Lackluster trade persists on D-Street as services PMI falls to 6-month low

Key Indian benchmarks continued lackluster trade in late morning session, as traders were concerned with report highlighting that Indian services sector contracted in February and fell to a six-month low, as new work orders suffered amid weak underlying demand conditions. The seasonally adjusted Nikkei India Services Business Activity Index fell from 51.7 in January to 47.8 in February, its lowest level since August. The sentiments remained downbeat with the report that foreign investors have pulled out more than Rs 11,000 crore from Indian stocks in February 2018, amid better opportunities in other emerging markets. This is the largest outflow in five months. Further, a report stating that as many as 359 infrastructure projects, each worth Rs 150 crore and above, have shown cost overrun to the tune of Rs 2.05 lakh crore owing to delays and other reasons, also added some anxiety among the market-men. Besides, sluggish trade of broader indices, also weighed on the sentiments. Investors overlooked Finance Minister Arun Jaitley’s statement that India would retain its position of fastest growing economy in the coming decades, like China did in the last three decades. He further noted that the way the situation in the world is changing there is a great opportunity that has come in the way of India. The world keep facing its challenges and (in) the last few years India has started leaving its footprints behind.

On the global front, Asian markets were trading in red, following the mixed cues from Wall Street Friday as investors worried about the impact of US tariffs on global trade, while the euro fluctuated after Italian exit polls pointed to a hung parliament. Back home, in scrip specific development, Ambition Mica was trading higher after the company received approval for the proposal to acquire the entire assets and liabilities of Velsons Laminate.

The BSE Sensex is currently trading at 33761.48, down by 285.46 points or 0.84% after trading in a range of 33717.74 and 34034.28. There were 4 stocks advancing against 27 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.94%, while Small cap index was down by 0.90%.

The only gaining sectoral indices on the BSE were Consumer Durables up by 0.20% and IT up by 0.10%, while Metal down by 2.62%, Basic Materials down by 1.89%, Oil & Gas down by 1.53%, Utilities down by 1.41% and PSU down by 1.32% were the top losing indices on BSE.

The top gainers on the Sensex were TCS up by 0.63%, Wipro up by 0.31%, Kotak Mahindra Bank up by 0.05% and Infosys up by 0.04%. On the flip side, Tata Motors down by 2.97%, Tata Motors - DVR down by 2.67%, Hindustan Unilever down by 2.26%, Yes Bank down by 2.18% and Tata Steel down by 2.15% were the top losers.

Meanwhile, India’s state-owned banks have written off Rs 516 crore worth of bad loans owed by wilful defaulters in the first half of fiscal year 2017-18 (H1 FY18). As per the finance ministry data, 38 loan accounts of wilful defaulters were written off the books of banks during April-September period of FY18. Write-off in banking parlance means that the bank has made 100% provision from its earning against that account. Following this, non-performing asset (NPA) is no longer part of its balance sheet. However, the write-off puts pressure on bank's balance sheet as it erodes operating profit.

According to the data, the country’s largest bank by asset, State Bank of India (SBI) accounts for 27% of the total outstanding loans run up by wilful defaulters as on March 31, 2017. Data further showed that of the total number of the wilful defaulters, as many as 1,762 wilful defaulters owed Rs 25,104 crore to SBI as on March 31, 2017, putting stress on the bank's balance sheet. It also highlighted that Punjab National Bank (PNB) is number two on the list with 1,120 wilful defaulters with outstanding loans to the tune of Rs 12,278 crore. The two banks account for Rs 37,382 crore or 40% of the total bad loans. It added that total outstanding loans due to public sector banks (PSBs) by 8,915 wilful defaulters amounted to Rs 92,376 crore.

The Reserve Bank of India in its direction to banks in 2015 had said that lenders should initiate legal proceedings wherever warranted, against the borrowers or guarantors and foreclosure for recovery of dues should be initiated expeditiously. The lenders may initiate criminal proceedings against wilful defaulters, wherever necessary.

The CNX Nifty is currently trading at 10354.85, down by 103.50 points or 0.99% after trading in a range of 10344.20 and 10428.70. There were 5 stocks advancing against 45 stocks declining on the index.

The top gainers on Nifty were Tech Mahindra up by 0.88%, TCS up by 0.67%, Wipro up by 0.21%, SBI up by 0.15% and Kotak Mahindra Bank up by 0.12%. On the flip side, Hindalco down by 4.53%, Aurobindo Pharma down by 3.99%, Tata Motors down by 3.12%, Tata Steel down by 2.80% and Ambuja Cement down by 2.55% were the top losers.

All the Asian markets were trading in red; Hang Seng decreased 387.47 points or 1.27% to 30,195.98, Nikkei 225 decreased 201.81 points or 0.95% to 20,979.83, Taiwan Weighted decreased 55.27 points or 0.52% to 10,642.90, KOSPI Index decreased 22.45 points or 0.93% to 2,379.71, FTSE Bursa Malaysia KLCI decreased 15.14 points or 0.82% to 1,840.93, Shanghai Composite decreased 6.76 points or 0.21% to 3,247.77 and Jakarta Composite decreased 2.73 points or 0.04% to 6,579.58.