Markets trade lower amid weakness in global stocks

Indian equity benchmarks made negative start on Wednesday amid a slide in global markets as optimism about early U.S. interest rate cuts ebbed ahead of the release of Federal Reserve minutes and jobs data. Domestic indices soon extended their losses and are trading lower with cut of around half a percent each in early deals. Traders were cautious amid crude oil price fluctuations as tensions are on a rise with Iran's deployment of a warship in the Red Sea in response to the US Navy destroying three Houthi boats. Investors also eyeing the Manufacturing PMI data to be released later in the day for more directional cues.  Meanwhile, the strike called by truck drivers’ association has been called off, following a meeting held between the representatives of the association and Union home ministry officials in New Delhi on January 02.

On the global front, Asian markets are trading in red, following the mostly negative cues from global markets overnight, as major currencies in the region were hit by a stronger US dollar. Technology stocks are bearing the brunt after Barclays cut the iPhone maker Apple's rating to underweight and trimmed its price target. The Japanese stock market is closed on Wednesday as the country continues to assess the damage from the earthquake that rocked the central region on New Year's Day.

Back home, sugar sector stocks are in focus after the National Federation of Cooperative Sugar Factories said Indian mills produced 11.21 million metric tons of sugar between October 1 and December 31, down 7.6% from the previous year, on lower production in key producing states Maharashtra and Karnataka. In stock specific development, Adani Group stocks traded in green ahead of the Supreme Court's hearing in the Hindenberg matter.

The BSE Sensex is currently trading at 71510.42, down by 382.06 points or 0.53% after trading in a range of 71494.13 and 71862.00. There were 6 stocks advancing against 24 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index fell 0.20%, while Small cap index was up by 0.17%.

The top gaining sectoral indices on the BSE were Utilities up by 1.67%, Power up by 1.34%, Oil & Gas up by 0.51%, FMCG up by 0.22% and Energy up by 0.10%, while Metal down by 2.05%, IT down by 1.78%, TECK down by 1.52%, PSU down by 0.65% and Auto down by 0.64% were the top losing indices on BSE.

The top gainers on the Sensex were ITC up by 0.85%, Bajaj Finserv up by 0.45%, Hindustan Unilever up by 0.24%, Reliance Industries up by 0.16% and Bharti Airtel up by 0.11%. On the flip side, JSW Steel down by 3.11%, Wipro down by 2.41%, Tata Steel down by 2.26%, Tech Mahindra down by 2.09% and Infosys down by 2.04% were the top losers.

Meanwhile, highlighting the India’s large and rapidly growing market, the Global Trade Research Initiative (GTRI) in its latest report has said everyone wants to do an FTA with India. Countries ranging from large economies like the US, Europe, Japan, and the UK to smaller ones like Oman, Peru, and Mauritius either already have or actively seeking an FTA with India. The main reason is India's high import duties, which make it difficult for these countries to access India's large and rapidly growing market. It said that by implementing a trade deal (FTA) with India, countries can access the Indian market with less or no import duties on substantial trade. This gives their companies an advantage over others in selling to the Indian market. Additionally, since India currently does most of its importing (over 75 per cent) from countries it does not have FTAs with, these agreements are particularly appealing as they offer a significant new market opportunity in India. 

However, it said that India may not see a big increase in exports from FTAs under negotiations. The countries with which India is negotiating trade agreements already have low import duties. GTRI Co-Founder Ajay Srivastava said ‘For example, the UK's duties are 4.1 per cent, Canada's 3.3 per cent, and the USA's 2.3 per cent. In contrast, India's import duties are higher at 12.6 per cent’. Also, a substantial share of imports from these nations are already happening at zero MFN (most favoured nation) duties. Canada's 70.8 per cent of imports are already happening at zero MFN duty. 

The same is the case with Switzerland (61 per cent), the US (58.7 per cent), the UK (52 per cent), EU (51.8 per cent). Srivastava added ‘In contrast, in India only 6.1 per cent of global imports are undertaken at zero MFN duty. Given this, India might not see a big increase in exports after these FTAs because these countries already have low or no import duties’. On the other hand, countries like the UK and Canada could benefit more from the FTAs, as they will be able to sell their products in India without the high duties that India usually imposes. 

The report suggested the government six steps while negotiating these deals and that includes creation of common exclusion list for merchandise trade negotiations; and focusing on obtaining real market access on the ground. The other suggestions include doing sectoral agreements with poor and developing countries instead of trade deals involving goods, services, and investments; and negotiate new subject areas such as environment, labor, data governance, digital trade, gender, small and medium enterprises, anti-corruption, and sustainable food systems, carefully.

The CNX Nifty is currently trading at 21574.55, down by 91.25 points or 0.42% after trading in a range of 21556.70 and 21677.00. There were 13 stocks advancing against 37 stocks declining on the index.

The top gainers on Nifty were Adani Enterprises up by 6.50%, Adani Ports & SEZ up by 5.01%, ITC up by 0.86%, Bajaj Finserv up by 0.58% and Eicher Motors up by 0.39%. On the flip side, JSW Steel down by 3.00%, Hindalco down by 2.80%, Wipro down by 2.39%, LTIMindtree down by 2.30% and Tata Steel down by 2.18% were the top losers.

Asian markets are trading lower; Taiwan Weighted slipped 303.23 points or 1.7% to 17,550.53, Hang Seng declined 205.1 points or 1.22% to 16,583.45, KOSPI dropped 52.13 points or 1.95% to 2,617.68, Jakarta Composite lost 27.62 points or 0.38% to 7,295.97, Straits Times fell 17.54 points or 0.54% to 3,212.41 and Shanghai Composite was down by 4.94 points or 0.17% to 2,957.34.