Weak trade continues on Dalal Street

Weak trade continued on Dalal Street in early noon session, with the Sensex and the Nifty losing around 0.40%, each, ahead of release of wholesale price index (WPI) inflation numbers for January 2019. Heavy selling at Telecom, Oil & Gas and Metal counters, weighed on the domestic sentiment. In line with, the larger peers, the broader indices were also lingering under pressure. Investors remained cautious with a report that volatile crude oil prices, a strong dollar and rising US bond yields has resulted in foreign institutional investors (FIIs) turning big sellers in the Indian market. Out of the 425 companies on the BSE-500 index, for the quarter ending December (Q3), there has been a decline in FII holdings in 256 companies, while only 169 companies saw net buying by FIIs. Trader remained pessimistic even after the Cabinet Committee on Economic Affairs approved the Credit Linked Capital Subsidy and Technology Up-gradation Scheme (CLCS-TUS) with a total outlay of Rs 2900 crore. The scheme will facilitate technology up-gradation to MSEs, improvement in Quality of products by MSMEs, enhancement in productivity, reduction in waste and shall promote a culture of continuous improvement.  

On the sectoral front, agri stocks were buzzing, after the Union Cabinet, chaired by the Prime Minister Narendra Modi approved the proposal for leasing out 1.61 acres of land bearing khasara No.91/15 located at Alipur Delhi, owned by Delhi Milk Scheme to Small Farmers Agribusiness Consortium (SFAC) for setting up of Kisan Mandi.

On the global front, Asian markets were trading mostly in red, despite China's January trade data comes in much stronger than expected. China's January dollar-denominated exports rose 9.1 percent from a year ago, defying a forecast of a 3.2 percent contraction. China's imports fell 1.5 percent over the same period, far better than the 10 percent decline that was expected. China's overall trade surplus of $39.16 billion in January also beat expectations.

The BSE Sensex is currently trading at 35904.96, down by 129.15 points or 0.36% after trading in a range of 35873.55 and 36109.10. There were 12 stocks advancing against 19 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index lost 0.19%, while Small cap index was down by 0.33%.

The top gaining sectoral indices on the BSE were Auto up by 0.57%, Bankex up by 0.51%, Consumer Disc up by 0.12%, FMCG up by 0.11% and Realty up by 0.06%, while Telecom down by 2.44%, Oil & Gas down by 1.92%, Metal down by 1.90%, Energy down by 1.67% and PSU down by 1.52% were the top losing indices on BSE.

The top gainers on the Sensex were Yes Bank up by 22.21%, Hero MotoCorp up by 2.33%, Indusind Bank up by 1.07%, Sun Pharma up by 0.90% and Tata Motors up by 0.71%. On the flip side, Bharti Airtel down by 3.17%, Coal India down by 3.02%, Power Grid down by 1.95%, ONGC down by 1.95% and NTPC down by 1.83% were the top losers.

Meanwhile, with a view to attract a larger number of global players in the single-brand retail sector, the Cabinet is expected to soon consider a proposal of a relaxation in mandatory 30% local sourcing norm for foreign direct investment (FDI) in single-brand retail by allowing them more time to comply with regulations. The commerce and industry ministry has already circulated a draft cabinet note seeking views of different ministries including the department of economic affairs on the proposal. After receiving the comments, the ministry will soon approach the cabinet for its consideration.

As per the proposal, single-brand retail firms may be allowed to open online stores before setting up brick-and-mortar shops if they invest more than $200 million FDI. But such firms would have to set up brick-and-mortar shops within two years of starting online sales. Presently, online sale by a single-brand retail player is allowed only after opening of physical outlet. Retail traders may also be allowed to adjust the incremental sourcing of goods from India for global operations during the initial 6-10 years, from the current five years (beginning April 1 of the year of the opening of first store), against the mandatory sourcing requirement of 30 percent of purchases from India.

These relaxations too will be subject to quantum of FDI one brings in India. Under the proposal, retailers that invest up to $100 million in the sector will get six years’ time to meet the norm. Those who bring in $200 million foreign inflows in the sector will get eight years, while those putting in over $300 million will have 10 years’ time.

The CNX Nifty is currently trading at 10749.05, down by 44.60 points or 0.41% after trading in a range of 10736.05 and 10792.70. There were 16 stocks advancing against 34 stocks declining on the index.

The top gainers on Nifty were Yes Bank up by 22.28%, Indiabulls Housing Finance up by 4.14%, Zee Entertainment up by 3.54%, Hero MotoCorp up by 2.75% and Adani Ports & SEZ up by 2.55%. On the flip side, BPCL down by 4.99%, HPCL down by 4.35%, Indian Oil Corporation down by 3.70%, Bharti Airtel down by 3.38% and Coal India down by 3.34% were the top losers.

Asian markets were trading mostly in red; Hang Seng decreased 63.16 points or 0.22% to 28,434.43, Shanghai Composite declined 8.64 points or 0.32% to 2,712.43, Jakarta Composite dropped 6.75 points or 0.11% to 6,412.37, Taiwan Weighted fell 1.57 points or 0.02% to 10,089.01 and Nikkei 225 was down by 4.77 points or 0.02% to 21,139.71. On the flip side, KOSPI gained 8.70 points or 0.40% to 2,210.18 and Straits Times was up by 3.57 points or 0.11% to 3,248.34.