Local equities continue to show sluggish trend

Local equity benchmarks continued to show a sluggish trend in morning session, with losses of over half a percent each, mirroring weak global cues, as investor sentiment took a hit amid the renewed slump in the Turkish lira. The Indian rupee slumped to a fresh record low against the US dollar as emerging-market currencies weakened. Investors are also cautious ahead of CPI inflation data for July due later today. Oil prices also surged on Monday amid concerns that US sanctions against Iran may tighten oil supply. Vedanta, SBI and Yes Bank were the prime losers among heavy-weights, pushing Sensex lower. Bankex, Energy, PSU and Oil & Gas counters witnessed notable losses, while Healthcare and IT sectors edged higher. The traders overlooked CII-ASCON Industry Survey report which highlighted that India’s economic growth will improve further in the coming quarters due to recovery in domestic demand as also the investment cycle. The demand and investment will be supported by better consumption patterns on account of favourable monsoon, moderation in inflation and the onset of festive season. Besides, industrial output recorded a growth of 7% in June on account of higher output in mining, manufacturing and power generation segments.

On the global front, Asian markets were trading in red, as the ongoing turmoil in Turkey and the fresh fall in the Turkish lira sparked concerns of contagion fears. The US President Donald Trump had approved the doubling of metals tariffs against Turkey on Friday. Back home, in scrip specific development, Jet Airways slipped on latest financial and regulatory troubles at the company. DGCA is set to conduct a financial audit of Jet Airways, after the Naresh Goyal-promoted airline postponed its June quarter (Q1) results.

The BSE Sensex is currently trading at 37606.30, down by 262.93 points or 0.69% after trading in a range of 37559.26 and 37693.19. There were 10 stocks advancing against 21 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index declined 0.26%, while Small cap index was down by 0.62%.

The top gaining sectoral indices on the BSE were Healthcare up by 0.56%, IT up by 0.42%, FMCG up by 0.22%, TECK up by 0.20% and Consumer Durables up by 0.14%, while Bankex down by 1.18%, Energy down by 1.02%, PSU down by 0.98%, Oil & Gas down by 0.90%, Basic Materials was down by 0.80% were the top losing indices on BSE.

The top gainers on the Sensex were Coal India up by 2.23%, Sun Pharma up by 1.69%, Bharti Airtel up by 1.12%, Mahindra & Mahindra up by 0.42% and Bajaj Auto was up by 0.41%. On the flip side, Vedanta down by 3.24%, SBI down by 2.81%, Yes Bank down by 2.06%, Tata Motors - DVR down by 1.93% and HDFC was down by 1.79% were the top losers.

Meanwhile, a joint survey carried out by the industry body, the Confederation of Indian Industry (CII) and ASCON has stated that India’s economic growth will improve further in the coming quarters on account of recovery in domestic demand as also the investment cycle. It highlighted that the demand and investment will be supported by better consumption patterns due to favourable monsoon, moderation in inflation and the onset of festive season.

Besides, it showed that the current expectations on the investment outlook for the next two months also points towards an impending recovery in investment cycle supported by improving capacity utilization levels amidst domestic demand recovery. Further, a continuous push to structural reforms such as GST, PSU bank recapitalization and time-bound insolvency resolution would also support the recovery. The survey tracked the performance of 70 sectors during the first quarter of the current fiscal (FY19), as against the year-ago period.

The survey witnessed fewer sectors anticipating negative growth trends, which clearly points towards improvement in the economic environment. It showed a sharp increase in the sectors witnessing ‘Excellent’ growth (>20%) in April-June 2018-19, over the year-ago period. The share of sectors witnessing ‘Excellent’ growth has improved to 14.3% (10 out of 70 sectors) in Q1 FY19 from 5.7% (4 out of 70) in Q1 FY18. At the same time, the share of sectors recording ‘High’ growth and ‘Moderate’ growth has improved marginally while the share of sectors witnessing ‘Low’ growth (<0%) has come down substantially.

The share of sectors registering ‘High’ growth inched up to 21.4% in the first quarter (15 out of 70) from 20% (14 out of 70) in Q1 FY18 whereas sectors witnessing ‘Moderate’ (0-10%) growth improved slightly to 44.3% (31 out of 70) from 42.9% (30 out of 70) in same period a year ago. The share of sectors witnessing ‘Low’ growth has come down substantially to 20% (14 out of 70) as compared to 31.4% (22 out of 70) recorded in the same period previous year.

On the production front, some sectors which have registered excellent growth include Commercial Vehicles, Three Wheelers, Construction Equipment Machinery, Soya Oil, Tractors and Sugar. On exports front, 3 wheelers, tractors, commercial vehicles, two wheelers, sugar, rapeseed meal reported excellent growth. Consequently, the survey observed that while the growth trends remain concentrated in the ‘Moderate’ category, a deceleration in the pace of de-growth suggests firming of the recovery in the economy.

The CNX Nifty is currently trading at 11359.20, down by 70.30 points or 0.62% after trading in a range of 11340.30 and 11369.80. There were 16 stocks advancing against 34 stocks declining on the index.

The top gainers on Nifty were Tech Mahindra up by 3.14%, GAIL India up by 2.76%, Coal India up by 2.16%, Sun Pharma up by 1.60% and Cipla was up by 1.25%. On the flip side, Indiabulls Housing Finance down by 3.32%, Vedanta down by 3.26%, SBI down by 2.74%, HPCL down by 2.50% and BPCL was down by 2.32% were the top losers.

All Asian markets were trading in red; KOSPI declined 41.00 points or 1.83% to 2,241.79, Taiwan Weighted fell 246.48 points or 2.3% to 10,737.20, Straits Times slipped 39.26 points or 1.21% to 3,245.52, Nikkei 225 decreased 409.17 points or 1.87% to 21,888.91, Hang Seng dropped 521.00 points or 1.87% to 27,845.62, Shanghai Composite declined 48.41 points or 1.76% to 2,746.90 and Jakarta Composite was down by 200.13 points or 3.41% to 5,877.04.