Benchmarks trade lackluster; Nifty slips below 11,000 mark

Indian equity benchmarks made pessimistic start and are trading below their crucial 37,100 (Sensex) and 11,000 (Nifty) levels in early deals on Tuesday, amid concerns that India's current account and fiscal deficit may took a hit due to rising oil prices. The Reserve Bank of India (RBI) Governor Shaktikanta Das said that India's current account and fiscal deficit could take a hit if oil prices continue to rise after an attack on Saudi Arabian oil facilities over the weekend. Besides, selling in Telecom, Auto, TECK and IT stocks also weighed on market sentiments. Adding anxiety among market participants, a private report indicating that lose-monetary policy alone cannot arrest the deepening slump, instead government must take demand-boosting measures, especially in rural areas, by frontloading expenditure primarily through the national rural employment scheme. It also warned that any attempt to trim government spending to maintain the fiscal numbers will be severely detrimental to growth. Some cautiousness also crept in with report that investments through participatory notes (P-notes) in the Indian capital market stood at Rs 79,088 crore in August-end, registering the third consecutive month-on-month decline. However, downside remained capped as traders took note of Commerce and Industry Minister Piyush Goyal’s statement that India and the US are in continuous dialogue and working towards early resolution of trade related issues.

Global cues also remained subdued with Asian markets were trading mixed as investors turned cautious amid worries about the overnight surge in crude oil prices and its impact on the global economy as well as on geopolitical tensions in the Middle East. Investors also preferred to remain on the sidelines as the Federal Reserve is scheduled to announce its latest monetary policy decision on Wednesday, with the central bank widely expected to cut interest rates by another 25 basis points. Meanwhile, US President Donald Trump said he has notified Congress that the US has reached initial trade agreements with Japan and these will be signed in the coming weeks.

Back home, in a relief to the farm sector, the government has decided not to levy 2 per cent tax deduction at source (TDS) on cash payments of over Rs 1 crore made through Agriculture Produce Market Committees (APMCs). Besides, aviation stocks were in focus with a private report indicating that domestic airlines may have to hike fares two weeks ahead of the busy travel season if oil prices remain elevated over next few days. In scrip specific development, Asian Paints gained on partnering with Mahindra logistics to strengthen its supply-chain in Eastern India.

The BSE Sensex is currently trading at 37053.19, down by 70.12 points or 0.19% after trading in a range of 37001.27 and 37169.56. There were 13 stocks advancing against 18 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.14%, while Small cap index was up by 0.37%.

The top gaining sectoral indices on the BSE were Metal up by 0.90%, Consumer Durables up by 0.82%, Basic Materials up by 0.50%, Realty up by 0.28% and Utilities was up by 0.17%, while Telecom down by 0.59%, Auto down by 0.45%, TECK down by 0.34%, IT down by 0.30% and Energy was down by 0.27% were the top losing indices on BSE.

The top gainers on the Sensex were Vedanta up by 2.19%, Asian Paints up by 1.34%, Yes Bank up by 0.97%, Tata Steel up by 0.79% and ONGC was up by 0.77%. On the flip side, HCL Technologies down by 1.66%, Axis Bank down by 1.50%, Tech Mahindra down by 1.10%, Hero MotoCorp down by 0.89% and Bajaj Auto was down by 0.86% were the top losers.

Meanwhile, terming the low Gross Domestic Product (GDP) growth of 5 per cent as a ‘surprise’, the Reserve Bank of India (RBI) Governor Shaktikanta Das has expressed confidence that the economy will look up with a host of measures taken by the government. In order to give a boost to the economy, he said that the central bank has been cutting rates, as slowdown was visible for past few months. The RBI slashed benchmark interest rate four times consecutively since January 2019. The central bank reduced the repo (short term lending) rate by 1.10 percentage points during the year.

Das said “I think with right measures taken, things should improve. It's a positive trend that the government is responding very fast and I don't think we have heard the last from the government with regard to dealing with the current economic situation ... My expectation is that it will be a continuous process and they would definitely be dealing with other challenges”.

With regard to structural reforms, he said the RBI has already pointed out in its annual report. He added “I think one major thing would be agriculture marketing. Definitely, I would expect some action from the government with regard to reforms in agricultural marketing”. Besides, the government announced a slew of measures in three dosages which include a special window for real estate, export incentives, bank consolidation and sops for MSMEs and the automobile sector.

Expressing concern over the Q1 GDP numbers, he said the numbers definitely looked much worse because the RBI had projected 5.8 per cent. He said “I think almost everybody had projected not below 5.5 per cent or so, but the number 5 per cent is a surprise.” He also said the second quarter growth of all advanced economies was lower than the first quarter so there is a deceleration. He said “But again I am not trying to justify our slowdown through the prism of the global slowdown although global slowdown does impact growth and results in slowdown we have domestic issues also”.

The CNX Nifty is currently trading at 10978.60, down by 24.90 points or 0.23% after trading in a range of 10965.25 and 11000.10. There were 22 stocks advancing against 28 stocks declining on the index.

The top gainers on Nifty were Vedanta up by 2.09%, Titan Company up by 1.61%, Asian Paints up by 1.19%, UPL up by 0.95% and JSW Steel was up by 0.95%. On the flip side, Indiabulls Housing Finance down by 2.27%, HCL Technologies down by 1.63%, Bharti Infratel down by 1.57%, Axis Bank down by 1.48% and BPCL was down by 1.17% were the top losers.

Asian markets were trading mixed; Jakarta Composite soared 11.39 points or 0.18% to 6,230.83, Nikkei 225 surged 1.97 points or 0.01% to 21,990.26, KOSPI was up by 1.77 points or 0.09% to 2,063.99. On the flip side, Straits Times trembled 15.67 points or 0.49% to 3,188.26, Taiwan Weighted dropped 25.16 points or 0.23% to 10,872.97, Shanghai Composite declined 30.91 points or 1.02% to 2,999.84 and Hang Seng was down by 274.83 points or 1.01% to 26,849.72.