Lackluster trade continues on Dalal street

Indian equity benchmarks continued their lackluster trade in late morning deals, due to heavy selling in Power, Realty and Utilities stocks. Traders were cautious with UN’s report that India’s informal sector got badly affected by demonetisation and may take further hit due to GST and lowered country's growth projection to 6.7 per cent for 2017 from 7 per cent in 2016. Besides, investors’ sentiments remained subdued with the SBI Ecoflash’s report which has raised concern about the second quarter gross domestic product (GDP), stating 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. Banking stocks were under pressure, as Fitch Rating held out a negative outlook on the country’s banking sector, citing weak capital position and financial performance. The global rating agency said banks look vulnerable with poor capitalisation and without adequate support from the state and capital markets.

On the global front, Asian markets were trading mostly in red after North Korea launched a missile in the direction of the east. Back home, in scrip specific development, Autolite India touched the roof on plan of investing in Autolite Manufacturing (AML) having orders worth Rs 480 crore to be supplied in phased manner to a leading OEM.

The BSE Sensex is currently trading at 32170.75, down by 71.18 points or 0.22% after trading in a range of 32138.38 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 0.65%, while Small cap index was down by 0.31%.

The few gaining sectoral indices on the BSE were Telecom up by 0.72%, IT up by 0.50% and TECK up by 0.46%, while Power down by 1.42%, Realty down by 1.07%, Utilities down by 1.02%, Healthcare down by 0.96% and Basic Materials down by 0.69% were the top losing indices on BSE.

The top gainers on the Sensex were ONGC up by 3.36%, Infosys up by 1.04%, Coal India up by 0.69%, Wipro up by 0.49% and TCS up by 0.49%. On the flip side, Power Grid Corporation down by 2.16%, Sun Pharma down by 1.43%, Dr. Reddy’s Lab down by 1.31%, Axis Bank down by 1.20% and Cipla down by 1.13% were the top losers.

Meanwhile, lowering India’s GDP growth forecast for the year 2017 to 6.7% from 7% in 2016, a UN report has said that the informal sector which still accounts for at least one-third of the country’s GDP and more than four-fifths of employment, was badly affected by the government’s ‘demonetization’ move, and it may be further affected by the rollout of the Goods and Services Tax (GST) regime.

Referring to India and China, UNCTAD’s Trade and Development 2017 report noted that at the current levels of growth, the countries are unlikely to serve as growth polls for the global economy in near future. It pointed out that India’s growth performance depends to a large extent on reforms to its banking sector, which is burdened with large volumes of stressed and non-performing assets (NPAs), and there are already signs of a reduction in the pace of credit creation. It added that banking sector in India is saddled with NPAs of over Rs 8 lakh crore.

The report further said that since debt-financed private investment and consumption have been important drivers of growth in India, the easing of the credit boom is likely to slow GDP growth. It also said that the gradual slowdown of China is expected to continue as it moves ahead with rebalancing its economy, towards domestic markets. Thus, it noted that the dependence on debt makes the boom in China and India difficult to sustain and raises the possibility that when the downturn occurs in these countries, deleveraging will accelerate the fall and make recovery difficult. 

The CNX Nifty is currently trading at 10052.50, down by 34.10 points or 0.34% after trading in a range of 10043.65 and 10083.90. There were 13 stocks advancing against 38 stocks declining on the index.

The top gainers on Nifty were ONGC up by 3.29%, Bharti Infratel up by 3.01%, Infosys up by 1.03%, Tech Mahindra up by 0.76% and Coal India up by 0.55%. On the flip side, Power Grid Corporation down by 2.45%, Vedanta down by 1.58%, Sun Pharma down by 1.50%, Axis Bank down by 1.48% and ACC down by 1.40% were the top losers.

Asian markets were trading mostly in red; Hang Seng decreased 24.29 points or 0.09% to 27,752.91, Jakarta Composite decreased 16.08 points or 0.27% to 5,835.92, Shanghai Composite decreased 14.74 points or 0.44% to 3,356.69 and FTSE Bursa Malaysia KLCI decreased 3.26 points or 0.18% to 1,778.11.

On the flip side, KOSPI Index increased 2.91 points or 0.12% to 2,380.57, Taiwan Weighted increased 26.84 points or 0.25% to 10,580.41 and Nikkei 225 increased 103.55 points or 0.52% to 19,910.99.