Key indices continue lackluster trade in early noon deals

Indian equity benchmarks continued their lackluster trade in afternoon session, on the back of selling activities by market-participants. The sentiments remained in lackluster mood with a report stating that India’s services sector activity contracted for the first time in three months in May as new business orders stagnated and cost pressures intensified amid higher fuel prices. The seasonally adjusted Nikkei India Services Business Activity Index fell to 49.6 in May from 51.4 in April, indicating a marginal contraction in business activity, following a two-month period of growth. Some concerns also came with S&P Global’s chief economist statement that global economic growth could slow down by 1 percentage point - or more than a quarter of the expansion rates projected by various international bodies - if US President Donald Trump’s tariff threats against China and others escalate into a full-blown trade war. On the sectoral front, select textile stocks were trading higher with Union Textiles Minister Smriti Irani stating that the sector only has 'ups and ups, and very few downs. She added that this sector talks about the capacity of the nation not only as a manufacturing base, but also as a nation which has the legacy of cultural magnitude that the world is yet to experience.

On the global front, Asian markets were trading mostly in green, tracking overnight gains on Wall Street. However, gains remained capped with private report indicating that activity in Japan’s services sector expanded at a reduced pace in May from the previous month as new orders grew at the slowest pace since September 2016, suggesting the economy is losing some momentum in the second quarter. The Markit/Nikkei Japan Services Purchasing Managers Index (PMI) fell to 51.0 in May on a seasonally adjusted basis from 52.5 in April.

The BSE Sensex is currently trading at 34989.04, down by 22.85 points or 0.07% after trading in a range of 34847.36 and 35073.12. There were 13 stocks advancing against 18 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.86%, while Small cap index was down by 1.79%.

The few gaining sectoral indices on the BSE were Energy up by 0.68%, Oil & Gas up by 0.22% and Bankex up by 0.07%, while Telecom down by 3.21%, Capital Goods down by 1.52%, Industrials down by 1.41%, Basic Materials down by 1.30% and Power down by 1.28% were the top losing indices on BSE.

The top gainers on the Sensex were Reliance Industries up by 1.45%, Indusind Bank up by 0.56%, SBI up by 0.53%, Maruti Suzuki up by 0.51% and Kotak Mahindra Bank up by 0.44%. On the flip side, Bharti Airtel down by 3.35%, Coal India down by 1.92%, Power Grid down by 1.74%, Larsen & Toubro down by 1.57% and Yes Bank down by 1.31% were the top losers.

Meanwhile, credit rating agency, ICRA in its latest report has said that the capacity addition in the wind power segment is expected to rise to around 3-3.5 Gigawatt (GW) in FY19, after witnessing a weak performance in FY18. It showed that the wind energy witnessed a capacity addition of only 1.7 GW in FY18, which is a significant drop from the 5.5 GW capacity added in FY17. It added that the Ministry of New and Renewable Energy (MNRE) along with the distribution utilities in Gujarat, Maharashtra and Tamil Nadu have awarded wind-power capacity of 7.6 GW over the past 15 months and another 10 GW each are proposed to be awarded in FY19 and FY20.

The rating agency has stated that this is in line with the trajectory of project awards announced by the MNRE in November 2017 to achieve the cumulative wind capacity target of 60 GW by FY22. However, on a cautious note, it said that the winning bidders in these auctions face the twin challenges of project viability at the quoted tariffs and securing connectivity and long-term access to inter-state transmission network. It added that while the regulations recently notified by the Central Electricity Regulatory Commission (CERC) on connectivity for renewable energy projects are positive for these developers, the adequacy of the existing inter-state transmission infrastructure in the states with high wind potential remains a challenge.

According to the report, the connectivity regulations recently notified by the power regulator CERC provide clarity on the procedure and timelines for securing connectivity from the central transmission utility and accord priority to projects holding a letter of award under the tariff-based competitive bidding. However, it said that the uncertainty on availability of adequate evacuation infrastructure persists, given that the existing inter-state transmission infrastructure in the states with high wind potential may not be sufficient to provide connectivity to the projects bid out so far and proposed bids by the SECI. Moreover, it pointed out that the augmentation of transmission infrastructure would take about 24-36 months, whereas the winning developers must commission the wind power projects within 18 months from the date of award.

The CNX Nifty is currently trading at 10614.40, down by 14.10 points or 0.13% after trading in a range of 10565.05 and 10633.15. There were 20 stocks advancing against 30 stocks declining on the index.

The top gainers on Nifty were Cipla up by 2.25%, Reliance Industries up by 1.38%, Tech Mahindra up by 1.29%, Bajaj Finance up by 1.07% and HPCL up by 0.61%. On the flip side, Bharti Airtel down by 3.24%, Zee Entertainment down by 2.74%, Indiabulls Housing Finance down by 2.67%, Coal India down by 1.97% and Power Grid down by 1.91% were the top losers.

Asian markets were trading mostly in green; KOSPI Index increased 6 points or 0.25% to 2,453.76, Shanghai Composite was up by 15.11 points or 0.49% to 3,106.30, Jakarta Composite added 50.32 points or 0.84% to 6,065.14, Nikkei 225 inched up 63.6 points or 0.28% to 22,539.54 and Hang Seng surged 142.87 points or 0.46% to 31,140.85.

On the flip side, Taiwan Weighted decreased 9.39 points or 0.08% to 11,100.11 and FTSE Bursa Malaysia KLCI was down by 4.38 points or 0.25% to 1,750.79.