Sensex, Nifty open lower due to profit booking after recent rally

Indian equity benchmarks made negative start on Tuesday after hitting life highs in previous two consecutive sessions, amid weakness in Asian counterparts. The record-breaking rally got hit on geopolitical fears as Yemen's Houthis struck a US ship in the Red Sea in response to air strikes on their targets. Sensex and Nifty are trading lower with marginal cut as investors booked some of their profits after recent rally. However, broader indices -- BSE Mid & Small cap -- traded in green amid foreign fund inflows. Foreign institutional investors (FIIs) bought shares worth Rs 1,085.72 crore on January 15, provisional data from the NSE showed. 

Traders took note of report that India’s trade deficit in December narrowed to a three-month low of $19.8 billion amid an import slowdown due to falling commodity prices. Data released by the commerce department showed that merchandise exports during the month grew 0.97 per cent over a year earlier to $38.45 billion, while merchandise imports grew 8.45 per cent to $58.25 billion. 

On the global front, most of the Asian markets are trading lower as the US dollar strengthens against most currencies in the region. Traders also cautiously await the first monetary policy decisions of the year from major global central banks. Back home, oil & gas sector stocks are in focus as India cut its windfall tax on petroleum crude to 1,700 rupees ($20.53) a tonne from 2,300 rupees a tonne. In stock specific development, Jio Financial fell after reporting 56 per cent Q-o-Q fall in its Q3 profit.

The BSE Sensex is currently trading at 73172.15, down by 155.79 points or 0.21% after trading in a range of 73101.01 and 73336.36. There were 16 stocks advancing against 14 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.10%, while Small cap index was up by 0.28%.

The top gaining sectoral indices on the BSE were Metal up by 0.57%, Basic Materials up by 0.32%, Industrials up by 0.31%, Oil & Gas up by 0.25% and PSU up by 0.24%, while IT down by 0.90%, TECK down by 0.69%, Realty down by 0.59%, Power down by 0.55% and Utilities down by 0.47% were the top losing indices on BSE.

The top gainers on the Sensex were Bajaj Finance up by 1.24%, Tata Motors up by 1.19%, Bharti Airtel up by 0.88%, Maruti Suzuki up by 0.71% and Asian Paints up by 0.66%. On the flip side, HCL Technologies down by 2.37%, Wipro down by 1.65%, Tech Mahindra down by 1.31%, NTPC down by 0.90% and Sun Pharma down by 0.69% were the top losers.

Meanwhile, amid the Red Sea crisis, Indian exporters are holding their consignments due to increasing shipping costs. Commerce Secretary Sunil Barthwal has said that the government provided a cushion to exporters by asking the ECGC not to increase the export credit interest rates. State-owned ECGC is an export promotion organisation, seeking to improve the competitiveness of Indian exports by providing them with credit insurance covers. He added ‘To that extent, we are going to give that kind of comfort to our exporters’. 

He further said that ‘if the demand is robust in Western countries, Indian exports will grow. India’s competitor nations are also facing higher costs due to the crisis. Therefore they are as less competitive as we are. It fairly balances everybody. So ultimately it (exports growth) will depend upon demand over there (in the Western world)’. The crisis is impacting shipping lines and containers and due to this, freight rates are high. He noted ‘It is a global issue, it is not an India-specific issue. A lot of commodities move from the eastern side to the western from the Suez Canal. Everybody is concerned about it, looking into it and trying to help each other. So let us see how this global cooperation works out’. 

The situation around the Bab-el-Mandeb Strait, a crucial shipping route connecting the Red Sea and the Mediterranean Sea to the Indian Ocean, has escalated due to recent attacks by Yemen-based Houthi militants. Due to these attacks, the shippers are taking consignments through the Cape of Good Hope, resulting in delays of almost 14-20 days and also higher freight and insurance costs. The secretary said that export promotion councils have been asked to immediately brief the government on any major issue faced by them but so far they have not given any ‘serious’ feedback. 

During December-January, the exporters normally face higher congestion surcharge due increased traffic on seas but this time the increase has been much more. On January 17 an inter-ministerial meeting has been called on the Red Sea issue that will see the participation of the Ministry of External Affairs, Commerce, Shipping, Defence and Department of Financial Services. Post that, another meeting with the exporters has been planned. 

Around 80 per cent of India’s merchandise trade with Europe passes through the Red Sea and substantial trade with the US also takes this route. Both these geographies account for 34 per cent of the country’s total exports. The Red Sea strait is vital for 30 per cent of global container traffic and 12 per cent of world trade. About 95 per cent of the vessels have rerouted around Cape of Good Hope adding 4,000-6,000 nautical miles and 14-20 days to journeys.

The CNX Nifty is currently trading at 22071.65, down by 25.80 points or 0.12% after trading in a range of 22029.20 and 22088.20. There were 28 stocks advancing against 22 stocks declining on the index.

The top gainers on Nifty were Bajaj Finance up by 1.06%, Bharti Airtel up by 1.06%, Tata Motors up by 1.00%, Maruti Suzuki up by 0.79% and BPCL up by 0.77%. On the flip side, HCL Technologies down by 2.47%, Wipro down by 1.38%, LTIMindtree down by 1.21%, Tech Mahindra down by 1.12% and Sun Pharma down by 0.74% were the top losers.

Asian markets are trading mostly in red; Hang Seng declined 311.94 points or 1.92% to 15,904.39, Nikkei 225 slipped 222.67 points or 0.62% to 35,679.12, Taiwan Weighted lost 116.12 points or 0.66% to 17,430.70, KOSPI dropped 18.09 points or 0.72% to 2,507.90, Shanghai Composite weakened 17.99 points or 0.63% to 2,868.30 and Straits Times fell 8.12 points or 0.25% to 3,191.30, while Jakarta Composite was up by 38.2 points or 0.53% to 7,262.20.