Markets pare gains; Oil & Gas, Energy stocks plunge

Benchmark indices pared their initial gains in late morning session but remained in green with Nifty trading almost flat, taking cues from regional markets. Sentiments were cautious with the report that India has been placed at a low 103 rank, the lowest among BRICS economies, on the WEF’s Global Human Capital Index, which has been topped by Norway. India also ranks among the lowest in the world when it comes to the employment gender gap. Some anxiety also came with the private report highlighting that Indian economy to be in period of dense fog and structural reforms including GST has introduced significant uncertainties related to growth, fiscal health, inflation, currency and the banking system in the country, for the near term. However, the indices managed to remain in green with taking support from private brokerage firm’s report that India’s GDP growth is expected to be around 7.1% this fiscal following a likely pick up in industrial production as firms resort to restocking post GST especially ahead of festive season. Meanwhile, SEBI has asked stock exchanges and clearing corporations to prepare a framework for appointing of third-party vendors. The market regulator has directed the so-called market infrastructure institutions to not outsource core and critical operations such as trading information, infrastructure and surveillance.

On the global front, Asian markets were trading mostly in red after disappointing economic data out of China, as investors awaited a rate decision from the Bank of England. Back home, in scrip specific development, Kabra Extrusiontechnik shined after the company received an approval to form a Joint Venture (JV) with Mecanor OY, Finland (MO) to manufacture Belling Machines in India with MO technology through Joint Venture Company to be incorporated. The Board of Directors of the company at their meeting held on September 13, 2017, has approved the same.

The BSE Sensex is currently trading at 32232.58, up by 46.17 points or 0.14% after trading in a range of 32187.20 and 32328.61. There were 18 stocks advancing against 13 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.46%, while Small cap index was up by 0.53%.

The top gaining sectoral indices on the BSE were Healthcare up by 1.63%, Power up by 1.11%, Industrials up by 0.58%, Capital Goods up by 0.52% and Bankex up by 0.49%, while Oil & Gas down by 0.48%, Energy down by 0.39%, TECK down by 0.03%, Auto down by 0.02% and IT down by 0.02% were the top losing indices on BSE.

The top gainers on the Sensex were Axis Bank up by 3.56%, Sun Pharma up by 2.75%, Tata Motors - DVR up by 1.97%, Cipla up by 1.68% and Dr. Reddy’s Lab up by 1.51%. On the flip side, Wipro down by 4.39%, Mahindra & Mahindra down by 0.63%, TCS down by 0.47%, Kotak Mahindra Bank down by 0.38% and Reliance Industries down by 0.37% were the top losers.

Meanwhile, credit ratings agency, ICRA in its latest report has said that effective policy measures by Indian government over the last 36 months, like awarding projects after securing 80 percent right of way and the government’s focus on developing roads have revived the Indian road sector and execution pace. It added that the steps also include delegating the power to grant forest clearances to regional offices and online filing for clearances. However, it maintained a stable outlook for the sector, mainly because developers find it difficult to achieve financial closure with lenders exercising more caution while taking on additional exposure and secondly because of the leveraged balance sheets of developers.

As per the report, the roads sector was marred by execution delays, project cancellations, stalled projects, loss of lender confidence, leveraged balance sheets of developers and sluggish traffic growth. It also said most of these measures were fully implemented by the end of FY2015 and therefore FY2016 saw a sharp pick up in execution pace by about 37 percent, followed by 35 percent growth in FY2017. It further said that other policy measures such as back-ending premium payment, compensating concessionaires for delays not attributable to them, relaxing exit norms and one-time fund infusion by the NHAI are expected to address liquidity-related concerns faced by the developers.

ICRA also said that asset sales in the road sector have picked up over the last 30 months with the relaxation in exit policy. It said sponsors in around 20 road assets involving a total cost of Rs 123.27 billion have monetised their assets as opposed to around Rs 70 billion in the preceding 50 months. Till FY2014, projects were awarded either on BOT (Toll) or BOT (Annuity); or on the basis of engineering, procurement and construction (EPC) in that order, depending on the traffic density along the project stretch. Currently, it said that Hybrid annuity mode (HAM) is the most preferred mode of awarding projects and about 53% of the awards in 2016-17 by NHAI were through the HAM route, compared to 8% in 2015-16 and added that this is likely to increase further in 2017-18.

The ratings agency further said that the government’s decision to monetise 75 road project through toll-operate-transfer (TOT) route is expected to fetch around Rs 35,600 crore. In August 2016, the Cabinet Committee on Economic Affairs authorised the NHAI to monetise the public-funded National Highway projects that are operational and generating toll revenues for at least two years after the commercial operation date through the TOT model.

The CNX Nifty is currently trading at 10082.75, up by 3.45 points or 0.03% after trading in a range of 10072.95 and 10126.50. There were 25 stocks advancing against 25 stocks declining on the index, while one stock remained unchanged.

The top gainers on Nifty were Axis Bank up by 3.52%, Sun Pharma up by 2.31%, Tata Motors - DVR up by 1.91%, Cipla up by 1.35% and Dr. Reddy’s Lab up by 1.06%. On the flip side, Wipro down by 4.39%, GAIL India down by 1.65%, BPCL down by 1.29%, Zee Entertainment down by 0.95% and Mahindra & Mahindra down by 0.94% were the top losers.

Asian markets were trading mostly in red; Hang Seng decreased 159.63 points or 0.57% to 27,734.45, Nikkei 225 decreased 51.54 points or 0.26% to 19,814.28, Shanghai Composite decreased 15.6 points or 0.46% to 3,368.55, Jakarta Composite decreased 2.77 points or 0.05% to 5,842.97 and FTSE Bursa Malaysia KLCI decreased 1.24 points or 0.07% to 1,784.83.

On the flip side, KOSPI Index increased 7.11 points or 0.3% to 2,367.29 and Taiwan Weighted increased 20.69 points or 0.2% to 10,553.57.