Markets trade lower amid surge in crude oil prices

Indian equity benchmarks made pessimistic start and are trading lower with cut of around quarter a percent each in early deals on Friday amid reports of surge in crude oil prices coupled with rupee hitting a near one-month low against the dollar. Some cautiousness came in with a private report indicating that India's real GDP growth would weaken further in Q3 of the financial year due to slow economic activity in the first two months of the second half and the GDP for FY20 could be around 4.5%. Adding more pessimism among market participants, think-tank Centre for Monitoring Indian Economy (CMIE) stated that India's unemployment rate increased to 7.7% in December, slightly higher than 7.48% reported in the previous month. However, downside remained capped with report that the Reserve Bank of India (RBI) on January 6 will carry a special simultaneous open market operation to buy and sell government bonds of Rs 10,000 crore each. Traders took note of Prime Minister Narendra Modi’s statement that agriculture has a key role to play in helping the country achieve its goal of becoming five trillion dollar economy and the government was focusing on formulating a cash crop and export-centric farming system.

On the global front, Asian markets were trading mostly in red, with some of the markets paring early gains as risk appetite waned on the prospects of heightened geopolitical tensions. Crude oil prices rose almost 3 percent in Asian trading following reports that a top Iranian military commander, Major General Qassem Soleimani, has been killed in a US drone strike in Baghdad.

Back home, metal stocks were in focus with India Ratings and Research’s (Ind-Ra) statement that domestic steel demand showed improvement in the third quarter of current fiscal year and can further pick up in the fourth quarter (January to March). Infrastructure stocks were buzzing as ratings agency ICRA maintained a cautious stance on the road sector, even as the government has decided to invest Rs 102 lakh crore from fiscal 2020-2025 in modernising infrastructure. In stock specific developments, Tata Steel and Tata Motors were down around a percent. Tata Sons has moved the Supreme Court seeking quashing of the NCLAT's decision directing the reinstatement of Cyrus Pallonji Mistry as executive chairman.

The BSE Sensex is currently trading at 41505.49, down by 121.15 points or 0.29% after trading in a range of 41480.47 and 41636.18. There were 7 stocks advancing against 23 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index declined 0.05%, while Small cap index was up by 0.30%.

The top gaining sectoral indices on the BSE were IT up by 0.99%, TECK up by 0.79%, Oil & Gas up by 0.35%, Realty up by 0.24% and Utilities was up by 0.17%, while Metal down by 0.86%, Bankex down by 0.65%, Auto down by 0.54%, Consumer Discretionary down by 0.39%, Basic Materials down by 0.39% were the top losing indices on BSE.

The top gainers on the Sensex were ONGC up by 3.28%, TCS up by 1.58%, HCL Technologies up by 0.97%, Infosys up by 0.78% and Tech Mahindra up by 0.50%. On the flip side, Asian Paints down by 1.65%, HDFC Bank down by 0.98%, Mahindra & Mahindra down by 0.86%, Tata Steel down by 0.86% and Hindustan Unilever down by 0.84% were the top losers.

Meanwhile, on a review of the current liquidity and market situation and an assessment of the evolving financial conditions, the Reserve Bank of India (RBI) has decided to conduct simultaneous purchase and sale of government securities under Open Market Operations (OMO) for Rs 10,000 crores each. It will conduct this simultaneous purchase and sale on January 06, 2020.

RBI said it reserves the right to decide on the quantum of purchase/sale of individual securities; accept bids/offers for less than the aggregate amount as well as purchase/sell marginally higher than the aggregate amount due to rounding-off effects.

The central bank may also accept or reject any or all the bid/offers either wholly or partially without assigning any reasons. It added that the eligible participants should submit their bids/offers in electronic format on the Reserve Bank of India Core Banking Solution (E-Kuber) system on January 06, 2020.

Recently, in the second special open market operation (OMO), the RBI had on December 30 bought Rs 10,000 crore of long-term government securities and sold Rs 8,501 crore of three short-term bonds. Though RBI offered to sell four securities in the auction, it accepted bids for three securities only.

The CNX Nifty is currently trading at 12235.70, down by 46.50 points or 0.38% after trading in a range of 12233.35 and 12263.55. There were 11 stocks advancing against 39 stocks declining on the index.

The top gainers on Nifty were TCS up by 2.23%, GAIL India up by 2.06%, ONGC up by 2.03%, HCL Technologies up by 1.37% and Wipro up by 1.13%. On the flip side, Zee Entertainment down by 2.40%, BPCL down by 1.97%, Eicher Motors down by 1.46%, Asian Paints down by 1.43% and JSW Steel down by 1.37% were the top losers.

Asian markets are trading mostly in red; Hang Seng decreased 48.41 points or 0.17% to 28,495.11, Taiwan Weighted dropped 38.90 points or 0.32% to 12,061.58, Straits Times trembled 16.66 points or 0.51% to 3,235.34 and Shanghai Composite declined 9.19 points or 0.3% to 3,076.01. On the flip side, KOSPI rose 0.52 points or 0.02% to 2,175.69 and Jakarta Composite was up by 21.66 points or 0.34% to 6,305.24.