Markets continue to languish into negative territory with small losses

The local barometer gauges continued to languish into negative territory with small losses in early afternoon session on account of selling by investors in the blue-chip counters. Traders remained cautious with a report from domestic rating agency Care Ratings, which said that employment generation has not kept pace with GDP expansion and termed it as a major concern. Such a scenario calls for proactive measures from government and the recent infrastructure building efforts will help, it noted and said that employment growth has not kept pace with economic growth. However, further losses were restricted with SBI Research’s report that Indian economy is likely to improve to 6 percent in the second quarter of the current fiscal year 2017-18, as against 5.7 percent growth in the first quarter of FY18. Meanwhile, the broader indices were holding up their fort in green with gains in the range of 0.15%-0.37%. In scrip specific development, HCL Technologies was trading in green on collaborating with Red Hat, the world's leading provider of open source solutions, to offer HCL Application Platform-as-a-Service (PaaS) services to enterprise customers globally.

On the global front, Asian markets were trading mostly in green. Growth in China’s manufacturing sector cooled more than expected in October in the face of tighter pollution rules that are forcing many steel mills, smelters and factories to curtail production over the winter. Back home, the BSE Sensex is currently trading at 33219.06, down by 47.10 points or 0.14% after trading in a range of 33174.99 and 33294.30. There were 16 stocks advancing against 14 stocks declining on the index, while 1 stock remained unchanged.

The broader indices were trading in green; the BSE Mid cap index was up by 0.15%, while Small cap index was up by 0.37%.

The top gaining sectoral indices on the BSE were Realty up by 1.07%, Consumer Durables up by 0.84%, Healthcare up by 0.50%, Telecom up by 0.47% and Power up by 0.40%, while Metal down by 1.95%, IT down by 0.53%, TECK down by 0.44%, Basic Materials down by 0.37% and Auto down by 0.28% were the top losing indices on BSE.

The top gainers on the Sensex were Axis Bank up by 6.31%, Dr. Reddy’s Lab up by 2.02%, ONGC up by 1.96%, HDFC up by 0.88% and Hero MotoCorp up by 0.74%. On the flip side, Tata Steel down by 2.11%, Infosys down by 2.08%, Coal India down by 1.85%, Mahindra & Mahindra down by 1.60% and SBI down by 1.47% were the top losers.

Meanwhile, domestic credit rating agency, ICRA in its latest report has said that cement demand growth is expected to bounce back from Q4 FY18 (January - March) after weak offtake in the first half of the current fiscal ending September (H1FY18) due to several factors such as weak real estate activity, sand shortage and Goods and Services Tax (GST) implementation issues. Based on current trends, it expects that the demand growth is likely to be driven by a pick-up in the housing segment - primarily affordable and rural housing, and infrastructure segment - mostly road and irrigation projects.  However, it said that subdued real estate activity and sand unavailability in few states is expected to delay the cement demand recovery to Q4 FY18.

From the profitability perspective, the rating agency stated that the industry’s ability to maintain cement prices remains critical, given the expectations of higher power, fuel and freight costs in this fiscal.  According to the report, during five-months of FY2018, the cement production reported de-growth of 3.2% to 117.3 million MT when compared to 121.2 million MT during 5M FY2017. It also noted that while in May 2017, production reported growth of 6.7% on a month-on-month (M-o-M) basis to 24.8 million MT, it declined by 1.5% and 7.2% in June and July 2017 on an M-o-M basis to 24.5 million MT and 22.7 million MT respectively. It added that monsoons impacted the demand in August-September 2017 across various regions and this resulted in a decline in demand by 3.1% on M-o-M basis in August 2017.

On the pricing front, the report indicated that despite adverse impact on cement prices across various regions, they continue to remain higher than traditionally what has been witnessed in the monsoon impacted Q2s till FY2016. It noted that pet coke prices continue to remain firm and are higher by around 12-15% in Q2 FY2018, compared to Q2 FY2017. It also mentioned that cement demand remained subdued across the country due to various local issues - in the North, especially in the states of Uttar Pradesh and Punjab the offtake has been impacted by sand shortage and labour unavailability, while in the West the implementation of the Real Estate Regulatory Authority (RERA) Bill resulted in construction activity slowing down.

The CNX Nifty is currently trading at 10347.50, down by 16.15 points or 0.16% after trading in a range of 10323.95 and 10367.70. There were 24 stocks advancing against 26 stocks declining on the index.

The top gainers on Nifty were Axis Bank up by 6.14%, ONGC up by 2.28%, Dr. Reddy’s Lab up by 1.87%, HCL Tech. up by 1.73% and Ambuja Cement up by 1.23%. On the flip side, Hindalco down by 2.71%, Tata Steel down by 2.05%, Infosys down by 2.03%, Vedanta down by 1.98% and Coal India down by 1.80% were the top losers.

The Asian markets were trading mostly in green; FTSE Bursa Malaysia KLCI increased 1.61 points or 0.09% to 1,749.96, Shanghai Composite was up by 6.22 points or 0.18% to 3,396.55, KOSPI Index surged 21.5 points or 0.86% to 2,523.43, Jakarta Composite added 24.59 points or 0.41% to 5,998.67 and Taiwan Weighted rose 36.93 points or 0.34% to 10,793.80.

On the flip sector, Hang Seng decreased 36.02 points or 0.13% to 28,300.17 and Nikkei 225 was down by 0.06 points or 0% to 22,011.61.