Pessimism continues on Dalal Street in early noon deals

Bearish momentum continued on Dalal Street with all the sectoral indices on BSE were trading in red, barring software and technology. Sentiments remain dampened since beginning as the spread of coronavirus outside China spooked global markets. Traders also remain worried with think tank National Council of Applied Economic Research (NCAER) in its latest report has pegged the India’s economic growth at 4.9 per cent for the current fiscal (FY20). Traders took note of Employees' Provident Fund Organisation’s ‘Provisional Estimate of Net Payroll’ data showing that India created 1008600 new jobs in the month of December 2019 as against revised figure of 1009238 in November 2019. On the sectoral front, shares of metal companies remained under pressure as international concern about the spread of coronavirus outside China grew.

The BSE Sensex is currently trading at 40825.71, down by 344.41 points or 0.84% after trading in a range of 40673.38 and 41037.01. There were 6 stocks advancing against 24 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index declined 0.27%, while Small cap index was down by 0.28%.

The only gaining sectoral indices on the BSE were IT up by 0.69% and TECK up by 0.27%, while Metal down by 3.21%, Telecom down by 1.81%, Auto down by 1.73%, Healthcare down by 1.23% and Basic Materials down by 1.10% were the top losing indices on BSE.

The top gainers on the Sensex were Infosys up by 1.04%, Tech Mahindra up by 1.02%, TCS up by 0.82%, Ultratech Cement up by 0.43% and SBI up by 0.37%. On the flip side, Tata Steel down by 3.35%, Maruti Suzuki down by 2.95%, ONGC down by 2.72%, HDFC down by 1.99% and ICICI Bank down by 1.94% were the top losers.

Meanwhile, expressing need to shift from pro-crony to pro-business policies, Chief Economic Advisor (CEA) Krishnamurthy Subramanian stated that India has some distance to go in terms of enabling that fully. He added that it will be pro-business policies that will enable the ‘invisible hands of the market’ and also take the country to the $5-trillion gross domestic product (GDP) goal. He said pro-business policies are those that enable fair competition in the country. On the other hand, pro-crony policies just help incumbents and that is something that we have to stay away from in enabling the invisible hands of the market.’

Subramanian said after the Comptroller and Auditor General (CAG’s) report on telecom spectrum allocations came out in 2011, investor returns from connected companies, a euphemism for crony firms, had been very low as compared to the broader indices. He further said the problem with cronyism is that it is not a better business model, and added that one should always aim for ‘creative destruction’ where incumbents were challenged. He also made a strong case for not depending only on recent work in economics to make policy choices and neglecting age-old texts like the Arthashastra.

Pointing out to the recent Economic Survey, he said over 40 million well-paying jobs could be created in the country by 2025 by focusing on assembling for the world, and the same could go up to 80 million by 2030. About the Budget’s thrust on imposing tariffs on certain sectors and how it has been criticised as being protectionist by some, Subramanian said ‘we needed to make a distinction between duties that are imposed on finished products against those on raw materials or intermediate goods, which hurt exports.’

The CNX Nifty is currently trading at 11968.90, down by 111.95 points or 0.93% after trading in a range of 11923.85 and 12012.55. There were 9 stocks advancing against 41 stocks declining on the index.

The top gainers on Nifty were Infosys up by 1.14%, Tech Mahindra up by 1.10%, TCS up by 0.72%, Wipro up by 0.57% and BPCL up by 0.39%. On the flip side, JSW Steel down by 4.24%, Vedanta down by 4.14%, Hindalco down by 3.87%, Tata Steel down by 3.54% and Maruti Suzuki down by 2.94% were the top losers.

Asian markets were trading mostly in red; Hang Seng decreased 470.58 points or 1.72% to 26,838.23, Taiwan Weighted dropped 151.48 points or 1.30% to 11,534.87, KOSPI fell 83.80 points or 3.87% to 2,079.04 and Straits Times trembled 30.07 points or 0.95% to 3,150.96. Jakarta Composite decreased 83.70 points or 1.42 % to 5,798.56 and Shanghai Composite dropped 8.44 points or 0.28% to 3,031.23.