Markets trade lower amid weakness in Asian peers

Indian equity benchmarks made pessimistic start and were trading lower with cut of over one third of a percent each in early deals on Wednesday, as traders preferred to book profits amid weakness in Asian peers. Investors were eyeing Balance of Trade data for the month of December to be out later in the day. Some cautiousness came in with a private report that a spike in India's retail inflation in December has raised the chances that the Reserve Bank of India (RBI) will put rate cuts on hold for some time despite economic growth languishing at more than six-year lows. As per the report, the RBI's monetary policy committee (MPC) may even change its stance from accommodative to neutral at its February meeting. Traders took note of report that new FICCI President Sangita Reddy has urged the government not to worry too much about the fiscal deficit and try to pump the economy by increasing investments to arrest slowdown and accelerate growth. Meanwhile, the government may impose anti-dumping duty on a Chinese medicine used to treat different kind of bacterial infections with a view to guard domestic players from cheap imports.

Global cues remained lackluster with all the Asian markets were trading lower as investors awaited the signing of a phase one trade deal between the US and China later today. Sentiment was dampened after a private report indicating that despite the signing of the trade deal, tariffs on billions of dollars of Chinese goods are likely to remain in place until after the US presidential election in November. Meanwhile, the Bank of Japan said that the M2 money stock in Japan was up 2.7 percent on year in December, coming in at 1,041.6 trillion yen.

Back home, reality stocks were in focus with a joint report by Knight Frank-FICCI-Naredco stating that real estate sentiments in the country revived in December quarter and turned optimistic after two quarters on the back of several measures taken by the government and the RBI to boost demand. In stock specific development, Wipro trading in red on reporting 3.20% fall in its consolidated net profit at Rs 2,463.00 crore for third quarter ended December 31, 2019 as compared to Rs 2,544.50 crore for the same quarter in the previous year. Canara Bank fell as it decided to call-off the divestment process of its entire stake in Can Fin Homes, which was under progress.

The BSE Sensex is currently trading at 41787.39, down by 165.24 points or 0.39% after trading in a range of 41759.29 and 41969.86. There were 9 stocks advancing against 21 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index declined 0.14%, while Small cap index was up by 0.09%.

The gaining sectoral indices on the BSE were Realty up by 0.82%, Consumer Durables up by 0.56%, Consumer discretionary up by 0.07%, Energy up by 0.03% and Telecom was up by 0.02%, while Bankex down by 0.77%, Metal down by 0.62%, Basic Materials down by 0.60%, PSU down by 0.48% and IT was down by 0.46% were the top losing indices on BSE.

The top gainers on the Sensex were Titan Company up by 1.03%, Hero MotoCorp up by 0.88%, Sun Pharma Industries up by 0.46%, Tech Mahindra up by 0.41% and Nestle up by 0.39%. On the flip side, Indusind Bank down by 3.83%, Tata Steel down by 1.28%, Ultratech Cement down by 1.07%, SBI down by 1.02% and Infosys down by 0.96% were the top losers.

Meanwhile, with an aim to arrest India’s economic slowdown and accelerate growth, new Federation of Indian Chambers of Commerce and Industry (FICCI) President Sangita Reddy has urged the government not to worry too much about the fiscal deficit and try to pump the economy by increasing investments. She said ‘we need to infuse capital into the economy. The fact is that there is a slowdown of the GDP but to pump prime economy, adequate capital is really the need of the hour and therefore the preposition which we put forward is that we should not worry for a small expansion in fiscal deficit.’

She also said that the government should find a mechanism to infuse Rs 1.5 to Rs 2 lakh crore into the economy as it would help to spur consumption. With the slowdown in economic growth, the government will face difficulty in adhering to the fiscal deficit road map laid down in the FRBM Act. With the increased consumption or purchasing power of people, investments and the overall sentiment of the corporate India will improve and this will create a virtuous cycle, which grows the Gross Domestic Product (GDP).

Reddy further said the government has enough fiscal space to infuse money into the system because the fiscal deficit is still under control. She noted that one mechanism to do this would be to raise money from the RBI and added that the government should also simultaneously pursue disinvestment programme in a time-bound manner. Besides, the government aims to restrict the fiscal deficit to 3.3% of the GDP for the financial year ending March 2020. If there will be well articulated and executed plan, then the expansion in fiscal deficit will not affect India's ratings.

She highlighted that there is a need to focus on boosting exports. She said ‘we are only 1.7% of global trade and this is miniscule for country like India and we should ramp this up’. Exports during April-November 2019-20 dipped by about 2% to $212 billion. On ease of doing business, she said there is more work needs to done by reducing amount of regulation, and further simplification. She said ‘we have improved but definitely there is a more scope’.

The CNX Nifty is currently trading at 12305.30, down by 57.00 points or 0.46% after trading in a range of 12298.55 and 12350.30. There were 13 stocks advancing against 37 stocks declining on the index.

The top gainers on Nifty were Titan Company up by 1.36%, Bharti Infratel up by 0.61%, Hero MotoCorp up by 0.52%, Kotak Mahindra Bank up by 0.46% and Bajaj Finance up by 0.39%. On the flip side, Indusind Bank down by 4.04%, Yes Bank down by 3.76%, Wipro down by 3.01%, BPCL down by 1.99% and SBI down by 1.62% were the top losers.

All Asian markets are trading lower; KOSPI fell 8.93 points or 0.4% to 2,229.95, Jakarta Composite lost 11.33 points or 0.18% to 6,314.08, Straits Times trembled 12.61 points or 0.39% to 3,257.93, Shanghai Composite declined 20.50 points or 0.66% to 3,086.32, Taiwan Weighted dropped 74.79 points or 0.61% to 12,105.02, Nikkei 225 slipped 131.01 points or 0.55% to 23,894.16 and Hang Seng was down by 246.19 points or 0.85% to 28,638.95.