Benchmarks turn red after a cautious start

Indian equity benchmarks entered into red terrain after a cautious start as traders turned pessimistic with Moody’s Investors Service’s statement that the steps announced by the government to aid MSMEs and the measures being planned to support farmers will increase the risk of fiscal slippage and push deficit to 3.4 per cent of GDP in the current financial year. The government budgeted the fiscal deficit for the current financial year at 3.3 per cent of the gross domestic product (GDP). Sentiments also remain dampened with report that foreign investors have pulled out close to Rs 6,000 crore so far from the Indian stock markets in January and experts believe this trend will continue in the coming months as well.

On the global front, Asian markets are trading mostly in green at this point of time, as Wall Street rallied after a deal was announced to reopen the US government following a prolonged shutdown that had shaken investor sentiment. The US markets ended in green on Friday, as mostly positive earnings results and a report that the Federal Reserve will maintain a larger portfolio of Treasury securities helped boost investor sentiment.

Back home, banking sector stocks remained in focus with report that the government has empowered PSU banks to request lookout circulars (LOCs) against wilful defaulters and fraudsters. The Home Ministry has also authorised the Serious Fraud Investigation Office (SFIO), a statutory corporate fraud investigation agency, to request LOCs if it feels the suspect may escape from India. In scrip specific developments, L&T rose on reporting 37% rise in Q3 consolidated net profit and NBCC edged higher on bagging order worth Rs 228 crore for redevelopment of WHO building.

The BSE Sensex is currently trading at 35835.37, down by 190.17 points or 0.53% after trading in a range of 35791.30 and 36124.26. There were 5 stocks advancing against 26 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index declined 1.33%, while Small cap index was down by 1.59%.

The few gaining sectoral indices on the BSE were Capital Goods up by 0.71%, TECK up by 0.15%, IT was up by 0.06%, while Healthcare down by 1.56%, Auto down by 1.56%, Basic Materials down by 1.39%, Power down by 1.36% and Telecom was down by 1.31% were the top losing indices on BSE.

The top gainers on the Sensex were Larsen & Toubro up by 2.54%, TCS up by 1.38%, Kotak Mahindra Bank up by 0.84%, Hindustan Unilever up by 0.50% and Asian Paints up by 0.44%. On the flip side, Bajaj Finance down by 2.86%, Yes Bank down by 2.73%, ICICI Bank down by 2.69%, Bajaj Auto down by 2.61% and Maruti Suzuki down by 2.28% were the top losers.

Meanwhile, expressing optimism over growth of Indian economy, the Economic Advisory Council to the Prime Minister (EAC-PM) has said that the country’s economic growth is likely to remain in the range of 7-7.5 per cent in the next few years. It added that the growth rate can be easily increased by 1 per cent by addressing structural problems through reforms. Besides, the Central Statistics Office (CSO) in its latest forecast pegged the growth at 7.2 per cent for 2018-19.

The Council strongly feels that there should be no deviation from the fiscal consolidation target but there must be continued emphasis on social sector interventions. It noted that the macro-economic fundamentals of the economy are sound but challenges remain, several of which are structural in nature. It highlighted that while the prospect for world economic growth does not look very promising, particularly in advanced economies, there is sufficient amount of growth momentum in emerging market economies. India is not insulated from global developments, nevertheless, India's growth expected to be in the 7-7.5 per cent range in the next few years.

The panel felt that the exchanger rate management of the rupee by RBI has been sound despite the volatility in price of the crude oil. There are indications that financial savings have started going up and there is credit uptick through private banks to the services sector. The reform in the financial sector should be strengthened further building upon what the government is already doing. It also felt that the challenge of insularity being seen in external trade should be reversed through supportive policy interventions because there is a positive turn in exports that are visible now. It noted that the challenges in the agriculture sector should be addressed by looking closely at the credit flow and support to employment programmes like MNREGA.

The CNX Nifty is currently trading at 10712.90, down by 67.65 points or 0.63% after trading in a range of 10698.10 and 10804.45. There were 12 stocks advancing against 37 stocks declining on the index.

The top gainers on Nifty were Zee Entertainment up by 9.30%, Larsen & Toubro up by 2.61%, Wipro up by 2.25%, Bharti Infratel up by 1.88% and TCS up by 1.43%. On the flip side, Adani Ports & SEZ down by 8.36%, Indiabulls Housing down by 5.84%, Ultratech Cement down by 4.18%, Bajaj Finance down by 2.91% and Axis Bank down by 2.74% were the top losers.

Asian markets are trading mostly in green; Straits Times gained 5.27 points or 0.16% to 3,207.52, Hang Seng jumped 115.04 points or 0.42% to 27,684.23, Taiwan Weighted rose 31.90 points or 0.32% to 10,001.51, KOSPI added 9.63 points or 0.44% to 2,187.36 and Shanghai Composite was up by 8.42 points or 0.32% to 2,610.14.

On the flip side, Nikkei 225 decreased 78.93 points or 0.38% to 20,694.63 and Jakarta Composite was down by 5.50 points or 0.08% to 6,477.34.