Markets trade deep in red amid geopolitical tensions

Indian equity benchmarks made gap-down opening on Monday and are trading deep in red with losses of over a percent each in early deals tracking a global selloff amid US-Iran tensions. Sensex and Nifty fell below their crucial 41,000 and 12,100 levels, respectively. Investors were also eyeing Services Purchasing Managers Index (PMI) for the month of December to be out later in the day. Some cautiousness came in with apex exporters’ body FIEO’s statement that further escalation in the tension between the US and Iran will have implications on India’s exports to the Persian Gulf nation. Adding more concern among market participants a report said that foreign portfolio investors (FPIs) began the year with profit booking as they withdrew a net sum of Rs 2,418 crore from the Indian capital markets in the first three trading sessions of January. However, traders overlooked the Reserve Bank of India’s (RBI) data showing that the country's foreign exchange reserves swelled by $2.520 billion to touch a record high of $457.468 billion in the week to December 27. Meanwhile, former union minister Suresh Prabhu said that India needs to strengthen its manufacturing capacity and produce quality products that will help the country achieve the $5 trillion economy target by 2025.

On the global front, Asian markets were trading mostly lower following the negative cues from Wall Street Friday amid heightened geopolitical tensions in the Middle East after a US airstrike killed Iranian military commander Qassem Soleimani last week. Iran has vowed to retaliate in revenge for Soleimani's death and said it will no longer abide by the limits on uranium enrichment contained in the 2015 nuclear deal.

Back home, IT stocks gained as rupee continued its downward journey and fell by 25 paise to 72.05 against the US currency on Monday. On the other hand, oil marketing companies fell as oil prices jumped nearly 2 percent today to extend gains from the previous session after US President Donald Trump issued a threat to impose sanctions on Iraq amid escalating tensions with Iran in the Middle East. In stock specific development, Indian Overseas Bank jumped as it received capital infusion of Rs 4,360 crore from the government.

The BSE Sensex is currently trading at 40992.98, down by 471.63 points or 1.14% after trading in a range of 40949.18 and 41378.34. There were 4 stocks advancing against 26 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index declined 1.72%, while Small cap index was down by 1.77%.

The only gaining sectoral indices on the BSE were IT up by 0.33% and TECK was up by 0.21%, while Metal down by 2.23%, PSU down by 2.20%, Power down by 2.15%, Basic Materials down by 1.87% and Utilities was down by 1.82% were the top losing indices on BSE.

The few gainers on the Sensex were Titan Company up by 1.58%, TCS up by 0.81%, Infosys up by 0.48% and HCL Technologies up by 0.26%. On the flip side, SBI down by 2.85%, Asian Paints down by 2.38%, Power Grid Corporation down by 2.25%, Maruti Suzuki down by 2.15% and Mahindra & Mahindra down by 2.03% were the top losers.

Meanwhile, with an aim to further improve India's ranking in the World Bank's ease of doing business index, the Department for Promotion of Industry and Internal Trade (DPIIT) has prepared a blueprint with a focus on six parameters, including enforcing contracts and starting a business. It is also following reform activities in Kolkata and Bengaluru as these two cities are included by the World Bank this year besides Delhi and Mumbai for preparing the ease of doing business report, with a view to provide a holistic picture of business environment in India.

The six parameters where the department is focusing are: enforcing contracts (163rd), resolving insolvency (52nd), starting a business (136th), registering property (154th), paying taxes (115th) and trading across borders (68th). The bank has added a new parameter government contracting, taking the total number of criteria to 11. The government will share with the World Bank reform activities undertaken for ease of doing business (EoDB) in May-June this year. Besides, India has jumped 14 places to rank 63rd out of 190 countries in the World Bank's Doing Business 2020 report on account of significant improvement in resolving insolvency and obtaining construction permits.

Under enforcing contracts, the focus will be on reducing time taken in disposal of cases and improve on quality index of judicial process and increasing awareness regarding electronic case management tool facility for judges and lawyers. Similarly under the 'registering property' criterion, the focus would be on land titling legislation by all the four cities, land records to reflect actual ownership, and timely disposal of property disputes. The interventions listed for 'starting a business' include integrated registration for ESIC, EPFO, GST, profession tax with company registration.

The CNX Nifty is currently trading at 12083.00, down by 143.65 points or 1.17% after trading in a range of 12069.10 and 12179.10. There were 3 stocks advancing against 47 stocks declining on the index.

The few gainers on Nifty were Titan Company up by 1.37%, TCS up by 0.51% and Wipro up by 0.22%. On the flip side, SBI down by 3.27%, Coal India down by 2.76%, Hindalco down by 2.45%, Yes Bank down by 2.44% and Asian Paints down by 2.38% were the top losers.

Asian markets are trading mostly in red; Nikkei 225 slipped 455.78 points or 1.93% to 23,200.84, Hang Seng decreased 189.94 points or 0.67% to 28,261.56, Taiwan Weighted dropped 134.17 points or 1.11% to 11,976.26, Jakarta Composite lost 34.16 points or 0.54% to 6,289.31, KOSPI fell 20.52 points or 0.94% to 2,155.94 and Straits Times trembled 16.49 points or 0.51% to 3,222.33. On the flip side, Shanghai Composite gained 18.19 points or 0.59% to 3,101.98.