Local equities continue to trade with caution

Local equities continued to trade with caution in the morning session, amid short-covering ahead of August futures and options (F&O) expiry on Thursday and mixed Asian cues. IT and TECK were the only counters witnessed notable losses, while Realty, PSU, Oil & Gas and Metal sectors edged higher. Some cautiousness came with private report that Indian economy is in for a rough ride, with rising oil prices set to continue weighing on its already-weakened currency, widen its deficit, and affect its growth outlook. However, losses remained capped as investors draw some solace from a report that with the right amount of industry and government participation, India could be in leadership ranks in adoption of blockchain technology in the next five years. Traders also took note of another private report stating that India’s economy is shrugging off global trade wars, relying on domestic consumption to stay on course to becoming the fastest-growing major economy this year. Besides, a private report stated that India likely grew 7.6% in the April-June quarter, propelled in part by an improvement in manufacturing and exports.

On the global front, Asian markets were trading mixed, as optimism over the US-Mexico trade deal was quickly clouded by caution ahead of a looming deadline on tariffs with China and a flat finish on Wall Street and a dearth of major economic data across the region made for thin trade. Back home, on the sectoral front, telecom stocks were buzzing on the street, despite a report that India Ratings and Research has maintained a ‘negative-to-stable’ outlook on telecom sector for the rest of FY19, saying weak revenue per user and high CAPEX will continue to suppress the sectoral credit outlook.

The BSE Sensex is currently trading at 38903.89, up by 7.26 points or 0.02% after trading in a range of 38842.79 and 38989.65. There were 18 stocks advancing against 13 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.82%, while Small cap index was up by 0.48%.

The top gaining sectoral indices on the BSE were Realty up by 1.95%, Metal up by 1.48%, PSU up by 1.05%, Oil & Gas up by 1.00%, Basic Materials up by 0.98%, while IT down by 0.74% and TECK was down by 0.67% were the only losing indices on BSE.

The top gainers on the Sensex were Vedanta up by 2.50%, ONGC up by 2.23%, SBI up by 1.98%, Bharti Airtel up by 0.98% and Tata Steel was up by 0.96%. On the flip side, Coal India down by 2.27%, Infosys down by 1.03%, HDFC Bank down by 0.95%, TCS down by 0.85% and Indusind Bank was down by 0.81% were the top losers.

Meanwhile, rating agency ICRA in its latest report has said that pressure of provisioning for bad loans on the banking industry is likely to reduce in current financial (FY19) over the previous year.  The agency underlined that the credit provisions for public sector banks (PSBs) are estimated at Rs 1.4-2 trillion for FY19, assuming 60-65% provisioning requirements on accounts to be resolved and normal slippages of about 3%. This estimate is nearly half of the actual provisioning level of Rs 2.71 trillion, seen by PSBs in FY18.

ICRA further expects the credit provisions for private banks to reduce to Rs 225-333 billion in FY19 as compared to Rs 503 billion in FY18. Additionally, it said that ‘With ongoing resolution of stressed assets, despite fresh slippages, we expect GNPAs and NNPAs for the banking sector are likely to reduce to Rs 10% and 4.3% respectively by March 2019, the same may be higher at 12.2% and 5.6% respectively in absence of resolution’.

Besides, agency highlighted that fresh slippages for the banking sector during Q1 of the current fiscal moderated to Rs 920 billion as compared to Rs 2.44 trillion during Q4FY18 and Rs 5.37 trillion during FY18. Gross Non-Performing Assets (GNPAs) for the sector declined for the first time after witnessing a consistent increase in the last 18 quarters. The GNPAs declined to Rs 10 trillion as on June 30, 2018, or 11.52% as compared to Rs 10.23 trillion, or 11.68% as on March 31.

The CNX Nifty is currently trading at 11735.60, down by 2.90 points or 0.02% after trading in a range of 11715.80 and 11753.20. There were 26 stocks advancing against 24 stocks declining on the index.

The top gainers on Nifty were Vedanta up by 2.71%, UPL up by 2.62%, ONGC up by 2.15%, SBI up by 1.70% and BPCL was up by 1.05%. On the flip side, Coal India down by 2.56%, Zee Entertainment down by 1.42%, Infosys down by 1.18%, HCL Tech. down by 1.08% and Tech Mahindra was down by 0.95% were the top losers.

Asian markets were trading mixed; Straits Times gained 3.80 points or 0.12% to 3,251.35, Taiwan Weighted surged 91.28 points or 0.82% to 11,080.83, KOSPI rose 2.63 points or 0.11% to 2,305.75 and Nikkei 225 was up by 28.39 points or 0.12% to 22,841.86.

On the other side, Hang Seng slipped 21.32 points or 0.08% to 28,330.30, Shanghai Composite dropped 9.75 points or 0.35% to 2,768.23 and Jakarta Composite was down by 31.89 points or 0.53% to 6,010.76.