Benchmarks trade lower in early deals

Indian equity benchmarks have made a weak start and are trading lower in early deals amid weak cues from Asian peers. Traders remained cautious with India Ratings’ report warning that with populist decisions like farm loan waivers and other financial support schemes likely to gain significance in the run-up to the forthcoming next general elections, aggregate fiscal deficit of the states is expected to reach 3.2 per cent in FY20. It expects the states’ revenue account on aggregate to clock a deficit of 0.5 per cent of Gross Domestic Product (GDP) in FY20 due to a higher growth in revenue spends than revenue receipt. Market participants failed to get any sense of relief with the International Monetary Fund’s (IMF) statement that India will further build its lead as the world’s fastest-growing major economy as it picks up pace next year while the global economy is forecast to slow. India’s GDP is forecast to expand 7.5% in FY20 and 7.7% in FY21, while China’s growth is seen at 6.2% in both years.

On the global front, all the Asian counters are trading in red at this point of time amid signs of pessimism about world growth, while sterling dithered as the latest plan for Brexit appeared to come and go with no progress. The US markets remain closed on Monday in observance of the Martin Luther King Jr. holiday, providing a pause after a bullish tilt on Wall Street to start 2019.

Back home, sugar stocks edged lower with industry body Indian Sugar Mills Association (ISMA) revising downward the country’s sugar output for the second time to 30.7 million tonne (MT) for the ongoing marketing year 2018-19, owing to a diversion for ethanol making. In scrip specific developments, Zensar Technologies declined on reporting 6% fall in Q3 consolidated net profit. However, Prabhat Dairy was trading higher on getting approval for sale of shareholding in SAIPL.

The BSE Sensex is currently trading at 36439.66, down by 139.30 points or 0.38% after trading in a range of 36413.30 and 36650.47. There were 6 stocks advancing against 24 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index slipped 0.25%, while Small cap index was down by 0.28%.

The few gaining sectoral indices on the BSE were Healthcare up by 0.62%, Oil & Gas up by 0.51% and Consumer Durables up by 0.05%, while Metal down by 1.41%, Auto down by 1.00%, Basic Materials down by 0.79%, Industrials down by 0.54%, Consumer Discretionary Goods & Services down by 0.47% were the top losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 3.99%, Kotak Mahindra Bank up by 1.83%, Bajaj Finance up by 1.28%, ONGC up by 0.45% and TCS up by 0.20%. On the flip side, Mahindra & Mahindra down by 2.06%, Tata Steel down by 1.81%, Vedanta down by 1.61%, Indusind Bank down by 1.49% and Tata Motors down by 1.13% were the top losers.

Meanwhile, the International Monetary Fund (IMF) in its January World Economy Outlook update has said that India’s economy is expected to grow at 7.5% in the 2019, keeping an upward trajectory as the rest of the world slumps and added that the growth will accelerate further to 7.7% in 2020. It said India's economy is poised to pick up in 2019, benefiting from lower oil prices and a slower pace of monetary tightening than previously expected, as inflation pressures ease.

The IMF said India's growth rate in 2018 was 7.3%. It has been projected to grow at 7.5% in 2019, which is a marginal 0.1% above its previous projection. In 2020, India is projected to grow at 7.7%. Besides, China’s growth is estimated at 6.2% for 2019 and 2020. Despite fiscal stimulus that offsets some of the impact of higher US tariffs, China's economy will slow down due to the combined influence of needed financial regulatory tightening and trade tensions with the US.

As per the report, growth in emerging and developing Asia will dip from 6.5% in 2018 to 6.3% in 2019 and 6.4% in 2020. Meanwhile, the IMF cut the global growth forecast from last October’s estimate. The global economy is projected to grow 3.5% in 2019 and 3.6% in 2020, 0.2 and 0.1 percentage points below last October’s projections. It said the downward revisions are modest. However, it believes that the risks to more significant downward corrections are rising. It also cautioned that escalation of trade tensions and a worsening of financial conditions are key sources of risk and called for policymakers to act.

The CNX Nifty is currently trading at 10920.90, down by 40.95 points or 0.37% after trading in a range of 10908.65 and 10949.80. There were 18 stocks advancing against 32 stocks declining on the index.

The top gainers on Nifty were Sun Pharma up by 4.03%, Kotak Mahindra Bank up by 1.89%, BPCL up by 1.66%, HPCL up by 1.57% and Wipro up by 1.26%. On the flip side, Mahindra & Mahindra down by 2.14%, Tata Steel down by 1.95%, Vedanta down by 1.81%, Indusind Bank down by 1.79% and Grasim Industries down by 1.24% were the top losers.

All the Asian markets are trading in red; Nikkei 225 declined 138.74 points or 0.67% to 20,580.59, Straits Times slipped 11.36 points or 0.35% to 3,209.20, Hang Seng dropped 275.05 points or 1.01% to 26,921.49, Taiwan Weighted dipped 27.42 points or 0.28% to 9,861.98, KOSPI shed 13.89 points or 0.65% to 2,110.72, Jakarta Composite decreased 20.56 points or 0.32% to 6,430.27 and Shanghai Composite was down by 19.14 points or 0.73% to 2,591.37.