Weak global cues drag benchmarks lower in early deals

Prolonging southward journey for third consecutive day, Indian equity benchmarks have made a sluggish start on Thursday amid weak global cues. The US markets ended lower in the last session on Fed tapering concerns after lawmakers agreed on a way out of a budget impasse. Moreover, all the Asian equity markets were trading in the red at this point of time amid expectations the Federal Reserve may act sooner than later to unwind its stimulus after a provisional budget deal in Washington eased some of the fiscal drag on the US economy.

Back home, investors also remained concerned with Standard & Poor’s (S&P) statement that India’s sovereign rating could come under threat if the general election due next year threw up a hung Parliament or the government was unable to push through reforms. Also, India’s export growth slipped to a five-month low of 5.86 percent in November as shipments of petro-goods, pharma, automobile and gems and jewellery fell. On the currency front, the rupee is lower at 61.65/66 versus its previous close of 61.245/255 on Wednesday, boosted by weakness in local and regional shares.

On the sectoral front, power and consumer durables remained the only gainers, while metal, auto and banking remained the top losers on the BSE sectoral space. The broader indices too were struggling to get some traction, while the market breadth on the BSE was negative; there were 532 shares on the gaining side against 606 shares on the losing side while 59 shares remain unchanged.

The BSE Sensex opened at 21101.05; about 70 point lower compared to its previous closing of 21171.41, and has touched a high and a low of 21103.80 and 21004.89 respectively. The index is currently trading at 21032.30, down by 139.11 points or 0.66%. There were 4 stocks advancing against 26 declines on the index.

The overall market breadth has made a weak start with 44.80% stocks advancing against 50.04% declines. The broader indices were trading in green; the BSE Mid cap and Small cap indices up by 0.01% and 0.06% respectively. 

The top gaining sectoral indices on the BSE were, Power up by 0.11% and Consumer Durables up by 0.05%, while Auto down by 0.91%, Metal down by 0.90%, Bankex down by 0.83%, IT down by 0.65% and Teck down by 0.62% were the top losers on the sectoral index. 

The top gainers on the Sensex were Gail India up by 0.97%, Tata Power up by 0.76%, BHEL up by 0.49% and HDFC up by 0.20%. On the flip side, Tata Motors was down by 1.85%, Bajaj Auto was down by 1.51%, Bharti Airtel was down by 1.48%, ICICI Bank was down by 1.22% and Tata Steel was down by 1.15% were the top losers on the Sensex.

Meanwhile, amid rising concerns over the deteriorating macro-economic indicators of the country, the Reserve Bank of India (RBI) Governor Raghuram Rajan highlighted that the focus of the central bank will remain on inflation. Mentioning that growth in the country seemed to have stabilised, however, cautioned that it was too early to say that it had bottomed out. Indian wholesale price index (WPI) accelerated to eight-month high at 7% in the month of October on y-o-y basis. Rising inflation in the country has become a concern for the central bank, which has been continually raising the policy rates over the past few months in order to trim the inflation. Meanwhile, Indian economy grew at 4.8% in July- September quarter as against the four-year low figure of 4.4% in April-June quarter of current fiscal.

By adding further, Rajan underscored that Indian rupee has stabilised, but said there is no room for complacency and also suggested the government to continue its efforts to contain the fiscal deficit. The governor further reiterated that the central bank is also keen to strengthen debt markets by introducing more products and would introduce measures to improve liquidity and depth in government bonds, widely known as G-secs in India. Referring to the rising non-performing assets of the banks, the RBI governor proclaimed that loan defaults has become a problem and the central bank will take steps soon to make borrowing costlier, especially for uncooperative and willful defaulters.

The governor has also expressed the need to improve the financial system by clarifying monetary policy framework, strengthening the banking structure through new entry or bank expansion and broadening financial markets, among others. The RBI will soon introduce interest rate futures on 10-year government bonds and has also allowed exchanges to launch these derivatives in other smaller tenor securities in the future.

The CNX Nifty opened at 6,276.75; about 31 points lower as compared to its previous closing of 6,307.90, and has touched a high and a low of 6,286.85 and 6,254.50 respectively. The index is currently trading at 6,263.00, down by 44.90 points or 0.71%. There were 8 stocks advancing against 42 declines on the index.

The top gainers of the Nifty were Ranbaxy up by 0.94%, Gail up by 0.74%, Tata Power up by 0.52%, Lupin up by 0.37% and HDFC up by 0.33%. On the flip side, Ambuja Cements down by 2.05%, Tata Motors down by 1.81%, Bharti Airtel down by 1.65%, Bajaj-Auto down by 1.62% and ACC down by 1.54% were the major losers on the index.

The Asian equity indices were trading in red; Shanghai Composite dipped 2.33 points or 0.11% to 2,201.84, Hang Seng dropped 122.16 points or 0.52% to 23,216.08, Jakarta Composite shed 43.47 points or 1.02% to 4,228.27, KLSE Composite contracted 5.60 points or 0.30% to 1,837.22, Nikkei 225 tumbled 257.84 points or 1.66% to 15,257.22, Straits Times decreased 7.04 points or 0.23% to 3,053.70, Seoul Composite contracted 12.88 points or 0.65% to 1,965.09 and Taiwan Weighted was down by 62.85 points or 0.75% to 8,370.92.