Local bourses hold gains; Sensex hovers around 31,800 mark

The local barometer gauges held their gains of over half a percent each in early afternoon session, on account of buying in frontline counters. Sentiments on the street remained in optimistic mood with Commerce and Industry Minister Suresh Prabhu’s statement that he is working together with the finance ministry and other departments to firm up policy initiatives along with fiscal incentives.  Markets also drew some solace with Minister of Railways and Coal Piyush Goyal’s statement that India is undergoing a change in the economic narrative and rebranding itself with technology driving growth. Further, positive trade in other Asian markets too supported the markets to sustain the early leads.  All the sectoral indices edged up on the bourses with Metal, Utilities, and Basic Materials stocks rising the most. In scrip specific development, Tata Steel was up by over four percent after reporting 18% rise in its saleable steel production to 5.98 million tonnes (MT) in April-September FY18 compared to 5.06 MT in the same period last year. 

On the global front, Asian markets were trading mostly in green, tracking persistent gains in US stocks as markets await a jobs report later in the day. Back home, the BSE Sensex is currently trading at 31764.37, up by 172.34 points or 0.55% after trading in a range of 31632.81 and 31814.36. There were 26 stocks advancing against 5 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.82%, while Small cap index was up by 1.09%.

The top gaining sectoral indices on the BSE were Metal up by 2.63%, Utilities up by 1.79%, Basic Materials up by 1.67%, PSU up by 1.53% and Power up by 1.46%, while there were no losers on the BSE sectoral front.

The top gainers on the Sensex were Tata Steel up by 3.96%, NTPC up by 3.54%, SBI up by 1.85%, Coal India up by 1.68% and Infosys up by 1.41%. On the flip side, HDFC down by 0.74%, Dr. Reddy’s Lab down by 0.52%, Hero MotoCorp down by 0.48%, ITC down by 0.17% and HDFC Bank down by 0.02% were the top losers.

Meanwhile, domestic credit rating agency, ICRA in its latest report has said that the leather and leather footwear exporters has been facing significant hurdles due to a challenging internal as well as external environment. It also noted that demand has been impacted due to the weak consumer sentiment in the European Union (EU - the biggest destination of India's footwear exports) and a significant drop in the value of the British Pound (GBP) following the vote on referendum to exit the European Union. Apart from this, it stated that the sector is also facing headwinds due to rupee appreciation against major currencies and recent regulatory restrictions placed on slaughter of animals and on leather tanneries, impacting raw material availability.

The rating agency has said that because of these factors, the leather export figures showed downtrend for the two consecutive years, by 9 percent in FY16 and 5 percent in FY17. Therefore, it expects that similar trends to continue in the near term which should impact the earnings of export focussed leather footwear players. On the domestic front, it noted that while the Indian footwear industry has historically recorded a healthy growth driven by increasing footwear demand and average selling price (ASP), growth has slowed in FY16 and FY17 due to moderation in consumer sentiments.

As per the report, the revenues of export-focussed leather footwear players declined by 2 percent in FY17, while the revenues of players focussed on the domestic market involved in leather as well as non-leather products saw a growth of 3 percent in FY17. It also highlighted that aggregate operating profitability margin of the entities focussed on exports has declined, from 14.1 percent in FY16 to 12 percent in FY17, while the aggregate operating profitability margin of companies focussed on the domestic market has declined modestly from 12.2 percent to 11.9 percent during this period.

ICRA further mentioned that though the players focussed on leather products and export markets are likely to face headwinds due to combination of internal and external factors and may see pressure on revenues, the credit risk profile is likely to remain comfortable on account of limited leverage and lower expected capex. On the other hand, it said that the revenue of those entities, which are focussed on domestic market is likely to see healthy improvement, once the impact of demonetisation and GST wanes out, and these players are likely to report better credit metrics.

The CNX Nifty is currently trading at 9956.90, up by 68.20 points or 0.69% after trading in a range of 9906.60 and 9967.95. There were 41 stocks advancing against 9 stocks declining on the index.

The top gainers on Nifty were GAIL India up by 3.98%, Tata Steel up by 3.90%, NTPC up by 3.57%, Hindalco up by 2.93% and Vedanta up by 2.14%. On the flip side, HDFC down by 0.64%, Dr. Reddy’s Lab down by 0.63%, Hero MotoCorp down by 0.40%, Bharti Infratel down by 0.32% and Zee Entertainment down by 0.21% were the top losers.

The Asian markets were trading mostly in green; FTSE Bursa Malaysia KLCI increased 0.59 points or 0.03% to 1,759.68, Taiwan Weighted rose 14.54 points or 0.14% to 10,532.81, Hang Seng added 55.21 points or 0.19% to 28,434.39 and Nikkei 225 surged 62.15 points or 0.3% to 20,690.71.

On the flip side, Jakarta Composite was down by 2.25 points or 0.04% to 5,899.66.