Benchmarks pare some losses; small cap performs better

Indian equity benchmarks pared some of their losses in late afternoon session but continued their trade in negative territory amid weak opening in European markets. Former RBI Governor Raghuram Rajan’s statement that the biggest challenge is cleaning up the balance sheets of public sector banks, continued to weigh on the sentiments. Some concerns also came with the government’s statement that names of over 2.09 lakh firms have been struck off from register of companies for failing to comply with regulatory requirements and action has been initiated to restrict operations of their bank accounts. However, some recovery witnessed as the indices pared some losses with taking support from the private report that economic activity in the country lost some pace amid GST related disruptions but underlying growth momentum remains strong and the country may clock 6.7 percent growth this fiscal. Besides, the broader indices outperformed benchmark indices and continued their trade in green territory.

On the global front, European markets were trading in red, tracking Wall Street's slide overnight amid a backdrop of lingering geopolitical tension. Asian markets were also trading in red. Back home, in scrip specific development, MRF was trading higher after the company unveiled luxury and premium range of passenger car tyres ‘PERFINZA’ in Chennai targeted at serving high end automobiles. With this new range of PERFINZA tyres, the company now offers additional products for the luxury and premium vehicle segment. The tyres unveiled will initially serve the domestic market and later be shipped to overseas.

The BSE Sensex is currently trading at 31696.89, down by 112.66 points or 0.35% after trading in a range of 31586.53 and 31718.51. There were 11 stocks advancing against 19 stocks declining on the index, while 1 stock remained unchanged.

The broader indices were trading in green; the BSE Mid cap index was up by 0.29%, while Small cap index was up by 0.54%.

The top gaining sectoral indices on the BSE were Metal up by 0.64%, Basic Materials up by 0.59%, Energy up by 0.38%, Consumer Durables up by 0.36% and Realty up by 0.30%, while Healthcare down by 1.10%, FMCG down by 0.98%, Capital Goods down by 0.49%, IT down by 0.42% and Telecom down by 0.40% were the top losing indices on BSE.

The top gainers on the Sensex were Kotak Mahindra Bank up by 1.23%, Reliance Industries up by 1.00%, Maruti Suzuki up by 0.59%, Coal India up by 0.41% and NTPC up by 0.35%. On the flip side, Sun Pharma down by 3.23%, ITC down by 2.30%, Tata Motors - DVR down by 2.19%, Lupin down by 1.58% and Axis Bank down by 1.47% were the top losers.

Meanwhile, raising concerns over the performance of infra debt funds (IDFs) which are investment vehicles for facilitating the flow of long-term debt to the infrastructure sector, credit rating agency, Icra has said that IDFs have failed to grow even after two years due to lack of good projects and banks’ troubles on asset quality and tepid credit growth, noting that they are yet to come of age and make a significant impact in the infrastructure financing space.

The rating agency said that availability of few operational projects with track record of satisfactory performance of one year and banks’ reluctance to shed these operational projects have dampened the growth of IDFs business. Icra further noted that they are likely to remain marginal players over the medium term and in order to maintain prudent economic capital levels, it suggested that IDF-NBFCs should raise capital over medium term as they also scale up and portfolio mix evolves.

As per Icra’s report, the total credit for IDF-NBFCs- where the IDF is set up as a company-has grown slightly by 1.2 per cent of banks’ exposure to the infrastructure sector, by increasing to Rs 11,200 crore in March 2017 and following the same trend of slower growth pace, the assets under management for IDF-Mutual Funds - where the IDF takes trust route - stood at Rs 2,900 crore as of June 2017.

The CNX Nifty is currently trading at 9930.85, down by 21.35 points or 0.21% after trading in a range of 9882.55 and 9931.55. There were 23 stocks advancing against 28 stocks declining on the index.

The top gainers on Nifty were Indiabulls Housing Finance up by 2.28%, GAIL India up by 1.31%, Ultratech Cement up by 1.30%, Kotak Mahindra Bank up by 1.28% and Hindalco up by 1.18%. On the flip side, Sun Pharma down by 3.06%, ITC down by 2.40%, Tata Motors - DVR down by 1.90%, Axis Bank down by 1.75% and Lupin down by 1.67% were the top losers.

Asian markets were trading mostly in red; Hang Seng decreased 127.59 points or 0.46% to 27,613.76, Taiwan Weighted decreased 69.98 points or 0.66% to 10,547.86, Nikkei 225 decreased 27.84 points or 0.14% to 19,357.97, KOSPI Index decreased 6.8 points or 0.29% to 2,319.82 and Jakarta Composite decreased 6.65 points or 0.11% to 5,823.32. On the flip side, Shanghai Composite increased 1.07 points or 0.03% to 3,385.39 and FTSE Bursa Malaysia KLCI increased 2.85 points or 0.16% to 1,772.48.

European markets were trading in red; UK’s FTSE 100 decreased 36.47 points or 0.49% to 7,336.45, Germany’s DAX decreased 13.19 points or 0.11% to 12,110.52 and France’s CAC decreased 9.13 points or 0.18% to 5,077.43.