Bourses trade flat with negative bias

Key Indian benchmarks traded flat with negative bias in late morning session, tracking weak cues from other Asian markets. Sentiments were downbeat with rating agency Care Ratings’ latest report that uptrend in crude oil price is likely to have a major impact on India's fiscal position. It further noted that higher prices of crude oil will increase the trade deficit and put pressure on the rupee. Traders also took note of a report which highlights that the Confederation of All India Traders’ (CAIT) has opposed Centre’s decision to allow 100% FDI in single brand retail via automatic route. CAIT has said that it is serious matter for small businesses and will hamper the welfare, upgradation and modernisation of existing retail trade. However, the broader indices traded in green with notable gains, contrasting the larger peers. Losses in the key equities were limited as some relief came with Crisil Ratings’ latest report stating that India Inc’s top-line (revenue) growth is likely to hit a five-year high of 9 percent in Q3 (October-December) 2017-18. Besides, Moody's in its latest report has said that India and China remain the fastest growth economies in Asia Pacific region, was too providing some relief to the markets.

On the global front, Asian markets were trading in red, following the weak lead overnight from Wall Street amid speculation that China, the largest buyer of US Treasuries, could slow or halt its purchases. Investors were also cautious as they await quarterly earnings results from some major Japanese companies later in the day. Back home, in scrip specific development, Bharti Airtel was trading higher after the company entered into partnership with Spanish m-commerce services provider RGK Mobile for direct billing services for digital content delivery to its subscribers.

The BSE Sensex is currently trading at 34431.32, down by 1.75 points or 0.01% after trading in a range of 34400.61 and 34484.85. There were 15 stocks advancing against 16 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.44%, while Small cap index was up by 0.77%.

The top gaining sectoral indices on the BSE were Realty up by 1.66%, Telecom up by 1.05%, TECK up by 0.35%, Utilities up by 0.31% and Industrials up by 0.31%, while Energy down by 0.26%, Oil & Gas down by 0.24%, Metal down by 0.20% and Bankex down by 0.12% were the top losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 1.61%, Kotak Mahindra Bank up by 1.23%, Tata Motors up by 0.81%, Infosys up by 0.75% and SBI up by 0.47%. On the flip side, Axis Bank down by 1.24%, Coal India down by 1.22%, Wipro down by 1.18%, ICICI Bank down by 0.88% and TCS down by 0.75% were the top losers.

Meanwhile, ahead of the corporate earnings season, Credit ratings agency, Crisil Ratings in its latest report has said that India Inc’s top-line (revenue) growth is likely to hit a five-year high of 9 percent in Q3 (October-December) 2017-18. However, it noted that profits will continue to contract, on the back of rising commodity prices. Besides, it said that the aggregate revenue of companies in key sectors is also expected to grow 9 percent over same period last year on higher realisations in steel, aluminium, cement and crude oil-linked sectors, and a pick-up in consumption-driven sectors such as auto and aviation.

The rating agency said that the revenue growth, which comes after a broadbased improvement in the previous second quarter that was taken as a prelude to a cyclical upturn, is ahead of inflation by a meaningful margin now. For the listed companies, it expects a revenue increase of 8-9 percent in FY18. It also stated export linked sectors such as information technology and pharmaceuticals will disappoint, together with telecom where the incumbents are forced to slash tarriffs due to aggressive play by the newcomer Reliance Jio. Besides, Crisil Ratings mentioned that stronger performance of consumer-oriented sectors is expected to be the primary driver of growth in the second half of this fiscal with Goods and Services Tax (GST) teething troubles abating and trade channels reverting to normalcy. It highlighted that the consumption-linked sectors excluding telecom had reported a 15 percent revenue growth in the second quarter.

As per the report, for the first two quarters, companies have reported a revenue growth of 6 percent despite the impact of the GST implementation, and added that if not for the reverses in telecom, the revenue growth would have come at 10 percent. From a profitability perspective, it believes that there can be a contraction of up to 1.30 percent in the pre-tax profits. Adding further, it indicated that EBIDTA margin fell for 8 of 21 sectors in the second quarter of this fiscal, and also expects that this trend will continue. The report further said that a contraction of 1-1.30 percent in aggregate EBIDTA margin in the third quarter would intensify pressures because there’s little latitude to control cost amid rising commodity prices. It concludes that telecom services, pharma, sugar and housing sectors will see the sharpest fall in margins.

The CNX Nifty is currently trading at 10628.40, down by 3.80 points or 0.04% after trading in a range of 10612.35 and 10641.25. There were 18 stocks advancing against 32 stocks declining on the index.

The top gainers on Nifty were Indiabulls Housing Finance up by 2.53%, Kotak Mahindra Bank up by 1.52%, Bharti Airtel up by 1.36%, Tech Mahindra up by 0.94% and UPL up by 0.73%. On the flip side, Cipla down by 1.57%, Axis Bank down by 1.48%, Wipro down by 1.42%, Coal India down by 1.25% and Ambuja Cement down by 1.05% were the top losers.

All the Asian markets were trading in red; Nikkei 225 decreased 141.1 points or 0.59% to 23,647.10, Taiwan Weighted decreased 21.03 points or 0.19% to 10,810.06, Hang Seng decreased 12.3 points or 0.04% to 31,061.42, Jakarta Composite decreased 8.63 points or 0.14% to 6,362.54, FTSE Bursa Malaysia KLCI decreased 7.57 points or 0.42% to 1,815.35, KOSPI Index decreased 6 points or 0.24% to 2,493.75 and Shanghai Composite decreased 4.32 points or 0.13% to 3,417.51.