Benchmarks trade lower in early deals; Realty, Metal lead losers

Indian equity benchmarks made negative start on Monday tracking muted cues from Asian peers. Markets are trading lower with around half a percent cut in early deals due to selling in Realty, Metal and Oil & Gas stocks. Investors’ sentiment remained weak as several states such as Delhi, Karnataka, and Maharashtra enforce new restrictions in view of rising Covid-19 cases. Traders were concerned with a private report as it has penciled in an 8.2 per cent GDP growth next fiscal, with more downside risks to the projection, warning that the New Year will be riskier than the previous two in terms of growth, inflation and the perils of monetary policy normalisation on consumption demand in particular, along with other external risks. Though, losses remained capped as a member of the Monetary Policy Committee (MPC) of the Reserve Bank, Jayanth R Varma expressed hope that in a few quarters from now, capital investment would begin to pick up even in the old economy, and said the next fiscal year is also expected to witness a decent growth. Traders may take note of report that the GST regime will see a host of tax rate and procedural changes coming into effect from January 1, including liability on e-commerce operators to pay tax on services provided through them by way of passenger transport or restaurant services.

On the global front, Asian markets traded mostly higher with muted gains in thin holiday trade as investors continued to fret over the economic impact of the Omicron coronavirus. China reported its highest daily rise in local Covid-19 cases in 21 months over the weekend as infections more than doubled in the northwestern city of Xian. Markets in Hong Kong remain closed for holidays.

Back home, fertilizer stocks were in focus as the government decided to make changes to the existing nutrient based subsidy (NBS) policy to promote domestic production of phosphatic and potassic (P&K) fertilisers amid a sharp rise in global prices. In scrip specific development, Adani Transmission traded higher as it won two projects, which will offer connectivity to crucial renewable energy projects in Gujarat and Tamil Nadu. Besides, HP Adhesives is set to make its market debut today. The IPO was subscribed 20.96.

The BSE Sensex is currently trading at 56797.73, down by 326.58 points or 0.57% after trading in a range of 56543.08 and 56975.08. There were 5 stocks advancing against 25 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index lost 0.68%, while Small cap index was down by 0.26%.

The only gaining sectoral indices on the BSE were Healthcare up by 0.34%, Power up by 0.08%, while Realty down by 1.73%, Metal down by 1.11%, Oil & Gas down by 0.93%, Energy down by 0.83%, Bankex down by 0.82% were the losing indices on BSE.

The top gainers on the Sensex were Power Grid Corp up by 1.35%, Mahindra & Mahindra up by 0.75%, Dr. Reddy's Lab up by 0.70%, Sun Pharma up by 0.36% and HDFC up by 0.21%. On the flip side, Indusind Bank down by 4.21%, Bajaj Finance down by 1.83%, Asian Paints down by 1.55%, Bajaj Finserv down by 1.32% and Maruti Suzuki down by 1.04% were the top losers.

Meanwhile, expressing hope that in a few quarters from now, capital investment would begin to pick up even in the old economy, a member of the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI), Jayanth R Varma has said ‘I am quite optimistic about the Indian economy and its growth prospects... The next year (2022-23) is also expected to witness decent growth’. He added that inflation is a matter of concern, but as of now it is the persistence of inflation rather than its level that is a matter of concern.

According to Varma, the pre-pandemic level of economic activity has already been surpassed, and the rest of this financial year should also see further recovery. He noted that calendar year 2021 saw dozens of new economy companies receive large funding both in private and public equity markets and these companies would have positive spillover effects into the rest of the economy as well. About the threat from the new Covid variant to the economy, he said the Omicron variant does create uncertainties, but he thinks the world is slowly beginning to live with the Covid-19 virus.

On high inflation, Varma pointed out that a few months ago, CPI inflation had breached the upper tolerance band of 6 per cent, but more recently, CPI has been well within the band. According to him, the worry is that inflation is not coming down to the 4 per cent target, and there is a risk of it stabilising at 5 per cent instead for too long a period. The rise in core inflation as well as WPI inflation suggest that CPI inflation may stay elevated well into 2022-23.

The CNX Nifty is currently trading at 16912.50, down by 91.25 points or 0.54% after trading in a range of 16833.20 and 16960.25. There were 7 stocks advancing against 43 stocks declining on the index.

The top gainers on Nifty were Cipla up by 1.44%, Mahindra & Mahindra up by 0.77%, Dr. Reddy's Lab up by 0.68%, Power Grid up by 0.44% and Sun Pharma up by 0.40%. On the flip side, Indusind Bank down by 4.28%, Bajaj Finance down by 2.04%, Eicher Motors down by 1.80%, Asian Paints down by 1.64% and Hindalco down by 1.46% were the top losers.

Asian markets are trading mostly in green; Straits Times added 2.74 points or 0.09% to 3,111.02, Taiwan Weighted rose 107.56 points or 0.60% to 18,069.20, Jakarta Composite gained 3.42 points or 0.05% to 6,566.32 and Shanghai Composite was up by 5.53 points or 0.15% to 3,623.58. However, Nikkei 225 fell 70.55 points or 0.25% to 28,712.04 and KOSPI lost 6.21 points or 0.21% to 3,006.22.