Markets trade tad lower in early deals

Indian equity benchmarks made slightly negative start of holiday-shortened week as investors turned cautious ahead of the Christmas Festival. Markets were trading tad lower in early deals on Monday led by selling pressure in index heavy weights Reliance Industries and Bharti Airtel. Sentiments were dampened as Fitch Ratings cut its growth forecast for India to 4.6% for the current financial year (FY20) from the previous estimation of 5.6%. Some cautiousness also came in with Assocham president Niranjan Hiranandani’s statement that the economy is facing a liquidity problem and demand recession, and it requires measures to lift consumption, including reduction in goods and services tax and personal income tax and improved credit flow, to revive. However, down side remained capped with report that the foreign portfolio investors seem to have flocked to the Indian capital market in a big way in 2019 with a net inflow of over Rs 1.3 lakh crore, including Rs 97,250 crore in equities -- the highest in last six years.

On the global front, Asian markets were trading mixed amid thin trade ahead of the Christmas holiday. Back home, banking stocks were in focus as the Reserve Bank of India (RBI) conducts a special open market operation to bring down long-term yields. In stock specific development, Wipro gained on partnering with the National Association of Software and Services Companies (NASSCOM) to launch the FutureSkills platform for 10,000 students from over 20 engineering colleges in India. Meanwhile, Titan Company, UltraTech Cement, Nestle India were included in BSE Sensex with effect from December 23. On the other side, Tata Motors, Tata Motors DVR, Vedanta and Yes Bank were removed from the index.

The BSE Sensex is currently trading at 41631.58, down by 49.96 points or 0.12% after trading in a range of 41525.85 and 41701.62. There were 19 stocks advancing against 11 stocks declining, while 1 stock remains unchanged on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.22%, while Small cap index was up by 0.10%.

The top gaining sectoral indices on the BSE were Metal up by 0.95%, Basic Materials up by 0.79%, Consumer Durables up by 0.72%, IT up by 0.38% and Realty up by 0.36%, while Energy down by 1.06%, Telecom down by 0.79% and Utilities was down by 0.20% were the few losing indices on BSE.

The top gainers on the Sensex were Titan Company up by 1.61%, Tata Steel up by 0.83%, Kotak Mahindra Bank up by 0.83%, Ultratech Cement up by 0.77% and ONGC up by 0.68%. On the flip side, Reliance Industries down by 1.90%, Bharti Airtel down by 0.66%, Nestle down by 0.56%, Bajaj Auto down by 0.44% and HDFC Bank down by 0.32% were the top losers.

Meanwhile, expressing cautiousness over India’s fiscal condition, the International Monetary Fund’s (IMF) Chief Economist Gita Gopinath has said the country needs to keep its fiscal deficit target, which would require expenditure rationalisation and increased revenue mobilisation. She said that in the past few quarters, there has been a steep slowdown in private sector demand and there is now weakness in investment. She highlighted that if there is a prolonged weakness in investment, it will affect potential growth.

For India, she said macro stability is very important, which means stability on the fiscal front. A clear sense of keeping to the target of fiscal consolidation is very important. That would require increasing revenue mobilisation and also rationalising expenditure. She further said that ‘when we talk about fiscal consolidation, we think of it as a medium-term target which is something that has to be addressed over a period of time and not necessarily overnight’.

Gopinath also said India’s consolidated deficit (the Centre and states combined) is the highest among the G20 nations. She added that ‘so, it’s not a free lunch and this has be very carefully managed’ and it is also important for India to undertake reforms. But, to be able to do this, some clarity, greater clarity and greater certainty would help, she said that this is also applied to big reforms like the goods and services tax (GST). On increasing share of the manufacturing sector, she said another set of big reforms are required to get manufacturing on the ground and for India to have bigger presence on the export front.

The CNX Nifty is currently trading at 12261.45, down by 10.35 points or 0.08% after trading in a range of 12229.30 and 12284.00. There were 30 stocks advancing against 20 stocks declining on the index.

The top gainers on Nifty were Zee Entertainment up by 2.39%, UPL up by 2.17%, BPCL up by 1.81%, Vedanta up by 1.39% and JSW Steel up by 1.36%. On the flip side, Reliance Industries down by 2.03%, Bharti Infratel down by 1.15%, GAIL India down by 0.54%, Bharti Airtel down by 0.51% and Nestle down by 0.43% were the top losers.

Asian counters are trading mixed; Taiwan Weighted strengthened 25.56 points or 0.21% to 11,984.64, Nikkei 225 surged 25.18 points or 0.11% to 23,841.81, Hang Seng increased 17.77 points or 0.06% to 27,889.12 and Jakarta Composite soared 0.36 points or 0.01% to 6,284.73. On the flip side, KOSPI fell 3.21 points or 0.15% to 2,200.97, Straits Times trembled 5.55 points or 0.17% to 3,206.84 and Shanghai Composite was down by 14.23 points or 0.47% to 2,990.71.