Benchmarks make pessimistic start on weak macro-economic data

Indian equity benchmarks made pessimistic start and are trading with cut of two tenth of a percent in early deals on Thursday on account of weak macro-economic data. India's retail inflation based on Consumer Price Index (CPI) spiked to 7.59 per cent for the month of January 2020 from 7.35 per cent in December 2019, due to costlier food products like vegetables, pulses and protein-rich items. Inflation in January is well above the Reserve Bank of India's (RBI) medium-term target of 4 per cent for the fourth straight month. Meanwhile, Industrial production contracted by 0.3 per cent in December 2019 as against 2.5 per cent growth in same month a year ago, weighed by a decline in the manufacturing sector. The IIP growth during April-December period of the current fiscal decelerated to 0.5 per cent from 4.7 per cent expansion in the same period of 2018-19. However, downside remained capped as traders took some solace with Chief Economic Advisor Krishnamurthy Subramanian’s statement that the coronavirus outbreak in China provides an opportunity for India to expand exports. India is one of China's leading trade partners in Asia and has a huge trade deficit with that country.

On the global front, Asian markets are trading mostly in red at this point of time as the number of new coronavirus outbreak victims soared in China. The US markets ended higher on Wednesday as investors concern over the coronavirus receded amid hopes the rate of infections is slowing.

Back home, Insurance related stocks remained in focus as the Cabinet approved the proposal for capital infusion and immediate release of Rs 2,500 crore for three public sector general insurance companies in the light of the critical financial position and breach of regulatory solvency requirements. In scrip specific developments, IRCTC traded jubilantly on strong Q3 numbers, while BHEL gained on signing MoU with Rosoboronexport.

The BSE Sensex is currently trading at 41472.95, down by 92.95 points or 0.22% after trading in a range of 41467.49 and 41709.30. There were 8 stocks advancing against 22 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index declined 0.21%, while Small cap index was up by 0.09%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 1.09%, IT up by 0.28%, Power up by 0.23%, PSU up by 0.22% and TECK was up by 0.21%, while Metal down by 0.63%, Auto down by 0.59%, Bankex down by 0.48%, Realty down by 0.41% and Capital Goods was down by 0.32% were the losing indices on BSE.

The top gainers on the Sensex were Titan Company up by 2.16%, SBI up by 1.98%, TCS up by 0.68%, Nestle up by 0.59% and Infosys up by 0.56%. On the flip side, HCL Tech down by 1.20%, Indusind Bank down by 1.19%, Kotak Mahindra Bank down by 1.15%, Maruti Suzuki down by 1.05% and Axis Bank down by 0.77% were the top losers.

Meanwhile, Chief Economic Advisor (CEA) Krishnamurthy Subramanian has said that the coronavirus outbreak in China provides an opportunity for India to expand exports and follow an export-driven model. He mentioned ‘it is very hard to say how this will manifest in terms of India's trade relations with China. If we go by the experience of SARS (outbreak), India was not affected that much.’ India is one of China's leading trade partners in Asia and has a huge trade deficit with that country.

He said China imports a lot of components, parts, assembles and integrates and then exports them. India has been following the same pattern in terms of mobile manufacturing in the country. So, if one looks from this perspective, it provides a good opportunity for India.

Besides, talking about GDP, Subramanian said the economic survey has projected it to be in the range of 6-6.5 per cent in the next fiscal. This has been done by collating many pieces of evidence using business cycles which prevailed in India. He added the Union Budget has laid emphasis on rural consumption and capital expenditure.  He further said ‘in any economy, you don't get growth rates that are constant. We need the average to be in that range’.

The CNX Nifty is currently trading at 12177.05, down by 24.15 points or 0.20% after trading in a range of 12171.60 and 12225.65. There were 15 stocks advancing against 35 stocks declining on the index.

The top gainers on Nifty were Yes Bank up by 3.98%, Zee Entertainment up by 2.50%, Titan Company up by 2.14%, SBI up by 2.09% and TCS up by 0.94%. On the flip side, Kotak Mahindra Bank down by 1.22%, Maruti Suzuki down by 1.13%, Indusind Bank down by 1.09%, HCL Tech down by 1.07% and Adani Ports &Special down by 0.99% were the top losers.

Asian markets are trading mostly in red; Hang Seng decreased 39.59 points or 0.14% to 27,784.07, Jakarta Composite lost 29.36 points or 0.5% to 5,883.72, Nikkei 225 slipped 25.78 points or 0.11% to 23,835.43, Shanghai Composite declined 15.55 points or 0.53% to 2,911.35 and Straits Times trembled 6.28 points or 0.19% to 3,217.09. On the flip side, KOSPI rose 5.76 points or 0.26% to 2,244.14 and Taiwan Weighted was up by 48.13 points or 0.41% to 11,822.32.