Benchmarks continue weak trade; Power, Realty drag

Indian equity benchmarks continued their weak trade in the morning session on account of selling in frontline blue chip counters taking cues from regional counterparts. North Korea made more threats in response to the latest United Nation sanctions, vowing to sink Japan with a nuclear weapon and reduce the US mainland to ashes and darkness. The acerbic rhetoric comes after the UN Security Council on Monday unanimously adopted tougher sanctions against North Korea targeting its exports and oil imports. The rupee opened lower against dollar on account of buying in American currency by banks and importers amid persistent foreign capital outflows. Foreign Portfolio Investors sold shares worth a net Rs 762.42 crore on Thursday, as per data available with NSDL. Traders were also remained cautious with SBI research report which highlighted that the country’s GDP is likely to remain below 6% in the second quarter of 2017-18 owing to muted agriculture growth and sluggish performance of manufacturing and mining sector. The GDP stood at a three year low at 5.7% for April-June quarter of 2017-18, which the report said has raised concerns about the annual GDP numbers for the fiscal.

Separately, a United Nations report said that effects of demonetization and rollout of the Goods and Services Tax regime on the informal sector and reduction in pace of credit creation may affect India’s growth prospects and the country unlikely to serve as the growth pole’ for the global economy in the near future. Investors took note that credit ratings agency, CRISIL Ratings in its latest report has estimated the gross non-performing assets (NPAs) in the banking system to increase by 1 percentage point to 10.5% of advances as of March 2018, up from 9.5% as of March 2017. It said that about two-thirds of the overall stressed assets in the banking system has already been recognized by banks as NPAs as on March 31, 2017.

Traders were seen piling up position in Telecom, TECK and IT stocks, while selling was witnessed in Power, Realty and Utilities sector stocks. Information Technology (IT) stocks were buzzing after a senior US official sought to allay India’s concerns on the H-1B visa programme, which is being reviewed by the Trump administration, saying there are no restrictions in place. The official said around 70% of the visas issued under the H-1B category over the past nine months have gone to Indians and that a record 1.2 million visas of Indians were adjudicated by the US last year. In scrip specific development, Asahi India Glass was trading in green on reports that Japan’s Asahi Glass, which owns a little over 22% of Asahi India Glass, is in advanced discussions to buy out partner Sanjay Labroo as part of a plan to take control of the JV. Labroo and his family also own an equal 22.21% in the venture. Wipro was trading in green on reports that it will continue to be bold on acquisitions.

On the global front, Asian markets were trading mostly in red. A poll showed that Japanese manufacturers’ confidence worsened for the first time in four months in September from the previous month's decade-high level and was expected to fall further, weighed by global uncertainty. Back home, the BSE Sensex and NSE Nifty were trading below the psychological 32,200 and 10,100 levels respectively. The market breadth on BSE was negative in the ratio of 818:1323, while 100 scrips remained unchanged.

The BSE Sensex is currently trading at 32190.13, down by 51.80 points or 0.16% after trading in a range of 32140.86 and 32245.28. There were 11 stocks advancing against 20 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.36%, while Small cap index was down by 0.17%.

The top gaining sectoral indices on the BSE were Telecom up by 1.13%, TECK up by 0.52%, IT up by 0.49% and Oil & Gas up by 0.17%, while Power down by 1.22%, Realty down by 0.80%, Utilities down by 0.69%, Metal down by 0.68% and Basic Materials down by 0.65% were the losing indices on BSE.

The top gainers on the Sensex were ONGC up by 3.39%, Infosys up by 1.12%, Bharti Airtel up by 0.98%, Wipro up by 0.65% and Coal India up by 0.65%.

On the flip side, Power Grid down by 1.59%, Asian Paints down by 1.23%, Axis Bank down by 1.20%, Sun Pharma down by 1.05% and Dr. Reddy’s Lab down by 0.89% were the top losers.

Meanwhile, after a muted first quarter growth, the SBI Ecoflash report has raised concern about the second quarter gross domestic product (GDP) too, and has said that the growth is likely to remain below 6% in the second quarter of 2017-18 owing to muted agriculture growth and sluggish performance of manufacturing and mining sector. It said that “Second quarter growth numbers are likely to be muted, almost like the first quarter numbers (below 6%), and the reasons are many”, adding that the support that first quarter got from trade, hotel, transport and public expenditure will not be there in the second quarter.

The report noted the agriculture growth is expected to be muted as rainfall in the first three months of monsoon was hugely deficit in key foodgrain producing states like Uttar Pradesh, Punjab, Haryana, and Madhya Pradesh and there was sluggish growth in manufacturing and mining sector. It further pointed that July index of industrial production (IIP) data showed that production was particularly weak in consumer durable goods and the exports growth has started coming down again after picking up for a few initial months in this calendar year. As per the report, high working capital requirement in the GST regime (based on principle of refund) is hurting the small manufacturers in particular.

While it estimated GDP numbers to remain muted at sub-6 percent for the July-September quarter, the third and fourth quarter growth is expected to be below 6.5 percent. The GDP stood at a three year low at 5.7% for April-June quarter of 2017-18, which the report said has raised concerns about the annual GDP numbers for the fiscal.

The CNX Nifty is currently trading at 10064.45, down by 22.15 points or 0.22% after trading in a range of 10044.50 and 10083.90. There were 15 stocks advancing against 36 stocks declining on the index.

The top gainers on Nifty were ONGC up by 3.61%, Bharti Infratel up by 2.91%, Infosys up by 1.13%, Tech Mahindra up by 1.02% and Bharti Airtel up by 0.95%.

On the flip side, Power Grid down by 2.10%, Vedanta down by 1.56%, Axis Bank down by 1.30%, Tata Power down by 1.29% and Asian Paints down by 1.28% were the top losers.

The Asian markets were trading mostly in red; Jakarta Composite decreased 16.08 points or 0.27% to 5,835.92, Shanghai Composite decreased 9.85 points or 0.29% to 3,361.58, Taiwan Weighted decreased 4.84 points or 0.05% to 10,548.73, FTSE Bursa Malaysia KLCI decreased 3.26 points or 0.18% to 1,778.11 and KOSPI Index decreased 1.06 points or 0.04% to 2,376.60.

On the other hand, Hang Seng increased 54.65 points or 0.2% to 27,831.85 and Nikkei 225 increased 103.68 points or 0.52% to 19,911.12.