Local equities continue to trade flat with negative bias

Local equity benchmarks continued to trade flat with negative bias in morning session, owing to selling pressure in frontline counters. A level of pressure was seen on frontline stocks, especially Kotak Mahindra Bank, HDFC and Infosys. However, the downfall on the streets arrested as traders were getting some solace with a private report that the Indian government is likely to seek to raise about $11.21 billion through the sale of state-owned assets in the next fiscal year, beginning April 1. Some support came 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. Besides, former RBI governor Raghuram Rajan stated 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 were trading mostly in green. Traders ignored the reports about global economic growth and the uncertainty over US-China trade talks. The reports indicating that the Trump administration rejected an offer from China for preparatory talks ahead of next week's high-level trade negotiations dampened sentiment. Back home, Moody’s Investors Service report stated that India's insurance and reinsurance sectors will grow strongly driven by strong economic growth and evolving regulatory regime. It said robust GDP expansion, coupled with current low insurance penetration, should support double digit growth for the non-life sector over the next 3-4 years.

The BSE Sensex is currently trading at 36414.54, down by 30.10 points or 0.08% after trading in a range of 36391.61 and 36521.47. There were 14 stocks advancing against 17 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.23%, while Small cap index was up by 0.20%.

The top gaining sectoral indices on the BSE were Metal up by 0.73%, FMCG up by 0.63%, Basic Materials up by 0.60%, Telecom up by 0.24% and Healthcare was up by 0.16%, while Realty down by 0.64%, IT down by 0.27%, Auto down by 0.23%, Industrials down by 0.15% and TECK was down by 0.12% were the top losing indices on BSE.

The top gainers on the Sensex were Yes Bank up by 1.59%, Tata Steel up by 1.28%, Hindustan Unilever up by 1.16%, Bajaj Finance up by 0.98% and ITC was up by 0.83%. On the flip side, Kotak Mahindra Bank down by 0.98%, Infosys down by 0.87%, HDFC down by 0.84%, Hero MotoCorp down by 0.66% and TCS was down by 0.63% were the top losers.

Meanwhile, State Bank of India (SBI) in its latest report has said that the government should choose for the unconditional cash transfer to farmers to alleviate agrarian distress rather than Universal Basic Income (UBI) scheme. The report stated that, currently, it may not be feasible to initiate Rythu Bandhu Scheme on national level as land data in several states, including Jharkhand, Bihar, Gujarat, and Tamil Nadu are yet to be digitised. It said that there have been reports saying that government is planning to provide direct cash support to the farmers in lieu of various farm level subsidies/support.

The 'Ecowrap' report highlighted that such move comes on the back of suggestions in public domain by noted agri-economists as well as Niti Aayog that perhaps Rythu Bandhu Scheme that is fiscally prohibitive to launch on a pan India level should be netted against fertiliser subsidies, interest plus and insurance support and adding that instead of this the farmers should be provided the benefit as direct cash in their account.

However, the report noted ‘We believe this argument has flaws, though a cash transfer scheme is always a better option than an UBI scheme. Many countries have found that UBI does not address the structural problems and is at best a solution in interregnum’. Besides, the report underlined, in Budget 2019-20, Government estimated Agriculture subsidy (plus support) at Rs 98,100 crore (Crop Insurance Rs 13,000 crore, Interest Subsidy Rs 15,000 crore and Fertilizer Subsidy Rs 70,100 crore).

The CNX Nifty is currently trading at 10920.65, down by 2.10 points or 0.02% after trading in a range of 10913.20 and 10942.55. There were 28 stocks advancing against 22 stocks declining on the index.

The top gainers on Nifty were Zee Entertainment up by 3.03%, UPL up by 2.04%, Wipro up by 1.83%, Yes Bank up by 1.59% and Tata Steel was up by 1.39%. On the flip side, HPCL down by 0.97%, Infosys down by 0.92%, Kotak Mahindra Bank down by 0.89%, Adani Ports down by 0.83% and Power Grid was down by 0.74% were the top losers.

Asian markets were trading mostly in green; Nikkei 225 surged 15.29 points or 0.07% to 20,638.20, Jakarta Composite soared 8.42 points or 0.13% to 6,476.98, KOSPI rose 5.38 points or 0.25% to 2,123.15, Hang Seng increased 4.31 points or 0.02% to 27,009.76 and Shanghai Composite was up by 1.92 points or 0.07% to 2,581.62.

On the global front, Straits Times trembled 6.44 points or 0.2% to 3,186.27 and Taiwan Weighted was down by 53.29 points or 0.54% to 9,841.37.