Benchmarks trade flat in early deals

Indian equity benchmarks made a cautious start and are trading flat in early deals on Wednesday as traders remained cautious following weak global cues amid uncertainty about global growth. Meanwhile, the SBI report said the government should opt for the unconditional cash transfer to farmers to alleviate agrarian distress rather than Universal Basic Income (UBI) scheme. However, traders are getting some solace with the Reserve Bank of India’s announcement of Rs 10,000 crore bond buyback on January 24, 2019, continuing with its commitment to provide adequate liquidity. The central bank had earlier committed to purchase government securities under its open market operations for an aggregate Rs 50,000 crore in January and has so far done Rs 30,000 crore. Some support also came with former RBI governor Raghuram Rajan’s statement that India will eventually surpass China in economic size and will be in a better position to create the infrastructure being promised by the Chinese side in South Asian countries.

On the global front, Asian markets are trading mostly higher at this point of time as traders pared initial losses. Most of the Asian peers started in red on escalating signs of slowing global growth and concerns over a yet-unresolved Sino-US trade dispute. The US markets settled lower on Tuesday as weak data out of China and lower global growth estimates from the International Monetary Fund renewed fears of the global economy slowing down.

Back home, steel sector stocks edged higher with Steel Minister Chaudhary Birender Singh’s statement that India is expected to edge past the US with regard to steel consumption this year. Power stocks remained in focus with power minister RK Singh’s statement that the recommendations of a high-level empowered committee (HLEC) on stressed power assets will be placed before the Cabinet soon for approval.

The BSE Sensex is currently trading at 36429.03, down by 15.61 points or 0.04% after trading in a range of 36401.80 and 36521.47. There were 16 stocks advancing against 14 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.41%, while Small cap index was up by 0.29%.

The top gaining sectoral indices on the BSE were Metal up by 1.40%, Basic Materials up by 0.94%, Utilities up by 0.62%, FMCG up by 0.52% and Telecom was up by 0.47%, while IT down by 0.37%, Realty down by 0.23%, TECK down by 0.20% and Auto was down by 0.03% were the few losing indices on BSE.

The top gainers on the Sensex were Yes Bank up by 1.77%, Vedanta up by 1.57%, Tata Steel up by 1.52%, Bajaj Finance up by 1.16% and Hindustan Unilever up by 1.09%. On the flip side, Kotak Mahindra Bank down by 1.25%, TCS down by 0.84%, Indusind Bank down by 0.83%, Infosys down by 0.80% and Sun Pharma down by 0.63% were the top losers.

Meanwhile, in bid to increase liquidity in the market, the Reserve Bank of India (RBI) has decided to infuse Rs 10,000 crore on January 24, 2019. This is in line with its continuous efforts to adhere commitment of providing adequate liquidity. The central bank had earlier committed to purchase government securities under its open market operations (OMOs) for an aggregate Rs 50,000 crore in January and has so far done Rs 30,000 crore.

RBI has decided to conduct purchase of the Government securities under OMOs for an aggregate amount of Rs 100 billion on January 24, 2019 through multi-security auction using the multiple price method. It has been decided based on an assessment of prevailing liquidity conditions and also of the durable liquidity needs going forward. The Central Bank will buyback five securities maturing between June 2019 and December 2033 through the purchase.

The eligible participants should submit their offers in electronic format on the RBI's core banking solution (E- Kuber) system on January 24. The result of the auction will be announced the same day and payment to successful participants will be made on the following day. It can be noted that ever since August, the system is passing through a liquidity deficit which is being bridged by the central bank using various tools with OMOs being a primary instrument deployed.

The CNX Nifty is currently trading at 10926.15, up by 3.40 points or 0.03% after trading in a range of 10914.60 and 10942.55. There were 34 stocks advancing against 16 stocks declining on the index.

The top gainers on Nifty were Zee Entertainment up by 2.56%, JSW Steel up by 2.25%, Yes Bank up by 1.66%, Tata Steel up by 1.61% and Hindalco up by 1.60%. On the flip side, Sun Pharma down by 1.50%, Kotak Mahindra Bank down by 1.25%, Infosys down by 1.03%, TCS down by 0.97% and Indusind Bank down by 0.88% were the top losers.

Asian markets are trading mostly in green; Nikkei 225 rose 5.23 points or 0.03% to 20,628.14, Hang Seng jumped 16.45 points or 0.06% to 27,021.90, KOSPI gained 7.40 points or 0.35% to 2,125.17, Jakarta Composite added 11.03 points or 0.17% to 6,479.59 and Shanghai Composite was up by 1.92 points or 0.07% to 2,581.62.

On the flip side, Straits Times decreased 6.26 points or 0.20% to 3,186.45 and Taiwan Weighted was down by 57.45 points or 0.58% to 9,837.21.