Domestic equity continue to trade in red

Following weak global cues, Indian equity benchmarks continued to show a sluggish trend in late morning session, with losses of over one third of a percent. Sentiments remained pessimistic with ICRA’s report highlighting that the high quantum of impaired assets will restrict the credit growth for fiscal 2018-19 to 8 percent, and India Inc will borrow more from cheaper sources abroad. Traders failed to take any sense of relief from report stating that the economic growth in India is expected to strengthen to 7.3 per cent in financial year 2018-19 on the back of robust activity from construction, manufacturing, and services sectors. Traders also failed to take note of a report from the union cabinet that they have approved the continuation of the Agri-umbrella programme, ‘Green Revolution Krishonnati Yojana’ for two more years with an outlay of Rs 33,000 crore. The programme merged 11 schemes for a holistic and scientific approach towards agriculture with an aim to double farmers’ income by 2022. Traders shrugged off a report from the Cabinet Committee on Economic Affairs (CCEA) stating that they have decided to offer a subsidy of Rs 5.5 per quintal to cane farmers this marketing year through September at a potential cost of Rs 1,540 crore to help mills clear cane arrears that have already reached around Rs 20,000 crore following a plunge in sugar prices.

Asian markets were trading mostly in red, as financial markets turned their attention to the looming US payrolls data for fresh catalysts. Investors were cautious after a largely weak performance on Wall Street overnight as some disappointing earnings reports offset strong economic data, while bond yields slid after a surprising slowdown in euro zone inflation. Back home, Pharma stocks remained sluggish despite a report stating that China has removed 28 drugs including all cancer medicines from import tariffs from May 1 and decided to further open up to foreign businesses. India’s exports of pharma products to China were negligible $37.44 million in the first 11 months of 2017-18. In scrip specific development, Hero MotoCorp gained on reporting 16.5% growth in sales in April. Besides, NCC surged on bagging orders worth Rs 1276.93 crore in April 2018.

The BSE Sensex is currently trading at 34977.11, down by 126.03 points or 0.36% after trading in a range of 34946.78 and 35206.55. There were 11 stocks advancing against 20 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index slipped 0.04%, while Small cap index was up by 0.11%.

The top gaining sectoral indices on the BSE were Realty up by 0.54%, Consumer Durables up by 0.23%, Bankex up by 0.08% and PSU was up by 0.03%, while Auto down by 0.59%, IT down by 0.58%, Energy down by 0.57%, Power down by 0.49% and TECK was down by 0.46% were the top losing indices on BSE.

The top gainers on the Sensex were Adani Ports up by 2.60%, ONGC up by 1.91%, Indusind Bank up by 0.78%, ICICI Bank up by 0.43% and Hindustan Unilever was up by 0.31%. On the flip side, Bajaj Auto down by 1.81%, Sun Pharma down by 1.73%, Infosys down by 1.54%, Asian Paints down by 1.18% and ITC was down by 1.18% were the top losers.

Meanwhile, the credit ratings agency, ICRA in its latest report has said that the high quantum of non-performing asset (NPA) will restrict the overall bank credit growth to a moderate 7-8% in fiscal 2018-19, despite recapitalisation of public sector banks (PSBs) and private sector players upping their game with a 25 percent credit growth. It also said that India Inc will borrow more from cheaper sources abroad.

ICRA also expects the external commercial borrowings (ECBs) to go up to $27-32 billion in FY19, on the back of recent relaxation in ECB norms by the Reserve Bank of India (RBI) and the high rate of borrowing domestically. It pointed out that the actual ECB inflows would be driven by the all-in-cost of ECBs remaining competitive in relation to domestic sources. It noted that improved ECB inflows would help to finance the larger current account deficit, which may support the rupee in the short-term.

According to the report, that the state-run banks' problems will stem from the high provisioning needed for bad assets and the need to meet mandated capital requirements. It also said that with the relaxation in ECB norms offering an alternate avenue for corporates' borrowings, the credit demand pressure on the domestic banking system and the bond market would ease, which would consequently reduce the upward pressure on domestic interest rates.

The CNX Nifty is currently trading at 10639.35, down by 40.30 points or 0.38% after trading in a range of 10630.10 and 10700.45. There were 18 stocks advancing against 32 stocks declining on the index.

The top gainers on Nifty were Adani Ports up by 2.61%, ONGC up by 1.49%, GAIL India up by 1.27%, Tech Mahindra up by 1.08% and Indusind Bank was up by 0.94%. On the flip side, Sun Pharma down by 1.97%, Bajaj Auto down by 1.92%, Infosys down by 1.65%, ITC down by 1.53% and Cipla was down by 1.22% were the top losers.

Asian markets were trading mostly in red, Hang Seng slipped 155.81 points or 0.51% to 30,157.56, Jakarta Composite declined 55.47 points or 0.95% to 5,803.26, KOSPI Index losses 20.7 points or 0.83% to 2,466.55 and FTSE Bursa Malaysia KLCI down by 7.02 points or 0.38% to 1,844.78.
On the flip side, Shanghai Composite gained 2.21 points or 0.07% to 3,103.07 and Taiwan Weighted was down by 15.19 points or 0.14% to 10,529.37.