Benchmarks trade slightly in red in early deals

Indian equity benchmarks have made a sluggish start and are trading slightly in red in early deals as investor remain concerned with the Ministry of Statistics and Programme Implementation data has showed that industrial production in volume terms declined in March for the first time in 21 months - by 0.1 per cent - against a growth rate 0.1 per cent in the previous month as manufacturing continued to contract for the second month in a row and mining growth was muted. The March numbers pulled down the index of industrial production (IIP) to 3.6 per cent in 2018-19 against 4.4 per cent in the previous year. Further, Sentiment on the street weakened with a recent technical study by the National Sample Survey Office (NSSO) for July 2016 – June 2017 on the services sector enterprises has again raised questions about India’s national income data & quality of the country’s growth estimates. The sentiments remained in lackadaisical mood with a private report stating that Indians who have the means to quit the country are doing so and in increasing numbers. India saw the third highest outflow of wealthy individuals last year. Nearly 5,000 millionaires, or high-net-worth individuals (HNWIs), left the country, which is 2 per cent of the total number of HNWIs in India, says the Global Wealth Migration Review (GWMR) 2019 by AfrAsia Bank and research firm New World Wealth.

On the global front the US markets ended higher on Friday after Treasury Secretary Steven Mnuchin wrapped up a second day of trade talks, calling the discussions constructive. Were as Asian market are trading in red on Monday as growing uncertainty over whether the United States and China will be able to reach a deal to end their trade war after Washington sharply hiked tariffs.

The BSE Sensex is currently trading at 37398.31, down by 64.68 points or 0.17% after trading in a range of 37319.00 and 37505.66. There were 12 stocks advancing against 19 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index declined 0.74%, while Small cap index was down by 0.51%.

The top gaining sectoral indices on the BSE were IT up by 0.68%, Telecom up by 0.61%, TECK up by 0.61%, Energy up by 0.10% and FMCG was up by 0.09%, while Capital Goods down by 1.57%, Healthcare down by 1.12%, Industrials down by 1.09%, Metal down by 1.07% and Basic Materials was down by 0.88% were the top losing indices on BSE.

The top gainers on the Sensex were TCS up by 1.13%, Hindustan Unilever up by 0.88%, ONGC up by 0.63%, HCL Tech up by 0.58% and Infosys was up by 0.48%. On the flip side, Larsen & Toubro down by 2.23%, Tata Steel down by 2.00%, Yes Bank down by 1.46%, Tata Motors - DVR down by 1.18% and NTPC was down by 1.02% were the top losers.

Meanwhile, the Reserve Bank of India (RBI) research in its lasted report has said that accelerating the rate of growth of the economy and disposable incomes holds the key to higher deposit mobilisation by the banking system. It further stated that the slowdown in bank deposit growth in the recent period alongside a revival of credit demand raised concerns about a structural liquidity gap in the system, possibly amplified by substitution effects of small savings and mutual funds on bank deposits in the aftermath of demonetization.

It highlighted that outstanding deposits of scheduled commercial banks (SCBs) at Rs 1,25,726 billion as on March 31, 2019 accounted for 128.7 per cent of outstanding bank credit (lower than 132.5 per cent a year ago), reflecting the tightening of financial conditions on account of low deposit growth. Besides, it mentioned that noting that the bank deposits remain an important part of the financial savings of households and key to the financing of bank lending, deposit growth is picking up in recent months in a cyclical upturn since December 2018, which is overwhelming a trend slowdown that has been underway since October 2009.

In order to address the issue of structural liquidity gap, the RBI in recent months took several initiatives including Open Market Operations and dollar rupee swap auction. Besides,  it highlighted that the widening wedge between credit and deposit growth is triggering concerns about a structural liquidity gap in the system, which can throw sand in the wheels of the financial intermediation process through which deposits are converted into productive investments by way of lending, thereby greasing the wheels of the economy.

The CNX Nifty is currently trading at 11246.40, down by 32.50 points or 0.29% after trading in a range of 11230.70 and 11279.90. There were 15 stocks advancing against 35 stocks declining on the index.

The top gainers on Nifty were Bharti Infratel up by 1.93%, Tech Mahindra up by 1.17%, TCS up by 1.07%, Hindustan Unilever up by 0.79% and ONGC was up by 0.66%. On the flip side, Eicher Motors down by 4.21%, Larsen & Toubro down by 2.18%, Indiabulls Housing down by 2.04%, Zee Entertainment down by 1.93% and Tata Steel was down by 1.81% were the top losers.

Asian markets are trading in red; Straits Times decreased 38.33 points or 1.17% to 3,235.17, Taiwan Weighted tumbled 118.92 points or 1.11% to 10,594.07, Jakarta Composite fell 20.22 points or 0.33% to 6,188.90 and Shanghai Composite shed 29.17 points or 0.33% to 2,910.04, Nikkei 225 dropped 128.34 points or 0.60% to 21,216.58 and KOSPI was down by 21.99 points or 1.04% to 2,086.05.