Benchmarks erase gains to trade in red

Indian equity benchmarks erased gains and entered into negative terrain in the morning session on account of selling in frontline blue chip counters. The rupee opened higher against dollar on account of selling of American currency by banks and exporters. The market took a beating on report that Foreign Portfolio Investors (FPI) have pulled out more than Rs 7,300 crore from the equity markets this month so far as they flee to safe haven assets amid geopolitical tensions and some domestic concerns. Some pessimism also crept in on report that as many as 322 infrastructure projects worth Rs 150 crore or above each have seen cost overrun of Rs 1.71 lakh crore due to delays and other reasons by March 2017. Separately, according to the RBI data during the week to August 4, there was an incremental credit de-growth of Rs 1.1 trillion. This comes after a record low full year credit growth in FY17 when credit growth slipped to the lowest in the past six decades at 5.1%. This was the lowest since fiscal 1953 when it grew a tepid 1.8%.

The downside was, however, arrested on reports that the government and RBI are in talks to shore up public sector bank capital in a time-bound manner due to the higher provisioning burden on these lenders. These measures could include a combination of capital raising from the market, dilution of government holding, additional capital infusion by the government, mergers based on strategic decision and sale of non-core assets. Separately, the government is also looking to set up a new mechanism to speed up decisions on possible mergers among state-run lenders in order to push consolidation in the public sector banking space.

Traders were seen piling up position in Metal, Basic Materials and Telecom stocks, while selling was witnessed in IT, Healthcare and TECK sector stocks. In scrip specific development, Infosys was trading in red after a foreign brokerage firm maintained ‘underperform’ call on the stock. The research house sees significant senior level departures over next six months till new CEO is found and also sees downside risks to guidance for FY18/19. Separately, at least three US-based law firms sent out statements saying they would initiate class-action lawsuits against Infosys for unlawful business practices, an exercise that is not uncommon with US-listed companies every time they go through a change, especially in the case of mergers and acquisitions.

On the global front, Asian markets were trading mostly in red, as US-South Korea joint military drills kicked off and a key meeting of global central bankers loomed. Confidence at Japanese manufacturers rose in August to its highest level in a decade led by producers of industrial materials, in a further sign of broadening economic recovery. Back home, the BSE Sensex and NSE Nifty were trading below the psychological 31,500 and 9,850 levels respectively. The market breadth on BSE was positive in the ratio of 1146:946, while 100 scrips remained unchanged.

The BSE Sensex is currently trading at 31477.63, down by 47.05 points or 0.15% after trading in a range of 31477.07 and 31641.81. There were 14 stocks advancing against 17 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index was down by 0.17%, while Small cap index was up by 0.03%.

The top gaining sectoral indices on the BSE were Metal up by 1.40%, Basic Materials up by 0.50%, Telecom up by 0.44%, Oil & Gas up by 0.43% and Bankex up by 0.31%, while IT down by 0.87%, Healthcare down by 0.81%, TECK down by 0.71%, Realty down by 0.47% and Power down by 0.25% were the losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 1.31%, ONGC up by 1.21%, ICICI Bank up by 1.07%, Coal India up by 1.07% and Bharti Airtel up by 0.83%.

On the flip side, Infosys down by 2.97%, Cipla down by 1.53%, Lupin down by 1.37%, Tata Motors down by 1.26% and Sun Pharma down by 1.22% were the top losers.

Meanwhile, showing a worrying state of affairs for the Indian infra sector, a flash report by the Ministry of Statistics and Programme Implementation (MoSPI) has stated that as many as 322 infrastructure projects, each worth Rs 150 crore or above, have seen a total cost overrun of Rs1.71 lakh crore by March 2017. The report said that total original cost of implementation of the 1,231 projects was Rs15,59,571.06 crore and their anticipated completion cost is likely to be Rs. 17,31,162.47 crore, which reflects overall cost overruns of Rs. 1,71,591.41 crore (11 per cent of original cost).

As per the flash report which provides details on the status of the 1,231 central infrastructure projects that cost Rs. 150 crore and above, as of March 2017, 9 were ahead of schedule, 324 were on schedule, 327 were delayed and 322 projects showed cost overrun. It said that 105 projects showed both time and cost overrun with respect to original implementation schedules. The report attributed the time overrun to a host of issues including delay in land acquisition, forest clearance, supply of equipment, funds constraints, the Maoist incursion, legal cases and law and order situation for the cost overrun.

The report however said that the number of delayed projects decreases to 233 if delay is calculated with reference to latest revised schedule of completion. Out of 327 delayed projects, 63 projects have overall delay in the range of 1 to 12 months, 67 projects have delay in the range of 13 to 24 months, 119 projects have delay in the range of 25 to 60 months and 78 projects have delay of 61 months and above. The report stated that the expenditure incurred on these projects till March 2017 is Rs. 7,46,480.94 crore, which is 43.12 per cent of the anticipated cost of the projects. There were 76 projects showing both time overruns of more than six months and cost overruns of more than Rs. 100 crore.

The CNX Nifty is currently trading at 9828.00, down by 9.40 points or 0.10% after trading in a range of 9828.00 and 9884.35. There were 27 stocks advancing against 24 stocks declining on the index.

The top gainers on Nifty were Vedanta up by 1.49%, Tata Steel up by 1.29%, Eicher Motors up by 1.22%, ONGC up by 1.06% and Coal India up by 0.99%.

On the flip side, Infosys down by 3.15%, Cipla down by 1.50%, Lupin down by 1.28%, Tata Motors down by 1.27% and Sun Pharma down by 1.20% were the top losers.

The Asian markets were trading mostly in red; Nikkei 225 decreased 80.18 points or 0.41% to 19,390.23, Jakarta Composite decreased 31.29 points or 0.53% to 5,862.55, FTSE Bursa Malaysia KLCI decreased 3.2 points or 0.18% to 1,773.02 and KOSPI Index decreased 2.48 points or 0.11% to 2,355.89.

On the other hand, Taiwan Weighted increased 4.35 points or 0.04% to 10,325.68, Shanghai Composite increased 9.08 points or 0.28% to 3,277.80 and Hang Seng increased 145.88 points or 0.54% to 27,193.45.