Markets trade lower in early deals amid weak global cues

Snapping three days gaining streak, Indian equity benchmarks made negative start and are trading lower with cut of over quarter a per cent each in early deals on Thursday, weighed down by metal and Energy stocks. Market participants were concerned with Asian Development Bank lowering India's Gross Domestic Product (GDP) growth forecast to 7 per cent for the current year on the back of fiscal shortfall concerns. Traders also turned cautious with the India Meteorological Department’s (IMD) statement that the country’s monsoon rains were 20 per cent below average in the week ending on Wednesday, as rainfall was scanty over the central, western and southern parts of the country. It also raised concerns over the output of summer-sown crops. Monsoon rains are crucial for farm output and economic growth, as about 55 per cent of India's arable land is rain-fed, and agriculture forms about 15 per cent of a $2.5 trillion economy that is the third biggest in Asia. Overall, India has received rains that were 16 per cent less than average since the monsoon season began on June 1. Investors overlooked a private report that budget proposals to address the country's free-float problem can result in inflows of $25 billion.

Global cues also remained subdued with most of the Asian markets trading in red amid concerns about global economic prospects and the ongoing US-China trade war. Besides, overnight losses on Wall Street also weighted down on Asian markets, where big-name firms including Caterpillar and United Technology sank on weak corporate reports. The US markets had closed lower on Wednesday.

Back home, the fast moving consumer goods (FMCG) stocks were in focus as a private research firm lowered its growth target for the FMCG sector. The firm has estimated growth in 2019 to be in the 9-10 percent range as against 11-12 percent estimated earlier. In scrip specific development, Yes Bank slipped around 10% on reporting 92.45% fall in its consolidated net profit at Rs 95.56 crore for first quarter ended June 30, 2019 as compared to Rs 1265.67 crore for the same quarter in the previous year, on account of higher provisioning and lower other income. However, Wipro gained around 3% on reporting 14.73% rise in its consolidated net profit at Rs 2402.30 crore for the Q1FY20 as compared to Rs 2093.80 crore for the same quarter in the previous year.

The BSE Sensex is currently trading at 39110.74, down by 104.90 points or 0.27% after trading in a range of 39099.52 and 39204.47. There were 6 stocks advancing against 25 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index declined 0.36%, while Small cap index was down by 0.22%.

The only gaining sectoral index on the BSE was Telecom up by 0.68%, while Metal down by 1.18%, Energy down by 0.84%, Auto down by 0.83%, Oil & Gas down by 0.77% and PSU was down by 0.73% were the losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 1.30%, HDFC up by 1.04%, HDFC Bank up by 0.75%, ITC up by 0.26% and Kotak Mahindra Bank up by 0.25%. On the flip side, Yes Bank down by 9.09%, ONGC down by 2.24%, Tata Motors - DVR down by 2.18%, Tata Motors down by 2.17% and HCL Technologies down by 1.90% were the top losers.

Meanwhile, the International Monetary Fund (IMF) in its India section of the External Sector Report has said that improving business climate, easing domestic supply bottlenecks and relaxing trade related norms will help India attract foreign direct investments (FDI), improve the current account deficit (CAD) situation and contain external vulnerabilities. It also said that although progress has been made on FDI liberalisation, portfolio flows remain controlled. It said the country’s trade barriers remain significant and added that steps to contain fiscal deficit should be accompanied with measures to enhance credit availability through faster cleanup of balance sheets of banks and corporates.

CAD, which is the net of foreign exchange inflows and outflows, increased to $57.2 billion or 2.1 per cent of Gross Domestic Product (GDP) in FY19 as against 1.8 per cent in the previous year. It noted that India's low per capita income, favourable growth prospects, demographic trends, and development needs justify the CAD. The IMF suggested for gradual liberalisation of portfolio investments, while monitoring risks of portfolio flow reversals. With CAD projected to continue in the medium term, the NIIP (Net International Investment Position)-to-the GDP ratio is expected to weaken marginally. A NIIP is the difference between a country's external financial assets and liabilities.

It also said that the moderate level of foreign liabilities reflects India's gradual approach to capital account liberalisation, which has focused mostly on attracting FDI. India's external debt is moderate compared with other emerging market economies, but rollover risks remain elevated in the short term. It added that the CAD is estimated to have increased to 2.5 per cent of the GDP in fiscal year 2018-19 from 1.9 per cent of GDP in the previous year, due to higher commodity prices and strong domestic demand in the first half of the fiscal year. It also said that FDI inflows are not yet sufficient to cover protracted and large CAD. FDI in India dipped by 1 per cent to $44.4 billion in 2018-19.

The CNX Nifty is currently trading at 11648.00, down by 39.50 points or 0.34% after trading in a range of 11647.75 and 11676.30. There were 10 stocks advancing against 40 stocks declining on the index.

The top gainers on Nifty were Wipro up by 2.18%, Bharti Airtel up by 1.14%, UPL up by 1.11%, HDFC up by 1.03% and HDFC Bank up by 0.73%. On the flip side, Yes Bank down by 9.30%, ONGC down by 2.47%, Tata Motors down by 2.35%, HCL Technologies down by 2.14% and Vedanta down by 1.87% were the top losers.

Asian counters are mostly trading in red; Nikkei 225 declined 427.41 points or 1.99% to 21,041.77, Straits Times shed 9.49 points or 0.28% to 3,355.38, Hang Seng 139.60 points or 0.49% to 28,453.57, Taiwan Weighted tumbled 14.73 points or 0.14% to 10,813.75, KOSPI decreased 8.08 points or 0.39% to 2,064.84 and Shanghai Composite slipped 19.04 points or 0.65% to 2,912.65. On the flip side, Jakarta Composite was up by 2.19 points or 0.03 to 6,396.80.