Markets trade flat with negative bias; Nifty below 11,100 mark

Indian equity benchmarks made a cautious start and are trading flat with negative bias in early deals on Wednesday. Sensex and Nifty are falling around 50 and 10 points, respectively. Besides, broader indices – BSE Midcap and Small cap are exhibiting mixed trend. Investors were cautious with Moody’s Investors Service’s statement that the economic measures announced by Finance Minister Nirmala Sitharaman are unlikely to provide some form of confidence and improve business sentiment and consumer sentiment. Moody’s, which has lowered India’s gross domestic product (GDP) forecast to 6.4% for FY20, said there is significant uncertainty in terms of the growth prospects both because of domestic as well as external factors. Traders were also concerned with a private report indicating that India’s economic growth momentum is expected to slip further as there is no quick fix solution for the structural issues that the economy is facing. It added that the lackluster growth in the Index of Industrial Production (IIP) is expected to prevail as the manufacturing sector is facing multiple challenges which will take time to get resolved.

On the global front, Asian markets were trading mostly in the green despite negative cues from Wall Street amid uncertainty about the US-China trade war and the inversion of a US Treasury yield curve to its worst level since 2007 that led to renewed concerns about a looming recession. Besides, Japan has officially removed South Korea from the whitelist of preferred trading partners on Wednesday. Meanwhile, Australia is scheduled to release second-quarter figures for construction work done.

Back home, on the sectoral front, banking stocks were in focus with global rating agency S&P’s report that given the weak credit demand from corporates and the lingering NBFC crisis, just announced recapitalisation of state-run banks will not deliver on the key objectives of higher lending and a recovering in their fortunes. In scrip specific development, Power Grid Corporation of India rose after a board of directors accorded investment approval for Transmission System for Solar Energy Zones in Rajasthan at an estimated cost of Rs 2578.47 crore with commissioning schedule as of December, 2020.

The BSE Sensex is currently trading at 37593.75, down by 47.52 points or 0.13% after trading in a range of 37527.12 and 37687.82. There were 15 stocks advancing against 16 stocks declining on the index.

The broader indices were trading mixed; the BSE Midcap index declined 0.01%, while the Small cap index was up by 0.26%.

The top gaining sectoral indices on the BSE were Utilities up by 0.82%, Healthcare up by 0.57%, IT up by 0.56%, Power up by 0.53% and TECK was up by 0.46%, while Metal down by 1.20%, Bankex down by 0.48%, Telecom down by 0.44%, Consumer Durables down by 0.43% and Energy was down by 0.20% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 2.54%, HCL Technologies up by 2.01%, Tata Motors – DVR up by 1.79%, Bajaj Auto up by 1.50% and Power Grid Corporation up by 1.07%. On the flip side, Tata Steel down by 2.01%, Maruti Suzuki down by 1.31%, Hindustan Unilever down by 1.16%, Kotak Mahindra Bank down by 1.05% and ONGC down by 0.91% were the top losers.

Meanwhile, amid raft of measures announced by the government to boost the sagging economic growth, Moody’s Investors Service has said these measures will provide some support to investors and business sentiments, and the acceleration of the capitalization of public sector banks to help improve the provision of credit and transmission of monetary policy easing. It said that the measures announced were an effort to stimulate slowing economic growth.

Though, it also said domestic and external headwinds to persist over the course of the year, resulting in 6.4% real Gross Domestic Product (GDP) growth in the fiscal year ending in March 2020. It added that growth rate will pick up next fiscal year to 6.8%. Recently, Moody’s had revised downwards India’s GDP growth forecast to 6.2% for 2019 calendar year from its previous estimation of 6.8%.

In order to revive growth momentum, the government had announced a raft of measures, including rollback of enhanced super-rich tax on foreign and domestic equity investors imposed in the Budget, exemption of startups from ‘angel tax’, a package to address distress in the auto sector and upfront infusion of Rs 70,000 crore to public sector banks. Also, it said Goods and Services Tax (GST) filing will be simplified further to meet the GSTN to remove further glitches in the system.

The CNX Nifty is currently trading at 11095.80, down by 9.55 points or 0.09% after trading in a range of 11077.80 and 11129.65. There were 24 stocks advancing against 26 stocks declining on the index.

The top gainers on Nifty were Cipla up by 2.03%, HCL Technologies up by 2.03%, Tata Motors up by 1.62%, GAIL India up by 1.54% and Power Grid Corporation up by 1.48%. On the flip side, Indiabulls Housing Finance down by 2.31%, Tata Steel down by 2.18%, JSW Steel down by 1.55%, Maruti Suzuki down by 1.41% and Hindustan Unilever down by 1.22% were the top losers.

Asian markets were trading mostly in green; Nikkei 225 gained 42.54 points or 0.21% to 20,498.62, Straits Times strengthened 3.36 points or 0.11% to 3,070.88, Hang Seng increased 13.68 points or 0.05% to 25,677.75, Taiwan Weighted rose 40.32 points or 0.39% to 10,427.55, Kospi advanced 11.90 points or 0.62% to 1,936.50 and Jakarta Composite inched up by 7.33 points or 0.12% to 6,285.50. On the flip side, Shanghai Composite was down by 9.49 points or 0.33% to 2,892.70.

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