Benchmarks trade slightly red in morning deals

Indian equity benchmarks pared initial gains to trade in red terrain in early deals on Tuesday, as traders remained concerned with the Federation of Indian Chambers of Commerce & Industry’s (FICCI) statement that India’s slowing economic growth is of serious concern and the country needs to urgently cut tax and interest rates to revive the economy. The economy grew 6.6 per cent in the three months to December - the slowest pace in five quarters. It added that the recent signs of a slowdown in the economy stem not only from slow growth in investments and subdued exports but also from weakening growth in consumption demand. Some cautiousness also came with rating agency Ind-Ra’s statement that India’s GDP growth during the fiscal 2018-19 is expected at 6.9 per cent, marginally lower than CSO’s advance estimate of 7 per cent. It also urged the new government to take short-term measures to arrest the slowdown in the economy. However, losses remain capped with report that the commerce ministry is considering a major export promotion scheme to ensure expeditious refund of central and state taxes and levies to boost shipments in the wake of global challenges at trade front.

On the global front, the US markets remained closed on Monday for the Memorial Day holiday. Asian markets were trading mixed on Tuesday, despite European gains, as relief over EU election results eased concerns about political difficulties. Back home, SBI Ecowrap report stated that the country’s economic growth in the fourth quarter ended March 2019 is expected to moderate to 6.1-5.9 per cent, which could pull down growth rate for the entire fiscal 2018-19 to below 7 per cent. In scrip specific developments, Hindustan Aeronautics edged higher on reporting 13% rise in Q4 net profit and Vascon Engineers advanced on getting LoI worth Rs 172 crore from Tycoons Avanti Projects LLP.

The BSE Sensex is currently trading at 39620.14, down by 63.15 points or 0.16% after trading in a range of 39617.98 and 39785.02. There were 17 stocks advancing against 14 stocks declining on the index.

The broader indices were trading in green and red; the BSE Mid cap index slipped 0.03%, while Small cap index was up by 0.15%.

The top gaining sectoral indices on the BSE were IT up by 1.16%, Metal up by 0.97%, TECK up by 0.85%, Energy up by 0.53% and Healthcare was up by 0.30%, while Telecom down by 1.10%, Capital Goods down by 1.08%, Realty down by 0.68%, Bankex down by 0.40%, PSU was down by 0.32% were the top losing indices on BSE.

The top gainers on the Sensex were Yes Bank up by 3.44%, Vedanta up by 2.13%, Coal India up by 1.74%, TCS up by 1.67% and Infosys waxs up by 1.18%. On the flip side, HDFC down by 1.92%, Larsen & Toubro down by 1.37%, SBI down by 1.16%, Hero MotoCorp down by 1.13% and Bharti Airtel was down by 1.09% were the top losers.

Meanwhile, raising concern over India’s economic growth, the State Bank of India (SBI) in its Ecowrap report has said the gross domestic product (GDP) growth of the country is likely to moderate to 6.1-5.9 per cent in the fourth quarter ended March 2019 (Q4FY19). It added that this could pull down growth rate for the entire fiscal 2018-19 to 6.9 per cent. Besides, the slip in GDP growth may force the Reserve Bank of India (RBI) to move with a deeper 0.50 per cent cut in rates at its next review to propel the sluggish economy.

The report expects gross value added (GVA) growth could be at 6 per cent or slip marginally below 6 per cent at 5.9 per cent. However, it added that the current slowdown can be ‘transitory’ if proper policies are adopted in the interim. Calling out the high real interest rates -- the differential between the policy rate and headline inflation -- as an impediment to investment, it said the RBI can cut rates by 0.35-0.50 per cent at its next policy announcement.

Talking about fourth quarter estimate of a slip in GDP growth to just above 6 per cent, the SBI report said both the investment demand and consumption demand is showing signs of moderation as revealed by various leading indicators. It added that performance of the fast-moving consumer goods sector is also lacklustre with a deceleration in demand for staples such as biscuits and soaps.

The CNX Nifty is currently trading at 11923.95, down by 0.80 points or 0.01% after trading in a range of 11900.05 and 11958.55. There were 28 stocks advancing against 20 stocks declining on the index.

The top gainers on Nifty were Yes Bank up by 3.64%, JSW Steel up by 2.81%, Vedanta up by 2.40%, Coal India up by 2.27% and Adani Ports &Special was up by 1.72%. On the flip side, Bharti Infratel down by 3.00%, HDFC down by 1.95%, Grasim Industries down by 1.71%, Larsen & Toubro down by 1.43% and Kotak Mahindra Bank was down by 0.94% were the top losers.

Asian markets were trading mixed; Hang Seng increased 134.89 points or 0.49% to 27,422.98, Nikkei 225 surged 80.67 points or 0.38% to 21,263.25, Shanghai Composite gained 25.74 points or 0.89% to 2,918.12 and KOSPI was up by 3.17 points or 0.16% to 2,047.38. On the flip side, Taiwan Weighted dropped 3.78 points or 0.04% to 10,330.35, Straits Times trembled 6.21 points or 0.2% to 3,164.56 and Jakarta Composite was down by 10.29 points or 0.17% to 6,088.68.