Indian markets trade in tight range in early noon session

Indian markets were trading in a very tight range, with Nifty and Sensex continuing their flat move with negative bias in the early noon session due to profit-booking by investors ahead of August F&O expiry due on Thursday. Traders cautiously await for June-quarter GDP data which will be announced on August 31. Besides, stocks from IT, Teck and Telecom were slowly pulling the markets lower. Blue-chip stocks such as Coal India and Indusind Bank were losing the most. Indian rupee hit a record low, which too added some pressure on the markets. Meanwhile, a private report stated that even after completion of one year of the new indirect tax regime, technical glitches continue to haunt the Goods and Services Tax Network (GSTN), as small and medium enterprises (SMEs) find it less user-friendly with missing features such as reset option and quarterly filing. However, losses were limited as traders took some relief with a report stating that India likely grew 7.6 percent in the April-June quarter, propelled in part by an improvement in manufacturing and exports. Some buying in Metal, Realty and Basic Materials stocks kept a lid on the losses of the indices.

On the global front, Asian counters were trading mostly in green, following another round of record highs on Wall Street overnight. Back home, stocks related to power sector were buzzing with Power Secretary A K Bhalla stating that lack of coal linkages, delay in payment from discoms and other regulatory issues impacted the power sector.

The BSE Sensex is currently trading at 38890.33, down by 6.30 points or 0.02% after trading in a range of 38842.79 and 38989.65. There were 15 stocks advancing against 15 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.88%, while Small cap index up by 0.49%.

The top gaining sectoral indices on the BSE were Metal up by 1.71%, Realty up by 1.49%, Basic Materials up by 1.25%, PSU up by 0.87% and Oil & Gas up by 0.81%, while IT down by 0.59%, TECK down by 0.53%, Telecom down by 0.12% and FMCG down by 0.11% were the top losing indices on BSE.

The top gainers on the Sensex were Vedanta up by 1.82%, ONGC up by 1.52%, Tata Motors - DVR up by 1.51%, SBI up by 1.38% and Tata Steel up by 1.26%. On the flip side, Coal India down by 2.43%, Indusind Bank down by 0.95%, HDFC Bank down by 0.92%, Infosys down by 0.87% and Asian Paints down by 0.50% were the top losers.

Meanwhile, the India Ratings and Research (Ind-Ra) in its latest report has retained its outlook on India's telecom sector at ‘negative-to-stable’ for the rest of financial year 2019. It said that continued weak average revenue per user (ARPU) forecasts, along with elevated capex for network and technology, will continue to suppress the sectoral credit outlook. It added that the industry's pricing power is yet to return, largely due to cut-throat competition after Reliance Jio entry in 2016.

According to the report, the industry will now be in the stabilization phase, with the merger of Vodafone and Idea Cellular finally approved and network integration in offing. It also said that the revenue market shares of all the players will also evolve over FY19, in line with their share of 4G data subscribers (higher ARPU customers). It noted that the current ARPUs are unsustainable from the cost and returns point of view, and that the ARPU decline is likely to be contained. It also said that the second round of consolidation in the industry will be based on a transition from multiple to single SIM, and would be a key event to watch for, once the tariffs witness upward corrections.

Talking on the telecom sector's debt levels - a key monitorable for industry watchers - the ratings agency said that debt levels are likely to remain high due to ongoing capex needs. It does not expect the sector leverage to reduce meaningfully in FY19, as most of the debt will be refinanced. It noted that as over 50 per cent of telcos' debt is in the form of deferred spectrum liabilities, which enjoy a fixed rate of interest, the sector is partially cushioned from the impact of tighter interest rates. Besides, it indicated that India's wireless data usage has increased exponentially to almost 20 percent of the current global data usage, however smartphone penetration in India is only 33%.

The CNX Nifty is currently trading at 11729.05, down by 9.45 points or 0.08% after trading in a range of 11715.80 and 11753.20. There were 24 stocks advancing against 26 stocks declining on the index.

The top gainers on Nifty were UPL up by 3.16%, Vedanta up by 1.54%, Grasim Industries up by 1.32%, ONGC up by 1.32% and SBI up by 1.23%. On the flip side, Coal India down by 2.63%, Eicher Motors down by 1.09%, Indusind Bank down by 1.06%, HCL Tech. down by 1.05% and Indiabulls Housing down by 1.01% were the top losers.

Asian markets were trading mostly in green; Straits Times increased 2.56 points or 0.08% to 3,250.11, Taiwan Weighted increased 110.02 points or 0.99% to 11,099.57, KOSPI increased 5.42 points or 0.23% to 2,308.54, Nikkei 225 increased 34.75 points or 0.15% to 22,848.22 and Hang Seng increased 22.76 points or 0.08% to 28,374.38.

Bucking the trend, Jakarta Composite decreased 31.89 points or 0.53% to 6,010.76 and Shanghai Composite decreased 9.34 points or 0.34% to 2,768.64.