Weak trade persist in late afternoon session

Indian benchmark indices continued to display weakness in late afternoon session, following sluggish opening in European markets coupled with heavy selling pressure in metal, healthcare  and capital goods stocks. The laggards that pulled down the indices were Lupin, ICICI Bank, Sun Pharma and Hindalco. Dr. Reddy’s remained the biggest loser among Sensex components by slumping 5.86% after the company reported over 57% drop in Q1FY18 net profit. Some concerns also came with Petroleum Planning Analysis Cell’s (PPAC) data that India’s crude oil import bill is expected to increase 23% in the current fiscal year. However, the broader markets showed some fervor and traded with notable gains, performing better than their larger peers. Investors paid no heed towards the S&P Ratings latest report that large Indian corporates’ revenues are expected to witness growth of around 10% annually over next 2 fiscal years.

On the global front, European markets were trading in red after US tech shares retreated from recent highs and investors reacted to a deluge of earnings reports. Asian markets were also trading in red. Back home, in scrip specific development, Dish TV India was trading higher after the company received National Company Law Tribunal (NCLT) approval for merger with Videocon D2h, paving the way for creation of country's largest direct-to-home service provider. The merged entity would have a subscriber base of over 27.2 million, creating the largest DTH service provider in the industry.

The BSE Sensex is currently trading at 32234.14, down by 149.16 points or 0.46% after trading in a range of 32104.66 and 32381.36. There were 6 stocks advancing against 25 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.35%, while Small cap index was up by 0.14%.

The only gaining sectoral indices on the BSE were IT up by 0.88% and TECK up by 0.61%, while Metal down by 1.76%, Healthcare down by 1.62%, Capital Goods down by 0.96%, Bankex down by 0.87% and Basic Materials down by 0.84% were the top losing indices on BSE.

The top gainers on the Sensex were HDFC up by 3.22%, Infosys up by 2.39%, Adani Ports & SEZ up by 0.85%, Kotak Mahindra Bank up by 0.48% and Maruti Suzuki up by 0.42%. On the flip side, Dr. Reddy’s Lab down by 5.86%, Lupin down by 4.17%, ICICI Bank down by 3.79%, Sun Pharma down by 3.12% and Larsen & Toubro down by 2.12% were the top losers.

Meanwhile, large Indian corporates’ revenues are expected to witness growth of around 10 per cent annually over next 2 fiscal years. Global credit rating agency, Standard & Poor's (S&P) ratings in its latest report has said that the credit quality of top corporates which is on the path of recovery is likely to improve over the next two years and will lead to revenue growth.

The report based on ‘the analysis of top 100 companies according to market capitalisation’ said that the corporates’ profitability will also be supported by rising demand and moderate inflation. It further noted that growth trends are reversing in India’s corporate field, as commodity focused sectors set to grow faster than export-focused industries such as information technology and pharmaceuticals and heavy industries’ progress is also likely to be more pronounced. However, S&P found that asset-light industries will face headwinds.

S&P expects the oil and gas sector to maintain its vastly improved EBITDA margins, while telcos are likely to see a compression in margins due to intense competition. It further noted that the key for deleveraging is to keep the debt levels under check through low capex as demand is still elusive. The report also sees increasing consolidation in domestic focused sectors, asset sales in infrastructure & power utilities and outbound acquisitions in export-focused sectors over the next two years.

The CNX Nifty is currently trading at 9986.00, down by 34.55 points or 0.34% after trading in a range of 9944.50 and 9999.35. There were 15 stocks advancing against 35 stocks declining on the index, while 1 stock remained unchanged.

The top gainers on Nifty were HDFC up by 3.59%, Infosys up by 2.58%, Yes Bank up by 2.42%, Indiabulls Housing Finance up by 1.43% and Tech Mahindra up by 1.26%. On the flip side, Dr. Reddy’s Lab down by 5.80%, Lupin down by 4.08%, ICICI Bank down by 3.74%, Sun Pharma down by 2.94% and Hindalco down by 2.64% were the top losers.

Asian markets were trading mostly in red; Hang Seng decreased 151.78 points or 0.56% to 26,979.39, Nikkei 225 decreased 119.8 points or 0.6% to 19,959.84, Taiwan Weighted decreased 85.32 points or 0.81% to 10,423.05, KOSPI Index decreased 42.25 points or 1.73% to 2,400.99, Jakarta Composite decreased 4.27 points or 0.07% to 5,815.48 and FTSE Bursa Malaysia KLCI decreased 1.03 points or 0.06% to 1,769.04. On the flip side, Shanghai Composite increased 3.46 points or 0.11% to 3,253.24.

All European markets were trading in red; Germany’s DAX decreased 84.82 points or 0.69% to 12,127.22, France’s CAC decreased 70.64 points or 1.36% to 5,116.31 and UK’s FTSE 100 decreased 41.31 points or 0.56% to 7,401.70.