Weak trade prevails in morning session

Indian equity benchmarks continued their weak trade below neutral line in morning session on account of selling in frontline blue chip counters taking cues from global sell-off amid resurgent trade war worries. The rupee opened higher against the US dollar. Currency traders and speculators seemed reluctant to place aggressive bets and preferred to stay on the sidelines ahead of RBI’s monetary policy announcement this week. Sentiments remained pessimistic as growth in India’s manufacturing sector slowed again in March as both output and new orders fell to its slowest pace since October. The Nikkei India Manufacturing Purchasing Managers’ Index, or PMI, fell to 51.0 in March from 52.1 in February. The slower growth reflects weaker gains in new businesses and a decline in employment for the first time in eight months. The sentiments were also dampened on ICRA’s report that more Indian companies are likely to default on their borrowings in the fiscal year that started in April compared with the previous year. The default rate could go up in fiscal year 2019 on higher interest cost, deteriorating business conditions, likely difficulty in getting bank funding given the challenges in the banking system. Pharma stocks displayed mixed trend on ICRA’s report that although demand prospect for the domestic pharmaceutical market is expected to remain healthy, slowing growth from the US, increased competition, among others, are likely to keep its revenue growth to single digits, between 7-10%, during financial year 2017-18 to 2019-20.

The downside was, however, capped as a steep rise in output of cement and fertilizers pushed up the growth of the core sector to 5.3% in February even as refinery products, electricity, coal, and natural gas production made the output of the infrastructure industries grow slower than 6.1% in January. Separately, direct tax collection in the fiscal year just ended has exceeded the targets with a record 6.84 lakh income tax returns being filed. Direct tax collections in 2017-18 at Rs 9.95 lakh crore, exceeded the revised budgetary target of Rs 9.8 lakh crore. A net of 99.5 lakh new assessees were added to the tax net. Meanwhile, banking stocks were buzzing as the Reserve Bank of India allowed banks to spread their bond trading losses, a change that is likely to boost profitability of lenders as well as spur a rally in stock and bond markets. Under the change, lenders can spread bond-trading losses incurred in the December 2017 and March 2018 quarters equally over four quarters. This will come as a major reprieve to the public sector banks, which have been hard hit by trading losses from a spike in bond yields over recent months.

Traders were seen buying in PSU, Bankex and Auto stocks, while selling was witnessed in Metal, TECK and IT sector stocks. In scrip specific development, Motherson Sumi Systems (MSSL) was trading in green as MSSL through its step down subsidiary, Samvardhana Motherson Automotive Systems Group B.V. (SMRP BV) has executed the transaction documents for the proposed acquisition of Reydel Automotive Group (Reydel), a privately held portfolio company of Cerberus Capital Management, L.P. (Cerberus) that manufactures interior components and modules for global automotive customers.

On the global front, Asian markets were trading in red. China’s ambassador to Washington said, amid growing fears of an impending trade war, that China will take counter-measures of the same proportion and scale if the United States imposes further tariffs on Chinese goods. Back home, the BSE Sensex and NSE Nifty were trading below the psychological 33,300 and 10,200 levels respectively. The market breadth on BSE was positive in the ratio of 1201:983, while 89 scrips remained unchanged.

The BSE Sensex is currently trading at 33220.81, down by 34.55 points or 0.10% after trading in a range of 33158.59 and 33318.34. There were 16 stocks advancing against 14 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.19%, while Small cap index was up by 0.22%.

The top gaining sectoral indices on the BSE were PSU up by 0.62%, Bankex up by 0.57%, Auto up by 0.51%, Healthcare up by 0.39% and Power up by 0.12%, while Metal down by 0.75%, TECK down by 0.49%, IT down by 0.48%, Consumer Durables down by 0.48% and Capital Goods down by 0.42% were the top losing indices on BSE.

The top gainers on the Sensex were SBI up by 2.19%, Yes Bank up by 2.06%, ICICI Bank up by 1.60%, Tata Motors - DVR up by 1.59% and Mahindra & Mahindra up by 1.39%.

On the flip side, Wipro down by 2.12%, Adani Ports & Special Economic Zone down by 1.51%, Tata Steel down by 1.39%, ONGC down by 1.39% and Larsen & Toubro down by 0.94% were the top losers.

Meanwhile, India’s core sector output expanded at a faster pace of 5.3% in February 2018, against the 0.6% growth recorded in February 2017, mainly helped by a robust performance of refinery products, fertilizer and cement segments. According to data released by the ministry of Commerce and Industry, the combined Index of eight core industries stood at 123.1 in February, 2018, which was 5.3% higher compared to the index of February, 2017. Its cumulative growth during April to February, 2017-18 was 4.3%. The Eight Core Industries - coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity - comprise 40.27% of the weight of items included in the Index of Industrial Production (IIP).    

Among eight core sectors, Coal production having 10.33% weight rose 1.4% in February, 2018 over February, 2017, and its cumulative index increased by 1.6% during April to February, 2017-18 over corresponding period of the previous year. Petroleum Refinery production having 28.04% weight jumped 7.8% in February, 2018 over February, 2017 and its cumulative index increased by 4.9% during April to February, 2017-18 over the corresponding period of previous year.

The Natural Gas production having 6.88% weight fell 1.5% in February, 2018 over February, 2017, while its cumulative index was up by 3.1% during April to February, 2017-18 over the corresponding period of previous year. Steel production having 17.92% weight increased by 5.0% in February, 2018 over February, 2017 and its cumulative index jumped by 5.9% during April to February, 2017-18 over the corresponding period of previous year.

Crude Oil production having 8.98% weight declined by 2.4% in February, 2018 over February, 2017 and its cumulative index fell by 0.8% during April to February, 2017-18 over the corresponding period of previous year. Fertilizer production having 2.63% weight surged by 5.3% in February, 2018 over February, 2017, while its cumulative index declined 0.2% during April to February, 2017-18 over the corresponding period of previous year. On the other hand, Cement production having 5.37% weight was up by 22.9% in February, 2018 over February, 2017 and its cumulative index increased by 5.7% during April to February, 2017-18 over the corresponding period of previous year.

The CNX Nifty is currently trading at 10192.50, down by 19.30 points or 0.19% after trading in a range of 10181.85 and 10229.45. There were 19 stocks advancing against 31 stocks declining on the index.

The top gainers on Nifty were HPCL up by 2.32%, Indiabulls Housing Finance up by 2.29%, SBI up by 2.03%, Yes Bank up by 1.94% and Lupin up by 1.61%.

On the flip side, Tech Mahindra down by 2.73%, Wipro down by 2.16%, Hindalco down by 1.89%, Tata Steel down by 1.48% and Zee Entertainment down by 1.39% were the top losers.

The Asian markets were trading in red; Hang Seng decreased 187.18 points or 0.62% to 29,906.20, Nikkei 225 decreased 110.78 points or 0.52% to 21,277.80, Taiwan Weighted decreased 73.67 points or 0.68% to 10,814.60, Shanghai Composite decreased 33.58 points or 1.06% to 3,129.60, Jakarta Composite decreased 30.51 points or 0.49% to 6,210.06, KOSPI Index decreased 7.26 points or 0.3% to 2,436.90 and FTSE Bursa Malaysia KLCI decreased 3.53 points or 0.19% to 1,854.82.