Weak trade continues on Dalal Street

Indian equity benchmarks continued their weak trade in afternoon deals, on account of selling in frontline blue chip counters. The mood on the street remained cautious ahead of index of industrial production (IIP) data for November scheduled to be released later in the day. Some anxiety remained among the local traders with a report that India's fiscal deficit target has overshot by 15 per cent in the first eight months of FY 2018-19, largely due to a revenue shortfall rather than front-loading of expenditure. Traders failed to get relief with GST Council’s report that it has doubled the exemption limit for Goods and Services Tax (GST) registration to Rs 40 lakh from Rs 20 lakh to ease cost of compliance for small taxpayers or micro, small and medium enterprises (MSMEs). This means businesses with an annual turnover under Rs 40 lakh will now be exempt from registration and payment of GST. On the sectoral front, textile sector remained in focus with the Cotton Textiles Export Promotion Council stating that the Centre’s move to allow companies under composition scheme to file GST returns annually will improve ease of doing business for small textile companies.

On the global front, Asian markets were trading in green, amid reports the United States and China were making headway in their talks on trade, while expectations of the US Fed hitting the pause button on monetary tightening helped boost sentiment. Back home, the BSE Sensex is currently trading at 35949.84, down by 156.66 points or 0.43% after trading in a range of 35897.35 and 36214.26. There were 8 stocks advancing against 22 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index fell 0.37%, while Small cap index was down by 0.24%.

The few gaining sectoral indices on the BSE were Metal up by 0.68%, FMCG up by 0.32%, Basic Materials up by 0.16% and Oil & Gas up by 0.07%, while Realty down by 1.27%, IT down by 1.13%, TECK down by 1.09%, Capital Goods down by 1.01% and Telecom down by 0.96% were the top losing indices on BSE.

The top gainers on the Sensex were ITC up by 1.64%, Vedanta up by 1.00%, ONGC up by 0.73%, NTPC up by 0.71% and Sun Pharma up by 0.29%. On the flip side, Tata Motors - DVR down by 2.65%, Tata Motors down by 2.37%, TCS down by 2.33%, Indusind Bank down by 1.56% and Larsen & Toubro down by 1.54% were the top losers.

Meanwhile, with an aim to enhance the Reserve Bank of India’s (RBI) ability to manage exchange rate volatility, the Union Cabinet, chaired by Prime Minister Narendra Modi, has approved a proposal for Bilateral Swap Arrangement (BSA) between India and Japan and authorized the RBI to sign the Agreement for BSA between the RBI and the Bank of Japan for a maximum amount of $75 billion.

The swap arrangement is an agreement between India and Japan to essentially exchange and re-exchange a maximum amount of $75 billion for domestic currency, for the purpose of maintaining an appropriate level of balance of payments for meeting short-term deficiency in foreign exchange. The BSA is a good example of mutual cooperation between India and Japan for strategic objective of assisting each other in times of difficulty and for restoring international confidence. This facility will enable the agreed amount of capital being available to India on tap for use.

Also, with this arrangement in place, prospects of Indian companies would improve in tapping foreign capital as there would be greater confidence in stability of country's exchange rate. Availability of such swap line to tide over difficulties arising out of balance of payment (BOP) would deter speculative attacks on the domestic currency and greatly enhance the RBI's ability to manage exchange rate volatility. The arrangement is another milestone in mutual economic cooperation and special strategic and global partnership between India and Japan.

The CNX Nifty is currently trading at 10771.95, down by 49.65 points or 0.46% after trading in a range of 10757.65 and 10850.15. There were 17 stocks advancing against 33 stocks declining on the index.

The top gainers on Nifty were ITC up by 1.61%, Hindalco up by 1.42%, UPL up by 1.39%, Indian Oil Corp. up by 1.08% and JSW Steel up by 0.88%. On the flip side, Tata Motors down by 2.48%, TCS down by 2.36%, Larsen & Toubro down by 1.86%, Indusind Bank down by 1.65% and Mahindra & Mahindra down by 1.44% were the top losers.

Asian markets were trading in green; Nikkei 225 surged 195.90 points or 0.97% to 20,359.70, Hang Seng increased 118.39 points or 0.45% to 26,639.82, KOSPI rose 12.29 points or 0.6% to 2,075.57, Jakarta Composite soared 12.32 points or 0.19% to 6,341.03, Taiwan Weighted strengthened 38.71 points or 0.4% to 9,759.40, Shanghai Composite gained 17.32 points or 0.68% to 2,552.42 and Straits Times advanced 14.84 points or 0.47% to 3,198.35.