Benchmarks extend early losses; Nifty trades below 10,700 mark

Indian equity markets, after making a gap-down opening, extended their losses in early deals on Thursday, with Sensex and Nifty losing around a percent each, respectively, on heavy sell-off in metal and oil stocks ahead of the Organisation of the Petroleum Exporting Countries (OPEC) meeting to discuss production policy, amid weakness in other Asian markets on growing uncertainty about the global economy. Besides, on a net basis, foreign portfolio investors (FPIs) sold shares worth Rs 357.82 crore on Wednesday, and domestic institutional investors (DIIs) were net sellers to the tune of Rs 791.59 crore, provisional data available with BSE showed. Traders failed to take any sense of relief with Finance Minister Arun Jaitley’s statement that India, among the world's fastest growing emerging economies, is likely to maintain the ‘high growth rate’ of 7-8 per cent over the next decade. He emphasized that landmark reforms such as the Insolvency and Bankruptcy Code offer an attractive and conducive environment to foreign investors to the country.

On the global front, Asian markets were trading in red territory, with losses of around a percent, as technology firms in Hong Kong and Shanghai battered after the arrest of a top executive at Chinese telecoms giant Huawei that has also fuelled fears about the recent China-US trade deal. Back home, on the sectoral front, banking stocks witnessed selling pressure after the RBI said it would link retail loans to external benchmarks replacing MCLR. Meanwhile, the Union Cabinet is expected to approve a policy to boost exports of agriculture commodities such as tea, coffee and rice and increase the country's share in global agri trade. The proposed policy would focus on all aspects of agricultural exports including modernising infrastructure, standardisation of products, streamlining regulations, curtailing knee-jerk decisions, and focusing on research and development activities.

The BSE Sensex is currently trading at 35592.06, down by 292.35 points or 0.81% after trading in a range of 35561.09 and 35707.23. There were 2 stocks advancing against 29 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index fell 1.15%, while Small cap index was down by 0.90%.

The top losing sectoral indices on the BSE were Realty down by 2.30%, Telecom down by 1.88%, Metal down by 1.81%, Auto down by 1.34% and Basic Materials was down by 1.31%, while there were no gaining sectoral indices.

The only gainers on the Sensex were Sun Pharma up by 3.24% and Power Grid Corporation was up by 0.68%. On the flip side, Vedanta down by 2.60%, Bharti Airtel down by 2.31%, Yes Bank down by 2.27%, Maruti Suzuki down by 1.99% and ICICI Bank was down by 1.82% were the top losers.

Meanwhile, the Reserve Bank of India (RBI), in its fifth bi-monthly monetary policy review of 2018-19, has kept repo rate under the liquidity adjustment facility (LAF) unchanged at 6.50%, in line with expectations, taking into account easing global crude prices, benign inflation and moderation in economic growth. This is for the second time in a row that the central bank maintained status quo. Consequently, the reverse repo rate under the LAF stood at 6.25%, and the marginal standing facility (MSF) rate and the Bank Rate at 6.75%. The RBI also maintained ‘calibrated tightening’ stance. The decision of the MPC is consistent the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4% within a band of +/- 2%, while supporting growth.

However, the RBI has decided to reduce statutory liquidity ratio (SLR), the portion of funds which banks are required to park in treasury bills and other instruments, by 0.25% every quarter beginning January. The calibrated reduction in SLR will continue till it reaches 18% of the net demand and time liabilities (NDTL) as part of aligning it with the liquidity coverage ratio (LCR). The current SLR is 19.5%.The first reduction of 25 basis points (bps) will take effect in the quarter commencing January 2019.

On the inflation front, the Central Bank has lowered retail inflation projection in the range of 2.7-3.2% for the second half of the current fiscal (H2FY19) and 3.8-4.2% in H1 FY20, with risks tilted to the upside, citing normal monsoon and moderate food prices. It added that the broad-based weakening of food prices imparts downward bias to the headline inflation trajectory going forward. Earlier, it had projected the retail inflation to be around 3.9-4.5% in the October-March period of 2018-19. It said the projected inflation path remains unchanged after adjusting for the HRA impact of central government employees as this impact dissipates completely from December 2018 onwards.

The CNX Nifty is currently trading at 10678.70, down by 104.20 points or 0.97% after trading in a range of 10674.45 and 10722.65. There were 4 stocks advancing against 46 stocks declining on the index.

The top gainers on Nifty were Sun Pharma up by 2.86%, Power Grid Corporation up by 0.54%, UPL up by 0.50% and Bajaj Finserv was up by 0.13%. On the flip side, Vedanta down by 3.02%, Indiabulls Housing Finance down by 2.75%, Tata Steel down by 2.52%, JSW Steel down by 2.51% and Bharti Airtel was down by 2.37% were the top losers.

All Asian markets were trading in red, Nikkei 225 slipped 495.66 points or 2.31% to 21,423.67, Taiwan Weighted decreased 225.81 points or 2.33% to 9,690.93, Hang Seng fell 702.40 points or 2.69% to 26,117.28, Straits Times lost 38.04 points or 1.22% to 3,117.88, Shanghai Composite declined 33.99 points or 1.3% to 2,615.82, KOSPI tumbled 28.24 points or 1.36% to 2,073.07 and Jakarta Composite was down by 31.08 points or 0.51% to 6,102.04.