Sluggish trade continues on D-street

Sluggish trade continued on the Dalal Street in late afternoon session, with Sensex trading marginally higher, despite firm opening in European markets. Pessimistic broader indices along with heavy losses led by PSU and Oil & Gas stocks, weighted on the domestic sentiments. Besides, Adani Ports & SEZ declined the most among all the major indices on the BSE. Anxiety remained among traders, with former chief economic advisor, Kaushik Basu’s statement that in the event of US-China currency war there will be a sideline effect on India and a depreciation of the rupee, which, if managed well by policymakers, will be good for the country. However, buying at Metal, Consumer Durables and Basic Materials counters supported the markets to keep their head above neutral lines in late noon deals. On the sectoral front, textiles stocks were trading lower, despite the government doubled import duty on as many as 328 textile products to 20% to provide a boost to the manufacturing of these items in the country, while stocks related to steel companies remained in limelight, amid India Ratings and Research’s (Ind-Ra) latest report that there is a moderate risk of global trade war with domino effect due to US trade restrictions on steel imports but rebounding steel margins could help domestic steel companies withstand the challenges.

On the global front, European markets were trading in green, as Euro zone confidence among investors improved to a 3-month high in August as they see signs of relief in the EU's trade dispute with the US. The survey data published by think tank Sentix showed that the investor sentiment index climbed to 14.7 in August from 12.1 in July. This was the highest score since June. Asian markets were also trading in green, after US stocks finished higher for a third day overnight, led by gains in media, retail and technology companies on optimism about highly impressive corporate earnings. Back home, in scrip specific development, TVS Motor Company caught the speed on reporting a rise of 13.24% in its net profit at Rs 146.61 crore for the quarter ended June 30, 2018 as compared to Rs 129.47 crore for the same quarter in the previous year.

The BSE Sensex is currently trading at 37734.11, up by 42.22 points or 0.11% 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 was down by 0.18%, while Small cap index was down by 0.20%.

The gaining sectoral indices on the BSE were Metal up by 1.33%, Consumer Durables up by 1.00%, Basic Materials up by 0.93%, Consumer Disc up by 0.50% and Auto up by 0.21%, while PSU down by 0.81%, Oil & Gas down by 0.79%, Energy down by 0.65%, Industrials down by 0.61% and Healthcare down by 0.45% were the losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 3.31%, Asian Paints up by 1.84%, Vedanta up by 1.70%, NTPC up by 1.56% and Yes Bank up by 1.26%. On the flip side, Adani Ports & SEZ down by 6.17%, Coal India down by 2.56%, Axis Bank down by 1.16%, Tata Motors down by 1.10% and Bharti Airtel down by 0.93% were the top losers.

Meanwhile, credit rating agency, India Ratings and Research (Ind-Ra) in its latest report has said that the Indian steel companies are likely to see a marginal risk of global trade war with a domino effect, noting that the companies’ rebounding margins may help them to withstand these global trade challenges.

Further, the rating agency does not expect margins of domestic players to be under material threat in the near term, as only about 10% of the India’s surplus capacity caters to the export markets, primarily Europe and neighbouring countries. Besides, the report said that potential correction in input prices and China’s supply discipline will benefit the margins. Though, as per the report, an unexpected deceleration in Chinese demand growth and increased intensity of global trade war could counter the margin improvement of steel players.

Ind-Ra is expecting further deleveraging of balance sheet of steel companies during current financial year on the back of sustained margins and absence of funding of loss by debt. Moreover, the report noted that resolution of stress companies will lead to debt reduction due to haircut by lenders as well as expected improvement in margin on change of management. However, it said that debt-led capacity expansion over and above the inorganic expansion will result in steady leverage for a few large players.

The CNX Nifty is currently trading at 11400.75, up by 13.65 points or 0.12% after trading in a range of 11359.70 and 11428.95. There were 25 stocks advancing against 25 stocks declining on the index.

The top gainers on Nifty were Tata Steel up by 3.62%, Grasim Industries up by 2.73%, Titan up by 2.47%, Asian Paints up by 1.98% and Eicher Motors up by 1.57%. On the flip side, Adani Ports & SEZ down by 6.12%, Coal India down by 2.88%, HPCL down by 1.94%, BPCL down by 1.68% and Tech Mahindra down by 1.68% were the top losers.

Asian markets were trading mostly in green; Straits Times increased 56.62 points or 1.69% to 3,341.96, Hang Seng soared 429.32 points or 1.52% to 28,248.88, KOSPI gained 13.66 points or 0.59% to 2,300.16, Nikkei 225 zoomed 155.42 points or 0.69% to 22,662.74 and Shanghai Composite was up 74.14 points or 2.67% to 2,779.30. On the flip side, Taiwan Weighted decreased 40.66 points or 0.37% to 10,983.44 and Jakarta Composite was down by 14.17 points or 0.23% to 6,086.96.

All European markets were trading in green; UK’s FTSE 100 increased 49.68 points or 0.64% to 7,713.46, France’s CAC surged 45.71 points or 0.83% to 5,522.89 and Germany’s DAX was up by 120.08 points or 0.94% to 12,718.29.