Local equities continue lackluster trade

Local equity benchmarks continued their lackluster trade in morning session, with losses of over one third a percent. Vedanta, Mahindra & Mahindra and Tata Steel were the prime losers among heavy-weights, pushing the Sensex lower. Traders remain concerned with a private report that the economic growth in 12 of the RBI’s 17 non-special states beat India’s economic growth of 6.7% in fiscal 2018, but it did not open more avenues for jobs. Traders failed to get solace with a IMF’s report that India is projected to grow at 7.5% in 2019 and 7.7% in 2020, an impressive over one percentage point ahead of China’s estimated growth of 6.2% in these two years. Investors also ignored RBI’s statement that it has proposed to relax norms for entry of new players in the retail payment systems with a view to give a boost to innovation and competition. The RBI has been issuing guidelines for various payment systems and grants authorisation to non-banks for setting up and operating payment systems. Besides, a private report also stated that India is among the most trusted nations globally when it comes to government, business, NGOs and media but the country’s brands are among the least-trusted.

On the global front, Asian markets were trading in red, amid worries about global economic growth after International Monetary Fund or IMF cut its global growth forecasts. The IMF's revised forecast comes after data released by China on Monday showed that the world's second-largest economy expanded at the weakest pace in nearly three decades in 2018. Back home, Centre for Science and Environment (CSE) reported that India would fall short of the government's target of achieving 175 GW of solar capacity by 2022.

The BSE Sensex is currently trading at 36438.45, down by 140.51 points or 0.38% after trading in a range of 36385.04 and 36650.47. There were 5 stocks advancing against 26 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index slipped 0.46%, while Small cap index was down by 0.42%.

The top gaining sectoral indices on the BSE were Healthcare up by 0.77%, Oil & Gas up by 0.69%, Energy up by 0.18% and Telecom was up by 0.13%, while Metal down by 1.80%, Auto down by 1.04%, Basic Materials down by 1.03%, Power down by 0.62% and Consumer Disc was down by 0.62% were the top losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 5.08%, Kotak Mahindra Bank up by 2.70%, Bajaj Finance up by 0.85%, Hindustan Unilever up by 0.29% and Reliance Industries was up by 0.06%. On the flip side, Vedanta down by 2.90%, Mahindra & Mahindra down by 2.22%, Tata Steel down by 1.94%, IndusInd Bank down by 1.54% and HDFC was down by 1.13% were the top losers.

Meanwhile, India Ratings in its latest report has pointed out that competitive populism, in the nature of farm loan waivers and other financial support schemes, would take the centre stage in the run-up to next general elections in April-May. A larger impact is expected on fiscal and revenue deficit to gross state domestic product ratios for Madhya Pradesh (MP), Kerala and Rajasthan, among non-special category states, in FY20.

However, it maintained a stable outlook on the finances of the states for FY20. It further highlighted that the aggregate fiscal deficit of the states will come in higher at 3.2% in FY20, which is higher than the FY19 mid-year outlook forecast of 2.8%, although this is higher than the fiscally prudent level of 3%, this will not pose any significant upside risks to these states' aggregate debt burden in FY20. On the expenditure side, it expects states' aggregate revenue expenditure to grow 18.9% to Rs 33.28 trillion in FY20.  The announcement of farm loan waivers by MP, Chhattisgarh, Assam and Rajasthan extends the list of states that have resorted to this mechanism to address farmers' distress.

Besides, it expects states' aggregate capex/GDP to come in marginally lower at 3% in FY20 from the budget estimate of 3.07% for FY19. It also expects the aggregate debt/GDP to rise to 25.1% in FY20 from the budgeted 24.3% for FY19. Moreover, the agency estimates gross market borrowings of the states to be Rs 5.7 trillion in FY20.

The CNX Nifty is currently trading at 10913.15, down by 48.70 points or 0.44% after trading in a range of 10902.40 and 10949.80. There were 15 stocks advancing against 35 stocks declining on the index.

The top gainers on Nifty were Sun Pharma up by 5.13%, Kotak Mahindra Bank up by 2.86%, HPCL up by 1.82%, GAIL India up by 1.45% and BPCL was up by 1.44%. On the flip side, Vedanta down by 2.80%, Mahindra & Mahindra down by 2.31%, Tata Steel down by 2.01%, JSW Steel down by 1.72% and Indiabulls Housing was down by 1.65% were the top losers.

All Asian markets were trading in red, Hang Seng decreased 309.03 points or 1.14% to 26,887.51, Nikkei 225 slipped 137.55 points or 0.66% to 20,581.78, Taiwan Weighted dropped 10.69 points or 0.11% to 9,878.71, Shanghai Composite declined 19.14 points or 0.73% to 2,591.37, KOSPI fell 13.82 points or 0.65% to 2,110.79, Straits Times trembled 11.39 points or 0.35% to 3,209.17 and Jakarta Composite was down by 31.72 points or 0.49% to 6,419.11.