Local equities extend losses tailing weak global cues

Extending their previous session's southward journey, local equity benchmarks are trading in the red in morning deals tailing weak global cues. Vedanta, Reliance Industries and Yes Bank were the prime losers among heavy-weights, pushing the Sensex half a percent lower. Traders took note of US Commerce Secretary Wilbur Ross’ statement the US wants India to eliminate trade barriers for American firms and remove data localisation restrictions, while expecting that the new government here will address these issues. He also alleged that India imposes very high import duties on goods like automobiles, motorcycles, agri-products and alcoholic beverages. Traders failed to draw any sense of relief from a report that the US has indicated that it could hold its proposed withdrawal of incentives on annual Indian exports of $5.6 billion under the so-called generalised system of preference (GSP) until the formation of the new government here. Besides, a private report stated that the first round of India-Ecuador Free Trade Agreement (FTA) which will reduce and/or eliminate customs duties on certain items traded between the two is scheduled to take place soon.

On the global front, Asian markets are trading in red, as investors digested ongoing developments in the US-China trade negotiations, which sent stateside shares tumbling overnight. Back home, a private report stated that India's 2018/19 cotton imports are likely to double from a year ago to a record 3.1 million bales as the drop in production to the lowest level in nine years forces textile manufactures to ramp up overseas purchases.

The BSE Sensex is currently trading at 38021.31, down by 255.32 points or 0.67% after trading in a range of 37981.64 and 38248.57. There were 2 stocks advancing against 29 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index fell 0.54%, while Small cap index was down by 0.61%.

The top losing sectoral indices on the BSE were Realty down by 1.43%, Energy down by 1.36%, Telecom down by 0.94%, Consumer Discretionary Goods & Services down by 0.77% and Healthcare was down by 0.75%, while there were no gainers on the sectoral front.

The only gainers on the Sensex were Power Grid up by 0.99% and Coal India was up by 0.22%. On the flip side, Vedanta down by 2.14%, Reliance Industries down by 1.75%, Yes Bank down by 1.46%, Tata Motors - DVR down by 1.32% and ONGC was down by 1.22% were the top losers.

Meanwhile, the US Commerce Secretary Wilbur Ross has said the US wants India to eliminate trade barriers for American firms and remove data localisation restrictions. He also expects that the new government will address these issues. He said “we applaud India’s commitment to addressing some of these barriers once the next government is formed in the June. He also alleged that India imposes very high import duties on goods like automobiles, motorcycles, agri-products and alcoholic beverages.

 US Commerce Secretary said India imposes bound tariff rates-maximum import duty India can charge under global trade rules of WTO-on agricultural products at the average of an incredible 113.5 percent and some are as high as 300 percent and added that they are way too high. However, India’s trade experts counter this by saying that India is not a ‘tariff king’ and it has all the right to take appropriate measures to protect the interest of specific sectors like agriculture.

Referring to trade imbalance with India, he said the US is India’s largest export market, accounting for something like 20 percent of the total. He also indicated that in 2018, the bilateral trade between the two countries stood at $142 billion, up by about $16 billion from 2017. In the services sector also, US has a trade deficit with India and last year it was $3 billion. He also said “We generally have services surplus with most countries. But in the case of India, the deficit is largely due to IT services.”

Besides, Ross stated that India jumped 23 places in the World Bank's ease-of-doing-business global rankings in 2018, but it still ranks 77 out of 190 countries. So, he said there is lots of room for further improvement. He also mentioned that yet today, India is only the US' 13th largest export market due to overly restrictive market access barriers. He also expressed confident that US technology and expertise can play an important role in serving India’s critical development needs, as India is pursuing a range of development priorities, including revitalisation of urban infrastructure.

The CNX Nifty is currently trading at 11418.55, down by 79.35 points or 0.69% after trading in a range of 11408.30 and 11479.10. There were 8 stocks advancing against 42 stocks declining on the index.

The top gainers on Nifty were Power Grid up by 0.89%, JSW Steel up by 0.62%, Coal India up by 0.44%, Indian Oil Corp. up by 0.29% and Titan Company was up by 0.23%. On the flip side, Zee Entertainment down by 8.07%, Vedanta down by 2.08%, Bajaj Finserv down by 1.92%, Reliance Industries down by 1.72% and Yes Bank was down by 1.67% were the top losers.

Asian markets are trading in red; Straits Times declined 34.72 points or 1.05% to 3,277.80, Hang Seng fell 218.92 points or 0.75% to 29,144.10, Taiwan Weighted slipped 68.43 points or 0.62% to 10,918.71, Jakarta Composite fell 46.61 points or 0.74% to 6,250.71, Shanghai Composite decreased 3.04 points or 0.10% to 2,923.35, Nikkei 225 tumbled 407.33 points or 1.86% to 21,516.39 and KOSPI was down by 5.77 points or 0.27% to 2,171.22.