Weak global cues drag benchmarks lower in early deals

Indian equity benchmarks made a pessimistic start and are trading with a cut of over half a percent in early deals amid weak global cues. Traders failed to get any solace with Finance Minister Piyush Goyal’s statement that the rate cut by the RBI will give a boost to the economy by providing affordable credit to small businesses and homebuyers. The RBI has reduced repo rate (at which RBI lends to banks) by 0.25% to 6.25%, a move that will translate into softening interest rates. Traders also shrugged off report that India has jumped eight places to 36th position on the International Intellectual Property (IP) Index, which analyses the IP climate in 50 global economies, this year. India's eight-point jump in 2019 from 44th position in 2018 is the highest increase among 50 nations mapped by the index. The report said the improvement reflects important reforms implemented by Indian policy-makers towards building and sustaining an innovation ecosystem for domestic entrepreneurs and foreign investors alike.

Weak global cues too dampened sentiment with all the Asian counters trading in red at this point of time as investors fretted about a broadening global economic slowdown. The US markets ended sharply lower on Thursday as trade tensions and bleak economic data from Europe renewed fears of a slowdown in global growth.

Back home, aviation sector stocks edged lower despite an International Air Transport Association (IATA) report stating that there is an 18.6% annual increase in domestic aviation sector considering the rise in Indians preferring to fly across the country last year. Non-banking finance companies (NBFCs) stocks remained buzzing with report that the RBI has decided to assign risk weights for the rated exposures of banks to all NBFCs to facilitate credit flow to the sector that is reeling under liquidity pressure post IL&FS defaults in August.

The BSE Sensex is currently trading at 36762.68, down by 208.41 points or 0.56% after trading in a range of 36754.65 and 36885.58. There were 6 stocks advancing against 25 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index declined 0.71%, while Small cap index was down by 0.34%.

The top gaining sectoral indices on the BSE were Realty up by 0.86%, Consumer Durables up by 0.48%, Power up by 0.46%, Utilities up by 0.24% and Telecom was up by 0.16%, while Auto down by 2.34%, Industrials down by 1.71%, Metal down by 0.97%, Healthcare down by 0.92% and Capital Goods was down by 0.71% were the toop losing indices on BSE.

The top gainers on the Sensex were Power Grid Corporation up by 1.41%, HCL Tech up by 1.10%, Indusind Bank up by 0.68%, NTPC up by 0.22% and Hero MotoCorp up by 0.14%. On the flip side, Tata Motors down by 15.77%, Tata Motors - DVR down by 14.62%, Vedanta down by 1.99%, Sun Pharma down by 1.94% and ICICI Bank down by 1.28% were the top losers.

Meanwhile, after the Reserve Bank of India (RBI) cut repo rate in its latest bi-monthly policy, Finance Minister Piyush Goyal has said the RBI’s this move will give a boost to the economy by providing affordable credit to small businesses and homebuyers. He added that it will further boost employment opportunities.

Goyal said that the rate cut would also impact bank's business by boosting demand in the economy. Expounding on the benefits of the rate cut, he said banks would come out of trouble faster this way. Cheaper loans would boost demand and already banks are witnessing a rise in credit growth rates.

The RBI surprisingly reduced the repo rate by 25 basis points to 6.25 percent and also changed the policy stance to 'neutral' from the earlier 'calibrated tightening', signalling further softening on its approach to rates if the inflation prints at the projected lower levels.

The CNX Nifty is currently trading at 11011.95, down by 57.45 points or 0.52% after trading in a range of 11006.75 and 11041.20. There were 14 stocks advancing against 36 stocks declining on the index.

The top gainers on Nifty were Bharti Infratel up by 2.39%, Power Grid Corporation up by 1.73%, Titan Co up by 1.59%, BPCL up by 1.31% and HCL Tech. up by 1.05%. On the flip side, Tata Motors down by 15.89%, Indiabulls Housing down by 3.73%, Vedanta down by 2.14%, JSW Steel down by 2.11% and Sun Pharma down by 2.06% were the top losers.

All the Asian markets are trading in red; Nikkei 225 surged 387.64 points or 1.87% to 20,363.64, Straits Times slipped 4.29 points or 0.13% to 3,196.35, Hang Seng declined 135.98 points or 0.49% to 27,854.23, KOSPI dropped 25.26 points or 1.15% to 2,178.16 and Jakarta Composite was down by 23.50 points or 0.36% to 6,512.96.