Sensex, Nifty turn negative

Indian equity benchmarks erased all of their gains in late afternoon session to turn negative, with the Sensex falling more than 30 points, amid weak cues from global markets. Disappointing inflation data and weakness in Realty, Industrials and Auto stocks, weighed on the domestic sentiments. India’s retail inflation inched up to 4.58% in the month of April 2018, as compared to 4.28% in March 2018 and 2.99% in April 2017, reversing the easing trend of last three months. In line with the larger peers, the broader indices too lost the momentum and were trading in red terrain with notable losses. Besides, the major industry losers like Tata Motors, Sun Pharma and SBI were also dragging the markets down. Anxiety spread among the investors with CARE Ratings’ report that the Reserve Bank of India (RBI) may go for a rate change in case inflation touches 5% mark. However, the losses were limited with a private report stating that India’s GDP is expected to grow by 7.7% in January-March, up from 7.2% in the preceding quarter, despite moderation in factory output growth in March. Some support also came with credit rating agency, India Ratings and Research’s (Ind-Ra) latest report stating that corporate outlook is expected to remain stable in the current fiscal year, with profitability improvement in the last fiscal year.

On the global front, European markets were trading mixed as investors monitored key political and economic risks while oil prices hovered close to multi-year highs. Asian markets were trading in red. Back home, in scrip specific development, Abbott India gained on reporting over 2-fold jump in its net profit at Rs 100.08 crore for the quarter ended March 31, 2018 as compared to Rs 42.06 crore for the same quarter in the previous year.

The BSE Sensex is currently trading at 35523.54, down by 33.17 points or 0.09% after trading in a range of 35498.83 and 35993.53. There were 12 stocks advancing against 19 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 1.15%, while Small cap index was down by 0.78%.

The few gaining sectoral indices on the BSE were IT up by 0.36%, TECK up by 0.14% and Metal up by 0.02%, while Realty down by 2.09%, Industrials down by 1.28%, Auto down by 1.08%, Telecom down by 0.96% and Healthcare down by 0.92% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 2.21%, Power Grid Corporation up by 2.15%, Kotak Mahindra Bank up by 1.54%, Asian Paints up by 1.22% and Hindustan Unilever up by 1.00%. On the flip side, Tata Motors - DVR down by 4.64%, Tata Motors down by 4.23%, Sun Pharma down by 2.17%, SBI down by 2.07% and Dr. Reddy’s Lab down by 1.54% were the top losers.

Meanwhile, with profitability improvement in the last fiscal year (FY18), credit rating agency, India Ratings and Research (Ind-Ra) in its latest report has said that corporate outlook is expected to remain stable in the current fiscal year (FY19). However, it said that the improvement will be limited to the metals sector and added that a broader recovery may be after much longer period.

As per the report titled ‘Corporate Risk Radar FY19’, India Inc revenue is likely to grow at rate of 7%-9% and EBITDA may grow at 8%-11%, on the back of rising demand in consumption-led sectors such as automobiles and retail, low base effect and higher realisation in commodity-linked sectors. However, the report found that export-linked sectors such as pharmaceuticals and information technology are expected to face challenges in the year amid concerns of global trade headwinds.

Ind-Ra further said that EBITDA growth will be limited, owing to the factors like higher commodity prices, higher interest cost and depreciation in rupee. Besides, it said that EBITDA growth will also be limited by little capital expenditure until 2019-2020. It also expects the working capital cycle to further deteriorate, given the impact of the implementation of the Goods and Services Tax regime and an initial pick-up in economic activities. Sectors such as oil and gas, metals, and chemicals could witness elongation of working capital cycle with rising commodity prices. However, auto and auto ancillary sectors will continue to have a stable working capital cycle, amid strong demand.

The CNX Nifty is currently trading at 10786.40, down by 20.20 points or 0.19% after trading in a range of 10781.40 and 10929.20. There were 22 stocks advancing against 28 stocks declining on the index.

The top gainers on Nifty were Power Grid Corporation up by 2.25%, Tata Steel up by 2.17%, Asian Paints up by 1.53%, Kotak Mahindra Bank up by 1.44% and Eicher Motors up by 1.23%. On the flip side, Tata Motors down by 4.68%, Lupin down by 2.61%, Sun Pharma down by 2.22%, SBI down by 2.17% and Indiabulls Housing Finance down by 1.84% were the top losers.

Asian markets were trading mostly in red; Hang Seng decreased 389.05 points or 1.23% to 31,152.03, Jakarta Composite decreased 100.7 points or 1.69% to 5,846.45, Taiwan Weighted decreased 77.66 points or 0.71% to 10,874.73, Nikkei 225 decreased 47.84 points or 0.21% to 22,818.02 and KOSPI Index decreased 17.57 points or 0.71% to 2,458.54. On the flip side, FTSE Bursa Malaysia KLCI increased 8.11 points or 0.44% to 1,858.53 and Shanghai Composite increased 18.09 points or 0.57% to 3,192.12.

European markets were trading mostly in green; France’s CAC increased 3.63 points or 0.07% to 5,544.31 and UK’s FTSE 100 increased 5.51 points or 0.07% to 7,716.49. On the flip side, Germany’s DAX decreased 21.8 points or 0.17% to 12,955.91.