Benchmarks trade lower in early deals; Nifty below 10,700 mark

With a gap down opening, Indian markets extended their southward journey for fourth straight session on Friday and are now trading below their crucial levels of Sensex -- 36,300 and Nifty -- 10,700, respectively. Worries over slowdown in the country, weighted on investor sentiments. Traders were concerned with report that Chief Economic Adviser (CEA) Krishnamurthy Subramanian virtually ruled out a major stimulus package for the economy, saying profit is private, losses are public is not good economics. He said sunrise and sunset phases for industry are usual and expecting the government to support industry in sunset phases can be morally hazardous. Some cautiousness also crept in as the International Monetary Fund (IMF) raised questions regarding the NDA government’s revenue targets in the light of the below-trend revenue collections amid the worsening slowdown in the broader economy. Besides, amid a slowdown in the expansion of industry and agriculture, credit rating agency ICRA has estimated India’s gross domestic product (GDP) growth rate at 5.5-6 percent in the first quarter (April-June) of the fiscal year 2019-20. Though, market participants failed to take any scene of relief with Niti Aayog Vice Chairman Rajiv Kumar’s statement that the government is considering a number of measures which will be taken at an appropriate time to deal with financial stress and unleash animal spirit in the economy.

On the global front, Asian markets were trading mixed on Friday following the mixed cues overnight from Wall Street. Investors were cautious ahead of US Federal Reserve Chairman Jerome Powell's speech at the Jackson Hole Economic Policy Symposium later today for additional clues about the outlook for interest rates. Worries about rising Japan-South Korea tensions also weighed on the markets after Seoul said it has decided to end an intelligence-sharing agreement with Tokyo.

Back home, on the sectoral front, aviation stocks were in focus with the Directorate General of Civil Aviation’s data showing that air passenger traffic in India grew 3.1% in the first seven months of 2019-the slowest pace in at least five years-amid market uncertainties in a slowing economy and the grounding of Jet Airways (India). In scrip specific development, NTPC rose on getting approval from its shareholders to raise up to Rs 15,000 crore through issuance of bonds and to raise its borrowing limit to Rs 2 lakh crore. The funds raised will be used for capital expenditure, working capital and general corporate purposes. Infosys gained on entering into strategic partnership with University of Illinois Urbana-Champaign (UIUC) to develop new technologies and systems in precision medicine.

The BSE Sensex is currently trading at 36217.13, down by 255.80 points or 0.70% after trading in a range of 36102.35 and 36387.68. There were 13 stocks advancing against 18 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index slipped 0.45%, while Small cap index was down by 1.04%.

The top gaining sectoral indices on the BSE were IT up by 1.04%, TECK up by 0.96%, Metal up by 0.41%, Oil & Gas up by 0.32%, Utilities up by 0.22%, while Bankex down by 1.43%, Capital Goods down by 0.92%, FMCG down by 0.88%, Industrials down by 0.84%, Consumer Durables down by 0.74% were the top losing indices on BSE.

The top gainers on the Sensex were Yes Bank up by 7.02%, Tata Motors up by 1.81%, TCS up by 1.32%, Vedanta up by 1.20% and Tata Motors - DVR up by 1.18%. On the flip side, Indusind Bank down by 3.25%, ICICI Bank down by 2.07%, Maruti Suzuki down by 2.05%, ITC down by 1.77% and Kotak Mahindra Bank down by 1.62% were the top losers.

Meanwhile, terming the stress in the financial sector as unprecedented, Niti Aayog vice chairman Rajiv Kumar has said that the government needs to take steps which eliminate apprehension from the minds of private sector players and encourage them to step up investments. He added this stress in the financial sector has resulted in an economic slowdown in the country. He also said private investments will drive India out of the middle income trap. He said nobody had faced this sort of situation in the last 70 years where entire financial system was under threat. Explaining further, Kumar said some of the steps have already been announced in the Union Budget to address stress in the financial sector and give a push to economic growth which hit a 5-year low of 6.8% in 2018-19.

Elaborating how stress in the financial sector has led to a slowdown in the economy, the Niti Aayog vice chairman said the entire episode started with indiscriminate lending during 2009-14 leading rise in non-performing assets (NPAs) post 2014. He said rising NPAs reduced the ability of banks to do fresh lending and added that the space was occupied by the shadow banks with credit growth of 25%. The NBFCs could not manage this high loan growth leading to defaults by some of the large entities triggering slowdown in the economy eventually.

He said the whole nature of the game has changed after demonetisation, the Goods and Services Tax and the Insolvency and Bankruptcy Code. The earlier period where you had 35% cash sloshing around, it has become much less now. All of these put together it is a fairly complex situation. There is no easy answer. On the issue of delay of payments by the government and its departments to private sector in lieu of goods and services availed from them, he said, it could be one of the reasons for the slowdown but the authorities are making all efforts to expedite the process.

The CNX Nifty is currently trading at 10697.95, down by 43.40 points or 0.40% after trading in a range of 10637.15 and 10708.20. There were 28 stocks advancing against 21 stocks declining, while one stock remain unchanged on the index.

The top gainers on Nifty were Yes Bank up by 8.08%, Indiabulls Housing Finance up by 2.87%, UPL up by 2.60%, Coal India up by 2.41% and Vedanta up by 1.74%. On the flip side, Indusind Bank down by 2.59%, ICICI Bank down by 1.99%, Cipla down by 1.66%, Maruti Suzuki down by 1.63% and Hindalco down by 1.50% were the top losers.

Asian markets were trading mixed; Hang Seng soared 124.87 points or 0.48% to 26,173.59, Shanghai Composite rose 13.70 points or 0.48% to 2,897.14, Nikkei 225 jumped 66.37 points or 0.32% to 20,694.38 and Taiwan Weighted inched up by 7.10 points or 0.07% to 10,536.88. On the other hand, Jakarta Composite lost 2.14 points or 0.03% to 6,237.11, Straits Times declined 10.96 points or 0.35% to 3,116.78 and KOSPI was down by 0.06 points to 1,950.95.