Markets ignore easing WPI inflation; Sensex down by 25 points

Key Indian equity markets ignored easing India’s Wholesale price index (WPI) inflation data in late afternoon session, as both the larger peers, Sensex and Nifty, continued lackluster trade. WPI slowed down to 4.64 percent in November from 5.28 percent in October. Build up inflation rate in the financial year so far was 4.73% compared to a build up rate of 2.83% in the corresponding period of the previous year. Domestic sentiments got hit after Former Reserve Bank of India (RBI) governor Raghuram Rajan said the Indian economy is not creating enough jobs and that growth is not benefiting everyone. Traders took note of Former Chief Economic Advisor Arvind Subramanian’s statement that the RBI is adequately capitalised, but the money should be used for fixing the financial system, not for financial deficit or financing government expenditure. Separately, the International Monetary Fund said that operational independence of central banks like the RBI was important for carrying out their responsibilities.

On the sectoral front, consumer durables were trading lower, ignoring Electronics and IT Minister Ravi Shankar Prasad’s statement that the government has almost finalised the National Policy on Electronics to boost electronics manufacturing in India on a big scale. Further, stocks related to mines and minerals industry remained in focus, with the government’s statement that 19 iron ore mines having reserves worth 581.5 million tonnes (MT) have been auctioned as on date.

On the global front, European markets were trading in red, as traders were in a cautious mood amidst some major ECB developments. ECB President Mario Draghi unveiled the latest set of ECB Staff macroeconomic projections for Eurozone, which revealed a further downgrade to the growth projection for next year. The euro area growth forecast for next year was trimmed to 1.7 percent from 1.8 percent. The outlook for this year was cut to 1.9 percent from 2 percent. Asia markets were also trading in red, after the latest batch of economic data from China showed industrial output in the country grew by 5.4 percent in November, slower than the 5.9 percent growth seen a month earlier. Retail sales in China increased by 8.1 percent in November, after rising 8.6 percent in October.

The BSE Sensex is currently trading at 35904.99, down by 24.65 points or 0.07% after trading in a range of 35813.85 and 36019.02. There were 9 stocks advancing against 22 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.17%, while Small cap index was down by 0.11%.

The top gaining sectoral indices on the BSE were Telecom up by 2.63%, Oil & Gas up by 1.49%, TECK up by 0.89%, IT up by 0.75% and PSU up by 0.61%, while Healthcare down by 1.30%, Metal down by 0.76%, Capital Goods down by 0.61%, Consumer Durables down by 0.47% and Auto down by 0.42% were the top losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 4.71%, ONGC up by 4.36%, Infosys up by 2.29%, Yes Bank up by 1.89% and Asian Paints up by 1.62%. On the flip side, HDFC down by 1.85%, Bajaj Auto down by 1.24%, Adani Ports & SEZ down by 1.01%, Sun Pharma down by 0.94% and Coal India down by 0.90% were the top losers.

Meanwhile, raising concerns over economic growth, global credit ratings agency, Moody's Investors Service has said that liquidity constraints faced by some non-bank financial institutions (NBFIs) in India, after the default of Infrastructure Leasing & Financial Services (IL&FS) in September 2018, will likely tighten credit supply and the country’s Gross Domestic Product (GDP) growth rate will slow to just a little over 7% for the fiscal 2019 and 2020. Besides, Indian economy grew at 7.1% in the July-September quarter of FY19, lower than 8.2% in April-June.

Moody’s also said that just above 7% growth for fiscal 2019 and 2020, is below an estimated 7.4% outturn in the fiscal year ending March 2018 and below the pick-up in growth that they envisaged a few months ago. It added that any further distress in the NBFI sector will pose significant downside risks to India’s growth outlook. The nation’s NBFIs are an important provider of credit to the country's economy and, in the fiscal year ended March 31, 2018, accounted for nearly 17% of total loans and one third of total retail loans.

The rating agency further said in a downside scenario, a sharper slowdown in NBFI credit supply would significantly tighten overall credit availability, drive up borrowing costs and reduce economic growth by around half a percentage point over a few years. It noted that weaker nominal GDP growth over a prolonged period would weigh on India's fiscal strength and the overall sovereign credit profile.

The CNX Nifty is currently trading at 10778.30, down by 13.25 points or 0.12% after trading in a range of 10752.10 and 10815.75. There were 17 stocks advancing against 33 stocks declining on the index.

The top gainers on Nifty were Bharti Airtel up by 4.55%, ONGC up by 4.36%, Indian Oil Corporation up by 3.06%, Infosys up by 2.22% and BPCL up by 1.97%. On the flip side, HCL Tech down by 2.15%, HDFC down by 1.92%, JSW Steel down by 1.81%, Titan down by 1.57% and Cipla down by 1.46% were the top losers.

All the Asian markets are trading in red; Nikkei 225 tumbled 441.36 points or 2.02% to 21,374.83, Straits Times declined 31.79 points or 1.02% to 3,079.29, Hang Seng dropped 429.56 points or 1.62% to 26,094.79, Taiwan Weighted fell 84.60 points or 0.86% to 9,774.16, KOSPI shed 25.09 points or 1.20% to 2,070.46, Jakarta Composite slipped 7.88 points or 0.13% to 6,169.84 and Shanghai Composite was down by 40.31 points or 1.53% to 2,593.74.

All European markets were trading mostly in red; UK’s FTSE 100 dipped 74.49 points or 1.08% to 6,803.01, Germany’s DAX fell 161.95 or 1.48% points to 10,762.75 and France’s CAC was down by 62.63 points or 1.28% to 4,834.29.