Local equities continue choppy trade

Local equity benchmarks continued their choppy trade in morning deals with frontline gauges trading tad below their neutral lines owing to selling pressure in frontline blue-chip counters. HCL Tech, TCS and Hindustan Unilever were the prime losers among heavy-weights, pushing the Sensex lower. Trade remained choppy after IHS Markit’s report showed that India’s real GDP growth in 2019-20 fiscal is expected to be slightly below 5% as the impact of stimulus measures will take time to filter through to the economy. Traders also remain concerned with Former Reserve Bank of India (RBI) governor Raghuram Rajan’s statement that India is in the midst of a ‘growth recession’ with signs of deep malaise in the Indian economy that is being run through extreme centralisation of power in Prime Minister’s Office and powerless ministers. Market participants were cautious with a report that reversing their buying trend, foreign portfolio investors (FPI) turned net sellers in December with a net outflow of Rs 244 crore from the capital markets amid subdued economic data. However, traders took note of a report that India Inc.’s foreign borrowings grew over two-fold to $3.41 billion in October over the corresponding month a year ago, according to data from the Reserve Bank of India. Indian companies had raised $1.41 billion in borrowings from overseas markets in October 2018.

On the global front, Asian markets were trading mostly higher, after a senior Chinese official said negotiations for a phase-one trade deal with the US are progressing. Back home, Finance Minister Nirmala Sitharaman stated that there is a need to have credibility back in the government data even as casting aspersions on every data collected is not required.

The BSE Sensex is currently trading at 40403.84, down by 41.31 points or 0.10% after trading in a range of 40336.56 and 40536.42. There were 18 stocks advancing against 13 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index gained 0.31%, while Small cap index was down by 0.15%.

The top gaining sectoral indices on the BSE were Auto up by 1.59%, Metal up by 0.80%, Consumer Disc up by 0.65%, Basic Materials up by 0.36% and Power was up by 0.25%, while IT down by 0.80%, TECK down by 0.67%, FMCG down by 0.63%, Realty down by 0.37% and Telecom was down by 0.32% were the top losing indices on BSE.

The top gainers on the Sensex were Maruti Suzuki up by 3.12%, Yes Bank up by 2.41%, Tata Motors up by 2.38%, Vedanta up by 1.44% and Hero MotoCorp was up by 1.17%. On the flip side, HCL Tech down by 2.23%, TCS down by 1.76%, Hindustan Unilever down by 1.34%, Tech Mahindra down by 1.32% and Kotak Mahindra Bank was down by 0.56% were the top losers.

Meanwhile, amid India's economic growth slowed to a 6-year low of 4.5% in second quarter of current fiscal, former Reserve Bank of India (RBI) governor Raghuram Rajan has said India is in the midst of a growth recession with signs of deep malaise in the Indian economy that is being run through extreme centralisation of power in Prime Minister's Office and powerless ministers. In order to boost competition and improve domestic efficiency, he urged India to join free trade agreements judiciously.

He mentioned ‘to understand what has gone wrong, we need to start first with the centralised nature of the current government. Not just decision-making but also ideas and plans emanate from a small set of personalities around the Prime Minister and in the Prime Minister's Office (PMO). That works well for the party's political and social agenda, which is well laid out, and where all these individuals have domain expertise. It works less well for economic reforms, where there is less of a coherent articulated agenda at the top, and less domain knowledge of how the economy works at the national rather than state level.’

Meanwhile, he added that previous governments may have been untidy coalitions but they consistently took path of further economic liberalization. Besides, he said Indi’s construction, real estate and infrastructure sectors are in deep trouble and so are lenders to it like the non-bank finance companies. The crisis among shadow lenders and a build-up of bad loans at banks have curbed lending in the economy.

The CNX Nifty is currently trading at 11913.30, down by 8.20 points or 0.07% after trading in a range of 11888.05 and 11941.25. There were 28 stocks advancing against 22 stocks declining on the index.

The top gainers on Nifty were Maruti Suzuki up by 3.01%, Tata Motors up by 2.63%, Yes Bank up by 2.41%, Zee Entertainment up by 2.16% and Vedanta was up by 1.97%. On the flip side, HCL Tech. down by 2.32%, TCS down by 1.93%, Hindustan Unilever down by 1.55%, Tech Mahindra down by 1.36% and Bharti Infratel was down by 1.06% were the top losers.

Asian markets were trading mostly higher, Nikkei 225 surged 76.68 points or 0.33% to 23,431.08, Taiwan Weighted strengthened 51.70 points or 0.45% to 11,661.34, Jakarta Composite soared 6.45 points or 0.1% to 6,193.32, KOSPI rose 6.05 points or 0.29% to 2,087.90, Hang Seng increased 0.95 points to 26,499.32 and Straits Times was up by 0.45 points or 0.01% to 3,195.16. On the other hand, Shanghai Composite slipped 1.82 points or 0.06% to 2,910.19.