Markets turn negative on below normal monsoon forecast

Erasing all of their gains, Indian equity benchmarks turned negative in late afternoon session, despite firm cues from European markets. In line with the larger peers, the broader markets too remained lackluster in late noon deals, while Bharti Airtel declined the most among major industry leaders on the BSE. Trading sentiments got hit after private weather forecaster Skymet said India’s monsoon rains were seen below normal this year. According to Skymet Weather, monsoon in 2019 was likely to be ‘below normal’ to the tune of 93 per cent of the long period average (LPA) of 887 mm for the fourth-month period from June to September. Adding some anxiety among investors, International Monetary Fund (IMF) Managing Director Christine Lagarde said that global growth has lost momentum amid rising trade tensions and tighter financial conditions, but pauses in rate hikes will help boost activity in the second half of 2019. Some concerns also came with the Asian Development Bank’ latest report stating that trade tensions between China and the United States are putting a drag on Asian economies, with growth likely to continue to slow in the coming two years.

On the global front, European markets were trading in green, as Eurozone retail sales grew for a second consecutive month and at a faster-than-expected pace in February. The preliminary data from Eurostat showed that retail sales rose 0.4 percent month-on-month in February, surpassing the street’s expectations for 0.10 percent growth. Asian markets were also trading in green, after media reports suggested the US and China have ironed out most of their differences in trade negotiations. They are drawing closer to a final trade agreement with final discussion centered on how to implement and enforce an agreement.

The BSE Sensex is currently trading at 39044.92, down by 11.73 points or 0.03% after trading in a range of 39044.60 and 39270.14. There were 13 stocks advancing against 17 stocks declining, while 1 stock remained unchanged on the index.

The broader indices were trading in red; the BSE Mid cap index fell 0.27%, while Small cap index was down by 0.43%.

The top gaining sectoral indices on the BSE were Realty up by 0.39%, Metal up by 0.25%, Auto up by 0.17%, FMCG up by 0.15% and Basic Materials up by 0.09%, while Telecom down by 1.47%, Oil & Gas down by 1.44%, Capital Goods down by 0.91%, Healthcare down by 0.90% and PSU down by 0.90% were the top losing indices on BSE.

The top gainers on the Sensex were Maruti Suzuki up by 2.28%, HCL Tech. up by 1.61%, Tata Steel up by 1.35%, HDFC up by 1.28% and NTPC up by 1.11%. On the flip side, Bharti Airtel down by 2.20%, Larsen & Toubro down by 1.58%, SBI down by 1.52%, Sun Pharma down by 1.46% and Yes Bank down by 0.95% were the top losers.

Meanwhile, after Supreme Court quashed 2018 Reserve Bank of India (RBI) circular on resolving bad debt, ICRA’s Vice President & Sector Head - Financial Sector Ratings, Anil Gupta has said that the decision can lead to negative impact for the banks if the loans are not resolved.

Anil Gupta further noted that the decision will benefit both banks and companies in the short run as banks will not have to do a fire sale of these assets under NCLT which was undermining the value and impacting the recoveries.

Gupta, however, underlined long-term side effects of it, giving an instance that “if a resolution is not happening and there is just 'ever-greening', then it can create a situation similar to what we have now. If you allow the defaulting borrowers to continue owning the assets without actually resolving it, and without recovering the NPAs, the situation will remain as much negative.”

The CNX Nifty is currently trading at 11682.15, down by 31.05 points or 0.27% after trading in a range of 11672.35 and 11761.00. There were 19 stocks advancing against 30 stocks declining, while 1 stock remained unchanged on the index.

The top gainers on Nifty were Indiabulls Housing Finance up by 3.75%, Maruti Suzuki up by 2.11%, Bajaj Finserv up by 1.72%, JSW Steel up by 1.25% and HCL Tech. up by 1.22%. On the flip side, BPCL down by 4.23%, Indian Oil Corporation down by 2.40%, Zee Entertainment down by 2.25%, SBI down by 2.14% and Eicher Motors down by 1.93% were the top losers.

All Asian market are trading in green; Taiwan Weighted gained 14.08 points or 0.13% to 10,704.38, Straits Times advanced 26.61 points or 0.81% to 3,306.39, Hang Seng increased 306.54 points or 1.03% to 29,931.21, Shanghai Composite gained 42.14 points or 1.33% to 3,218.96, KOSPI rose 26.09 points or 1.2% to 2,203.27 and Nikkei 225 was up by 207.90 points or 0.97% to 21,713.21.

All European markets were trading in green; France’s CAC gained 39.10 points or 0.72% to 5,462.57, Germany’s DAX rose 154.31 points or 1.31% to 11,909.10 and UK’s FTSE 100 was up by 8.90 points or 0.12% to 7,400.02.