Markets slip into red; Realty stocks tumble

Indian equity benchmarks took U-turn and slipped into red terrain in late afternoon session, as traders opted to book profit at higher levels ahead of Q2 numbers of TCS and Reliance scheduled to be released on October 12 and October 13 respectively. Traders also remained on sidelines ahead of key economic data of August IIP and September CPI, which are scheduled to be released tomorrow. Sentiments got dampened after the World Bank forecasted that India's GDP may slow from 8.6 percent in 2015 to 7.0 percent in 2017 because of disruptions by demonetisation and the GST, and warned that subdued private investment due to internal bottlenecks could put downside pressures on the country's potential growth. Adding more pessimism, a private report stated that India's industrial growth and inflation may trend up as key metrics such as IIP, CPI and WPI are expected to come in higher, driven by a waning GST impact and higher commodity rates. Besides, the reports that US President Donald Trump discussed a 'range of options' with his top military advisors to respond to North Korea's aggression and prevent it from threatening the US and its allies, too raised concerns. In line with larger peers, the broader indices too washed out their gains and were trading in red.

On the global front, European markets were trading mostly in red as investors continued to monitor ongoing political uncertainty. Asian markets were trading mostly in green. Back home, in scrip specific development, Suven Life Sciences was trading in green after the company secured one product patent from New Zealand corresponding to the New Chemical Entities (NCEs) for the treatment of disorders associated with Neurodegenerative diseases and these Patents are valid through 2034.

The BSE Sensex is currently trading at 31789.82, down by 134.59 points or 0.42% after trading in a range of 31771.20 and 32098.46. There were 6 stocks advancing against 25 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 1.16%, while Small cap index was down by 1.41%.

The top gaining sectoral indices on the BSE were Telecom up by 1.90%, Oil & Gas up by 0.62%, TECK up by 0.27% and Energy up by 0.10%, while Realty down by 2.27%, Metal down by 2.13%, Basic Materials down by 1.63%, Industrials down by 1.34% and Healthcare down by 1.24% were the top losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 3.67%, TCS up by 1.64%, Mahindra & Mahindra up by 0.95%, Hindustan Unilever up by 0.60% and Wipro up by 0.52%. On the flip side, SBI down by 2.08%, Tata Steel down by 2.05%, Lupin down by 1.83%, Tata Motors down by 1.75% and Cipla down by 1.58% were the top losers.

Meanwhile, amid weak consumption demand, global overcapacity and working capital disruptions due to the goods and services tax (GST), credit rating agency, India Ratings and Research’s (Ind-Ra) sees muted private capex conditions to continue for two more financial years. In its latest report it raised concerns over the capital expenditure growth and said that the corporate capex growth would stay muted over FY18-FY20. It expects capex to grow at a compounded annual growth rate of just 5-8 per cent or by Rs 1 trillion over FY18-FY20, which also will mainly be in the form of maintanence capex.

The Fitch group company further said that any meaningful capex recovery will happen only after FY20 and will be led by the private sector. As per its report, corporates are likely to show an unwillingness to invest in long-term projects due to muted demand and significant leverage, despite a low interest rate environment. Further, it noted that out of the top 200 asset heavy corporates, only 125 non-stressed corporates will spend on maintenance, while the remaining 75 stressed corporates may not even be in a position to incur maintenance capex which may impact on the investment recovery. Besides, it said that sectors like oil and gas, auto and telecom will be the main drivers for marginal growth over FY18-FY20.

The rating agency further pointed that though the Insolvency and Bankruptcy Code is likely to streamline debt resolution through debt reduction options for stressed corporates, the low capacity utilization of 40%-50% of stressed corporates could delay the overall recovery in investment, as these stressed corporates may pull-back investments of the non-stressed corporates.

The CNX Nifty is currently trading at 9977.80, down by 39.15 points or 0.39% after trading in a range of 9977.35 and 10067.25. There were 15 stocks advancing against 35 stocks declining on the index.

The top gainers on Nifty were HPCL up by 4.00%, Bharti Airtel up by 3.58%, Bharti Infratel up by 2.28%, TCS up by 1.79% and BPCL up by 1.57%. On the flip side, SBI down by 2.20%, Yes Bank down by 2.19%, Indiabulls Housing Finance down by 2.16%, Zee Entertainment down by 1.86% and Ambuja Cement down by 1.64% were the top losers.

Asian markets were trading mostly in green; Shanghai Composite increased 5.3 points or 0.16% to 3,388.28, KOSPI Index increased 24.35 points or 1% to 2,458.16, Nikkei 225 increased 57.76 points or 0.28% to 20,881.27 and Taiwan Weighted increased 108.38 points or 1.03% to 10,641.19. On the flip side, Hang Seng decreased 101.26 points or 0.36% to 28,389.57, Jakarta Composite decreased 30.26 points or 0.51% to 5,875.50 and FTSE Bursa Malaysia KLCI decreased 7.21 points or 0.41% to 1,753.92.

European markets were trading mostly in red; France’s CAC decreased 9.88 points or 0.18% to 5,353.77 and UK’s FTSE 100 decreased 2.81 points or 0.04% to 7,535.46. On the flip side, Germany’s DAX increased 3.29 points or 0.03% to 12,952.54.