Markets trade flat as budget session begins in parliament

In the extremely range-bound session of trade, Indian equity benchmarks, altering between positive and negative territory, were now trading flat with bit of negative bias as Finance Minister Nirmala Sitharaman tabled the Union Budget for the year 2019.20. Buying in frontline stocks such as Hindustan Unilever, Asian Paints and Kotak Mahindra were aiding sentiment, while selling in Yes Bank, ONGC and NTPC kept the gains in the markets in check. Cautiousness continued on the street as the US dragged India to the WTO by filing a complaint against New Delhi's move to increase customs duties on 28 American goods, alleging the decision is inconsistent with the global trade norms. The US has stated that India does not impose these duties on like products originating in the territory of any other WTO member nation. However, losses remained limited as traders took some support with a report that the government is expected to further ease the foreign direct investment (FDI) norms with a view to bridge the widening current account deficit (CAD). Some solace also came with a report that the size of Indian economy has grown to $2.75 trillion in 2018-19 from $1.99 trillion in 2015-16 even as global economy has faltered. Meanwhile, in order to boost exports & domestic manufacturing and to reduce trade deficit, Ministry of Commerce and Industry has started an exercise to review the current Foreign Trade Policy 2015-20. The present Foreign Trade Policy was brought out on April 01, 2015 and is valid for five years which ends on March 31, 2020. A midterm review was held in December 2017 after the introduction of GST.

On the global front, Asian markets were trading mixed as investors waited for American employment data and details of U.S.-Chinese trade talks. Back on the street, in scrip specific development, shares of Titagarh Wagons edged up as Finance Minister announced Railways will require investment of Rs 50 lakh crore from 2018-30. Besides, Westlife Development gained as its arm aims Rs 2,500 crore topline by 2022.

The BSE Sensex is currently trading at 39895.28, down by 12.78 points or 0.03% after trading in a range of 39866.87 and 40032.41. There were 15 stocks advancing against 16 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index lost 0.01%, while Small cap index was down by 0.05%.

The few gaining sectoral indices on the BSE were Telecom up by 0.62%, Realty up by 0.24%, Bankex up by 0.13% and FMCG was up by 0.13%, while Oil & Gas down by 1.42%, Metal down by 1.06%, Power down by 1.04%, Utilities down by 0.83% and PSU was down by 0.79% were the top losing indices on BSE.

The top gainers on the Sensex were Hindustan Unilever up by 1.02%, Asian Paints up by 0.68%, Kotak Mahindra Bank up by 0.62%, HCL Technologies up by 0.49% and Bharti Airtel up by 0.36%. On the flip side, Yes Bank down by 4.73%, ONGC down by 2.90%, NTPC down by 2.58%, Vedanta down by 2.19% and Sun Pharma was down by 1.59% were the top losers.

Meanwhile, Former Reserve Bank of India (RBI) governor Raghuram Rajan has said that public sector banks (PSBs) might perform far better if they are freed from some of the constraints they operate under such as paying above the private sector for low-skilled jobs and paying below the private sector for senior management positions, having to respond to government diktats on strategy or mandates, or operating under the threat of CVC/CBI scrutiny. However, he felt that such freedom typically requires distance from the government, so long as PSBs are majority-owned by the government, they may not get that distance.

Rajan also expressed view that there is no guarantee that privatization will be a panacea. He added that much of the discussion on privatization seems to make assumptions based on ideological positions. He noted that some private banks have been poorly governed. He said 'Instead, we need to recognise that ownership is just one contributor to governance and look at pragmatic ways to improve governance across the board. There certainly is a case to experiment by privatising one or two mid-sized public sector banks and reducing the government stake below 50 per cent for a couple of others, while working on governance reforms for the rest’.

Former RBI governor has argued that 'rather than continuing a never-ending theoretical debate, we will then actually have some evidence to go on’. Some political compromises will be needed to allow the process to go through, but so long as the newly privatised banks are not totally hamstrung in their operational flexibility as a result of these compromises, this will be an experiment worth undertaking.

The CNX Nifty is currently trading at 11932.20, down by 14.55 points or 0.12% after trading in a range of 11924.65 and 11981.75. There were 22 stocks advancing against 28 stocks declining on the index.

The top gainers on Nifty were Bharti Infratel up by 1.63%, Indiabulls Housing up by 1.05%, Hindustan Unilever up by 0.75%, Kotak Mahindra Bank up by 0.65% and Ultratech Cement was up by 0.57%. On the flip side, Yes Bank down by 4.94%, UPL down by 3.72%, ONGC down by 3.08%, NTPC down by 2.58% and Indian Oil was down by 2.27% were the top losers.

Asian markets were trading mixed; KOSPI rose 0.29 points or 0.01% to 2,109.02, Taiwan Weighted strengthened 9.83 points or 0.09% to 10,785.73, Nikkei 225 surged 13.23 points or 0.06% to 21,715.68, Hang Seng increased 38.54 points or 0.13% to 28,834.31 and Shanghai Composite was up by 3.80 points or 0.13% to 3,009.05. On the flip side, Straits Times trembled 6.69 points or 0.2% to 3,365.56 and Jakarta Composite was down by 11.02 points or 0.17% to 6,364.95.