Markets trade lower amid weakness in Asian peers

Indian markets made negative start and extended their losses in early deals on Friday ahead of the September quarter (Q2) Gross Domestic Product (GDP) number slated to be released later in the day. As per a report, India's economic growth is expected to have declined below 5 percent in the second quarter of the financial year 2019-20 on the back of weak consumer demand, slowing factory activities and negative impacts of the prolonged monsoon. Some cautiousness also came in with CRISIL’s report that for states, balancing the fiscal math while continuing to spend on infrastructure capital expenditure (capex) will be challenging. Besides, weakness in global markets also dampened the sentiments with most of the Asian markets trading lower in the absence of fresh cues from Wall Street, which was closed overnight for a public holiday. Investors remained cautious amid worries that tensions between the US and China over Hong Kong could delay a potential ‘phase one’ trade deal.

Back home, NBFCs and reality stocks were buzzing on report that in a bid to help the NBFCs and real estate companies, the Centre is considering more relief measures for both stressed sectors. In the past few months the government has announced few measures to ease liquidity and the credit crunch in the economy. Power stocks were in focus with the government’s statement that a total 31,696 Mega Watt (MW) of grid connected solar power generation capacity has been set up in the country till October 2019. In scrip specific development, HDFC Bank traded lower. The Bank has set up a six member panel to find a successor to its longest-serving chief Aditya Puri. However, Future Retail jumped around 14% after the Competition Commission of India approved Amazon's proposed acquisition of a minority stake in Future Group.

The BSE Sensex is currently trading at 40982.88, down by 147.29 points or 0.36% after trading in a range of 40961.59 and 41143.22. There were 9 stocks advancing against 22 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was gained 0.69%, while Small cap index was up by 0.67%.

The top gaining sectoral indices on the BSE were Telecom up by 3.51%, Utilities up by 0.78%, Power up by 0.70%, Realty up by 0.57% and TECK was up by 0.36%, while Bankex down by 0.36%, FMCG down by 0.30%, Energy down by 0.28%, Capital Goods down by 0.25% and IT was down by 0.23% were the top losing indices on BSE.

The top gainers on the Sensex were Yes Bank up by 5.21%, Bharti Airtel up by 2.30%, Tata Motors up by 1.61%, NTPC up by 0.82% and Tata Motors - DVR up by 0.75%. On the flip side, Tata Steel down by 1.02%, Kotak Mahindra Bank down by 1.02%, ICICI Bank down by 1.01%, Hindustan Unilever down by 0.79% and Larsen & Toubro down by 0.68% were the top losers.

Meanwhile, the government has sought Parliament approval for additional spending of Rs 21,246.16 crore in the current fiscal ending March 2020. Finance Minister Nirmala Sitharaman has tabled the first batch of Supplementary Demands for Grants for the financial year 2019-20 in both the Houses of Parliament saying of the total spend, cash outgo will be about 19,000 crore. The government has sought Rs 8,820.62 crore as grants for Union territories Jammu & Kashmir and Ladakh in lieu of the erstwhile state's share of 14th Finance Commission Award. Another Rs 4,557 crore will be infused in the IDBI Bank through recapitalisation bonds, while Rs 2,500 crore will go into recapitalsation of state-owned insurance companies.

The Union Budget for FY20, presented in July, had estimated a total government spending of Rs 27.86 lakh crore, excluding expenses of public-sector companies. Besides, the finance minister sought Rs 1,500 crore to meet the additional expenditure towards payment of pay and allowance of armed forces and another Rs 666 crore for meeting expenditure of Department of Space. As much as Rs 3,387.46 crore has been provided in the supplementary demands for grants for meeting expenditure towards salaries and cost of the ration of police. About Rs 1,000 crore has been sought for providing additional funds under the scheme for free LPG connection to poor households.

A sharp cut in corporate tax rates and lackluster growth in goods and services tax collections, amid a marked downturn in the economy, have squeezed government finances this year. The Indian economy expanded by 5% in April-June, its slowest annual pace since 2013 and the projections are that it may have slowed down further in the second quarter, making six consecutive quarters of slowing growth, a first since 2012. This despite a recent series of fiscal stimulus, including a reduction in corporate tax rates. Growth outlook has weakened sharply this year, with a crunch that started with the non-banking finance institutions spreading to retail businesses, car-makers, home sales and heavy industries. So far, the government has maintained that it will stick to the fiscal deficit target of 3.3% of GDP for 2019-20 and has no plans to revise it.

The CNX Nifty is currently trading at 12116.40, down by 34.75 points or 0.29% after trading in a range of 12107.00 and 12147.40. There were 22 stocks advancing against 28 stocks declining on the index.

The top gainers on Nifty were Bharti Infratel up by 8.52%, Yes Bank up by 4.64%, Bharti Airtel up by 2.18%, Zee Entertainment up by 1.91% and Tata Motors up by 1.70%. On the flip side, ICICI Bank down by 1.07%, Kotak Mahindra Bank down by 0.99%, Eicher Motors down by 0.98%, Hindustan Unilever down by 0.98% and Dr. Reddy’s Lab down by 0.80% were the top losers.

Asian markets were trading mostly in red; Hang Seng decreased 529.95 points or 1.97% to 26,363.78, Taiwan Weighted dropped 103.69 points or 0.89% to 11,513.39, Nikkei 225 slipped 45.67 points or 0.2% to 23,363.47, KOSPI fell 27.61 points or 1.3% to 2,090.99, Shanghai Composite declined 18.61 points or 0.64% to 2,871.08 and Straits Times trembled 13.62 points or 0.43% to 3,186.99. On the flip side, Jakarta Composite was up by 48.91 points or 0.82% to 6,001.97.