Markets end in red ahead of RBI monetary policy meeting outcome

Tuesday turned out to be a lackluster day for the Indian equity benchmarks, as both the larger peers settled with losses, ahead of RBI monetary policy meeting outcome. The markets made a cautious start and remained in red terrain throughout the day, as Crisil cut India’s growth forecast for current fiscal to 7.4% on the back of weakening GDP growth and lower global trade forecasts. India’s growth in the July-September quarter slipped to 7.1% from 8.2% in the April-June quarter. It added that India’s export, which saw a revival in early part of 2018, could likely see a slower growth. Anxiety remained among the traders, amid reports that the recent move by the US government to change the method of H-1B visa allotment is a mixed bag for India. It added that while the move is expected to have a negative impact on the Indian technology services industry. The trade also remained lackluster with a private report that the 50 percent rise in shadow-banking loans in October was on account of difficulties in arranging money from money market alternatives but is unlikely to sustain.

However, downside remained capped, supported by the finance ministry’s statement that total Goods and Services Tax (GST) refunds to the tune of Rs 91,149 crore has been cleared by the Central Board of Indirect Taxes and Customs (CBIC) and the state authorities out of the total refund claims of Rs 97,202 crore received so far. Thus, the disposal rate of 93.77 percent has been achieved. Adding some relief, Revenue Secretary Ajay Bhushan Pandey said that the new simplified GST return forms will be rolled out from April 1, 2019. He also exuded confidence that the government will achieve the budgeted target for GST collection and said the revenue department is getting inputs about entities which are evading taxes. Meanwhile, CBDT chairman Sushil Chandra said that income tax return filing for assessment year 2018-19 has so far seen a 50 per cent rise since last year. He further said that demonetisation has been very good for increasing the tax base of the country. This year, we have already got around 6.08 crore income tax returns, which is 50 percent higher than last year by this particular date.

On the global front, European markets were trading in red, as Eurozone's manufacturing growth slowed in November, amid marginal growth in output and weak business confidence, and was the lowest since August 2016. The final data from IHS Markit showed that the manufacturing purchasing managers' index fell to 51.8 from 52 in October. The flash reading was 51.5. Meanwhile, UK manufacturing growth improved in November, but activity remained subdued amid a second consecutive month of decline in export orders, though domestic demand increased as Brexit worries prompted clients to stock up on supplies. The survey data from IHS Markit showed that the CIPS manufacturing purchasing managers index rose to 53.1 from October's 27-month low of 51.1. Asian markets ended lower, reflecting concerns over how the US and China will resolve a range of issues from technology development to trade within the next 90 days.

Back home, auto stocks ended lower, as ratings agency ICRA revised downwards its growth forecast for domestic passenger vehicles sales to 7-8 percent for the ongoing fiscal, citing sluggish customer sentiments due to high fuel prices and rising interest rate. ICRA had earlier projected a growth of 8-9 percent. Further, telecom stocks also ended in red, impacted by credit rating agency ICRA’s report that telecom industry's debt would remain elevated owing to reduction in organic cash flow generation and consistently high capex requirements and it maintains negative outlook for the sector with no respite in sight, following intense rivalry. Stocks related to the logistic industry remained in focused, with a private report stating that demand for logistics infrastructure is booming in India due to the introduction of the GST that has revolutionised how goods are delivered across the country.

Finally, the BSE Sensex plunged 106.69 points or 0.29% to 36,134.31, while the CNX Nifty was down by 14.25 points or 0.13% to 10,869.50.

The BSE Sensex touched a high and a low of 36,295.84 and 36,036.39, respectively and there 14 stocks advancing against 17 stocks declining on the index.

The broader indices ended mixed; the BSE Mid cap index fell 0.07%, while Small cap index was up by 0.14%.

The top gaining sectoral indices on the BSE were IT up by 1.71%, TECK up by 1.43%, Oil & Gas up by 0.85%, Metal up by 0.28% and Energy up by 0.22%, while FMCG down by 0.65%, Telecom down by 0.63%, Realty down by 0.62%, Consumer Durables down by 0.61% and Bankex down by 0.51% were the top losing indices on BSE.

The top gainers on the Sensex were ONGC up by 2.52%, Infosys up by 2.18%, Wipro up by 2.06%, Vedanta up by 1.53% and TCS up by 1.37%. On the flip side, Sun Pharma down by 2.75%, Mahindra & Mahindra down by 2.36%, HDFC down by 1.92%, SBI down by 1.64% and NTPC down by 1.41% were the top losers.

Meanwhile, stressing on need for open borders, Union Finance Minister Arun Jaitley has said that trading across national boundaries is an economic imperative of the times and that barriers to free trade should be dismantled. His remarks come amid mounting worries over tariff wars across the world, especially after the US initiated a slew of actions against select goods to address its trade balance with select countries, including a few items like steel from the country.

The minister has stated that it is in the larger interest of every country to make sure that trade barriers are brought down to the extent it is possible. He pointed out that there is a need for open trade as no country can manufacture all goods or specialize in rendering all services which are needed by consumers wanting the best quality at the lowest prices.

Besides, Jaitley reiterated that nations across the world are now realising that increased trade helps not just the global economy but also its own economy. He also affirmed the Centre’s commitment to improving trade facilitation across borders and also adopt the best practices across the world. He added that the steps taken by the government have helped in massive improvement in the ranking in trade across borders to 80 this year, from 146 earlier.

The CNX Nifty traded in a range of 10,890.95 and 10,833.35. There were 24 stocks advancing against 26 stocks declining on the index.

The top gainers on Nifty were BPCL up by 2.79%, ONGC up by 2.60%, UPL up by 2.58%, Indiabulls Housing Finance up by 2.49% and IOC up by 2.18%. On the flip side, Sun Pharma down by 2.72%, Mahindra & Mahindra down by 2.55%, Grasim Industries down by 2.26%, HDFC down by 1.91% and SBI down by 1.46% were the top losers.

European markets were trading in red; UK’s FTSE 100 lost 28.45 points or 0.4% to 7,033.96, France’s CAC fell 31.71 points or 0.63% to 5,022.27 and Germany’s DAX was down by 81.75 points or 0.72% to 11,383.71.

Asian markets closed mostly lower on Tuesday as the initial euphoria over the US-China truce on import tariffs subsided and investors wondered if a 90-day tariff truce was enough for the two countries to resolve their differences on a range of issues. According to reports, US President Donald Trump has appointed Robert Lighthizer, one of his cabinet's most strident trade hawks, to oversee the next round of trade negotiations with China. China's central bank chief said in an article in the China Finance magazine that the central bank would keep its monetary policy flexible and adjust it appropriately according to changes in the country's economic situation. Japanese shares fell on profit taking after a strong rally in the previous session.