Local equities erase gains to turn negative; Sensex below 39,000 mark

Following weak Asian cues, local equity benchmarks have turned cautious in the morning deals, both Sensex and Nifty were trading below their crucial 39,000 and 11,550 marks, respectively. Investors turn concerned with Fitch Ratings’ report that the steep cut in tax paid by companies may stimulate investments and economic growth only in the medium term, but it will lead to breach fiscal targets in the current fiscal itself. Traders took note of report that the Reserve Bank of India (RBI) released the much-awaited report of the internal working group to review the liquidity management framework. The group observed that the current liquidity management framework should largely continue in its present form - a corridor system with the call money rate as the target rate. However, losses remain capped with Chief Economic Advisor Krishnamurthy Subramanian’s statement that investment is key to the country becoming a $5-trillion economy in five years. He has identified three engines to promote investment - land reform, labour reform and power. Some solace came with Securities and Exchange Board of India (SEBI) chairman Ajay Tyagi’s statement that an increase in private investments through higher fundraising by way of equity or debt instruments was crucial to attain the vision of a $5-trillion economy.

On the global front, Asian markets were trading in red, as traders weighed data showing slower US economic growth and also the possible impact of an impeachment inquiry of President Donald Trump. Back home, a global report stated that India has advanced four places to 44th position in terms of digital competitiveness in the world as the country has made improvement in terms of knowledge and future readiness to adopt and explore digital technologies.

The BSE Sensex is currently trading at 38916.85, down by 72.89 points or 0.19% after trading in a range of 38814.79 and 39107.37. There were 9 stocks advancing against 22 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index slipped 0.29%, while Small cap index was down by 0.33%.

The only gaining sectoral indices on the BSE were Energy up by 0.56% and FMCG was up by 0.52%, while Realty down by 2.18%, Metal down by 2.03%, Auto down by 1.38%, Telecom down by 1.22%, Basic Materials was down by 1.19% were the top losing indices on BSE.

The top gainers on the Sensex were ITC up by 2.08%, Yes Bank up by 1.86%, Bajaj Finance up by 1.46%, Reliance Industries up by 0.96% and HDFC was up by 0.48%. On the flip side, Tata Motors - DVR down by 4.76%, Vedanta down by 4.60%, Tata Motors down by 4.58%, ONGC down by 3.47% and Tata Steel was down by 3.30% were the top losers.

Meanwhile, Finance Minister Nirmala Sitharaman has said that she is hoping the country’s economy will start looking up in the second half of the current financial year (FY20) as consumption rises and banks increase their lending operations. The minster mentioned that economic slowdown seems to have bottomed out and the coming festive season will help the economy start looking up. The GDP growth in the first quarter of the current financial year slipped to an over six-year low of 5%.

Sitharaman met private-sector lenders and financial institutions that, according to her, categorically stated they are not facing liquidity crisis. They also said there is enough demand for loans. She further said the private sector banks and financial institutions told her that the slump in commercial vehicle sales is cyclical and likely to pick up in the next one or two quarters.

As regards slowdown in the passenger vehicle segment, she said that the banks see the issue as cyclical and not structural. The slowdown in sales is sentiment driven according to the banks.

The CNX Nifty is currently trading at 11540.15, down by 31.05 points or 0.27% after trading in a range of 11516.80 and 11593.60. There were 12 stocks advancing against 38 stocks declining on the index.

The top gainers on Nifty were ITC up by 2.04%, Yes Bank up by 1.86%, Indian Oil Corporation up by 1.66%, Bajaj Finance up by 1.43% and Bajaj Finserv was up by 1.07%. On the flip side, Zee Entertainment down by 4.67%, Tata Motors down by 4.58%, Vedanta down by 4.52%, ONGC down by 3.58% and Tata Steel was down by 3.26% were the top losers.

Asian markets were trading in red, Nikkei 225 slipped 292.00 points or 1.32% to 21,756.24, Hang Seng decreased 74.70 points or 0.29% to 25,967.23, Jakarta Composite lost 28.16 points or 0.45% to 6,202.17, KOSPI fell 27.97 points or 1.35% to 2,046.55, Taiwan Weighted dropped 25.76 points or 0.24% to 10,846.23, Straits Times trembled 8.50 points or 0.27% to 3,117.31 and Shanghai Composite was down by 0.12 points to 2,928.97.