Benchmarks trade flat in early deals on Wednesday

Indian equity benchmarks have made cautious start and are trading flat in early deals on Wednesday, amid sharp fall in crude oil prices. Investors are eyeing Services PMI data to be out later in the day. Broader indices, BSE Mid cap and Small cap are also showing mixed trend. Some cautiousness came with the finance minister’s statement that India's state-owned banks had classified Rs 1.50 trillion ($21.76 billion) worth of loans as wilful defaults in 2018-19, with the biggest lender State Bank of India accounting for nearly a third. However, traders took some support with Finance Minister Nirmala Sitharaman’s statement that India still continues to be the fastest growing economy and demonetisation has had no effect on the Indian economy. Traders took note of report that the apex NBFC body Finance Industry Development Council (FIDC) said they should be allowed to avail of refinance facility under the Mudra scheme and also setting up of a permanent refinance window at RBI similar to the one that National Housing Bank (NHB) offers them to help meet their liquidity needs. The liquidity crisis has seen a massive 19 percent points drop in disbursement by NBFCs in the fourth quarter of FY19. Meanwhile, the government may impose anti-dumping duty on imports of certain types of filament yarn from China, Korea, Taiwan and Thailand as the commerce ministry has started investigation into alleged dumping of the product following complaints from domestic players.

Global cues also remained sluggish, with all the Asian markets trading lower at this point of time as concerns over US trade policy continue to weigh on investor sentiment. Washington has threatened to impose tariffs on $4 billion of additional European Union goods in a long-running dispute over aircraft subsidies. Meanwhile, a private survey showed growth in China’s services sector slowing to a four-month low in June.

Back home, on the sectoral front, the Information Technology (IT) stocks were trading mixed amid Crisil’s report that scaling up and the need to build digital capabilities will lead to faster consolidation among the mid-tier information technology companies in India. Most of the sugar stocks were trading marginally higher amid a report that sugar prices are expected to remain stable or slightly higher at Rs 34-35 per kg in the coming months following the surplus situation even as the production is likely to fall during 2019-20. In scrip specific development, Kalpataru Power Transmission soared on inking agreement to sell stake in 3 power transmission assets and Aditya Birla Fashion surged on completing acquisition of Jaypore and TG Apparel.

The BSE Sensex is currently trading at 39823.76, up by 7.28 points or 0.02% after trading in a range of 39732.38 and 39908.47. There were 16 stocks advancing against 14 stocks declining, while 1 stock remain unchanged on the index.

The broader indices were trading mixed; the BSE Mid cap index fell 0.06%, while Small cap index was up by 0.14%.

The top gaining sectoral indices on the BSE were Power up by 0.38%, Realty up by 0.38%, Telecom up by 0.31%, Capital Goods up by 0.29%, Energy up by 0.27%, while Metal down by 0.58%, Healthcare down by 0.41%, IT down by 0.17%, Basic Materials down by 0.13%, TECK down by 0.08% were the top losing indices on BSE.

The top gainers on the Sensex were Indusind Bank up by 1.32%, Yes Bank up by 1.29%, Asian Paints up by 1.13%, Mahindra & Mahindra up by 0.93% and NTPC up by 0.77%. On the flip side, Vedanta down by 1.83%, ONGC down by 1.18%, HDFC down by 0.73%, Tata Steel down by 0.56% and TCS down by 0.50% were the top losers.

Meanwhile, expressing optimism over India’s growth, Finance Minister Nirmala Sitharaman has said that the country still continues to be the fastest growing economy. She added that the manufacturing sector has had a certain fall, but it is not attributable to demonetisation. She noted that if the United States' growth has grown between 1.6, 2.2, 2.9 and 2.3 per cent in 2016, 2017, 2018 and 2019, and China's growth has also decelerated from 6.7, 6.8, 6.6 and 6.3 per cent, India is still well above 7 per cent at 7.3 per cent growth.

She said economic growth is high on the agenda of the Government and various reforms are being undertaken in many spheres to improve Gross Domestic Product (GDP) growth. The key reforms in Governments new term include expansion to all farmers the cash transfer scheme 'PM-Kisan' providing an income support of Rs 6000 per year, which was earlier limited to farmers with a land holding of less than 2 hectares. Along with this, the Government has launched voluntary pension scheme for small and marginal farmers and small shopkeepers or retail traders.

Sitharaman further said the moderation in growth momentum in 2018-19 is primarily on account of lower growth in ‘Agriculture and allied’, ‘trade, hotel, transport, storage, communication and services related to broadcasting’ and ‘public administration and defence sectors’. Regarding steps taken, the minister said the government has taken several steps in order that more money goes to people and that is why the PM's Kisan Samman Yojna, the Pension Yojna, where money goes directly through DBT into the people's hands, are activities through which people are getting the benefit.

She said over and above that, in order that institutions will have to extend more credit facilities for industry and for those entrepreneurs in the ground, the credit situation and also taking care of resolutional stressed assets through banks is also happening. She further said as per estimates available from Central Statistics Office, Growth of GDP at constant prices was 6.8 percent in 2018-19, as compared to 7.2 percent in 2017-18 and 8.2 percent in 2016-17. Besides, to give focused attention to issues of growth, Government has constituted a five-member cabinet committee on investment and growth chaired by Prime Minister.

The CNX Nifty is currently trading at 11900.25, down by 10.05 points or 0.08% after trading in a range of 11887.05 and 11932.15. There were 25 stocks advancing against 24 stocks declining, while 1 stock remain unchanged on the index.

The top gainers on Nifty were Indiabulls Housing Finance up by 2.09%, Indusind Bank up by 1.39%, Yes Bank up by 1.24%, Asian Paints up by 1.09% and Zee Entertainment up by 1.05%. On the flip side, Vedanta down by 2.03%, Dr. Reddy’s Lab down by 1.53%, Hindalco down by 1.34%, Eicher Motors down by 1.27% and GAIL India down by 1.25% were the top losers.

All the Asian markets were trading in red; Nikkei 225 slipped 178.15 points or 0.82% to 21,576.12, Taiwan Weighted dropped 113.29 points or 1.04% to 10,751.83, Shanghai Composite declined 21.21 points or 0.7% to 3,022.73, Straits Times trembled 11.91 points or 0.35% to 3,358.89, Jakarta Composite lost 34.60 points or 0.54% to 6,350.30, KOSPI fell 21.23 points or 1% to 2,100.79 and Hang Seng decreased 52.19 points or 0.18% to 28,823.37.