Domestic markets shift gears; trade slightly in red

Erasing all their initial gains, Indian equity markets turned negative and were off their high points as traders were offloading their holding in shares of heavyweight companies such as Adani Ports and Coal India. Selling in Energy, Realty and Telecom stocks dragged the markets lower. Along with these sectors even Oil and Gas sector was trading lower as Oil prices rose ahead of the introduction of US sanctions against major crude exporter Iran. The broader indices were underperforming their larger peers and market breadth on BSE was negative. Besides, the rupee weakened against the US dollar, which added pressure on the markets. In the scrip specific development, shares of Dhanlaxmi Bank fell on reporting a net loss of Rs 44.99 crore in Q1, while Parag Milk Foods surged on reporting around 3-fold jump in Q1 consolidated net profit. 

On the global front, Asian markets were trading mostly in green. China stocks was trading higher as investors snapped up shares hit by recent heavy losses, but an escalating Sino-US trade war and worries over the prospect for domestic growth are likely to continue to weigh on the sentiments.

Back home, tourism sector was in focus after a report stating that there has been 14 per cent growth in foreign tourists arrivals (FTAs) in India in 2017 as compared to 2016. The total foreign exchange earnings (FEEs) accrued through tourism in 2017 was Rs 1,77,874 crore.  Stocks related to agriculture were in limelight with government stating that the 15 per cent drop in farmer enrolment under the Pradhan Mantri Fasal Bima Yojana (PMFBY) in 2017-18 as compared to 2016-17 was due to announcement of debt waiver schemes by the States like Maharashtra, Uttar Pradesh, perceived risk reduction on account of better monsoon and deduplication in Aadhaar made mandatory for coverage.

The BSE Sensex is currently trading at 37619.14, down by 72.75 points or 0.19% after trading in a range of 37586.88 and 37876.87. There were 14 stocks advancing against 17 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index fell 0.58%, while Small cap index down by 0.52%.

The few gaining sectoral indices on the BSE were Basic Materials up by 0.19%, Consumer Disc up by 0.13% and Consumer Durables up by 0.10%, while Energy down by 0.99%, Realty down by 0.98%, Telecom down by 0.89%, PSU down by 0.88% and Oil & Gas down by 0.77% were the top losing indices on BSE.

The top gainers on the Sensex were Asian Paints up by 2.18%, Yes Bank up by 1.03%, Vedanta up by 0.71%, Larsen & Toubro up by 0.48% and Kotak Mahindra Bank up by 0.43%. On the flip side, Adani Ports down by 5.77%, Coal India down by 1.96%, Axis Bank down by 1.17%, Bharti Airtel down by 1.13% and Reliance Industries down by 0.95% were the top losers.

Meanwhile, rating agency ICRA in its latest report highlighted that revenues of Indian corporates have jumped 22% in the first quarter of current financial year (Q1FY19) as compared to same quarter in previous year. The increase in revenues has been attributed to the strong growth in both consumer-based industries and commodity sectors. Consumer-based industries include consumer goods, and auto; and commodity sectors such cement, iron, steel, and oil and gas.

As per report, in the first quarter, the two sectors which have done well are pharmaceuticals and information technology (IT).  In the First quarter results of current financial year Pharmaceuticals sector showed a growth of 20.8% supported by strong performance in the domestic markets. The IT sector reported a healthy growth of 12.9% over the corresponding period last year on account of their strong performance in their digital offerings and partial recovery in the financial services sector.
ICRA noted that ‘The strong revenue growth has ensured that companies were able to protect their EBTIDA margins (overall flat) to a larger extent on both Y-o-Y (year-on-year) and Q-o-Q (quarter-on-quarter) basis, reflecting that they have managed to offset the increase in raw material and fuel price through price hikes, operating leverage and cost reduction’.

Though, EBTIDA margins for a few industries such as airlines and cement have been under pressure. The EBTIDA margin of the airline industry was under pressure on account of rising fuel prices, weaker rupee and competitive pressures. EBTIDA margin of the cement sector was negatively impacted by a rise in raw materials’ prices and freight rates.

The CNX Nifty is currently trading at 11377.65, down by 9.45 points or 0.08% after trading in a range of 11359.70 and 11428.95. There were 27 stocks advancing against 23 stocks declining on the index.

The top gainers on Nifty were Asian Paints up by 2.07%, Ultratech Cement up by 1.87%, Grasim Industries up by 1.46%, Titan Co up by 1.23% and Bajaj Finserv up by 1.20%. On the flip side, Adani Ports down by 5.65%, Coal India down by 2.03%, Cipla down by 1.50%, HPCL down by 1.43% and BPCL down by 1.21% were the top losers.

Asian markets were trading mostly in green; Straits Times increased 55.00 points or 1.65% to 3,340.34, Hang Seng surged 379.38 points or 1.35% to 28,198.94, Shanghai Composite soared 49.40 points or 1.79% to 2,754.56, KOSPI rose 12.99 points or 0.56% to 2,299.49 and Nikkei 225 was up 155.42 points or 0.69% to 22,662.74.

On the contrary, Jakarta Composite decreased 16.34 points or 0.27% to 6,084.79 and Taiwan Weighted was down by 40.66 points or 0.37% to 10,983.44.