Domestic indices continue to trade flat in early noon session

Domestic indices continued to trade flat in early noon session amid weakening of rupee against the dollar. Besides, barring IT, TECk and Energy, all other BSE sectoral indices were trading in red. Among them, FMCG fell the most followed by Basic Materials and Metal. Meanwhile, broader indices were underperforming their larger peers. Some cautiousness spread with Andhra Pradesh Chief Minister N Chandrababu Naidu stating that price of petrol would soon touch Rs 100 a litre as also the rupee against the US dollar. Sentiments were dampened as foreign institutional investors (FIIs) sold shares worth a net Rs 21.13 crore and domestic institutional investors (DIIs) also sold shares worth a net Rs 542.12 crore on September 3, 2018, as per provisional data from the stock exchanges. Investors were a little anxious with NITI Aayog Vice Chairman Rajiv Kumar’s statement that the revised mechanism introduced by former RBI governor Raghuram Rajan to identify NPAs stopped banks from issuing fresh credit, resulting in slowdown of the economy in post demonetisation period. 

On the global front, Asian counters were trading mostly in green. US and Canadian officials are still due to resume talks on a revised NAFTA deal, after they failed to reach an agreement last week.  Back home, aviation sector remained in focus after Centre for Asia Pacific Aviation (CAPA) in its Mid-Year Aviation Outlook 2019 has said that the domestic airlines industry is expected to post higher losses at $1.65-1.90 billion this fiscal year, up from projected $430-460 million, amid the headwinds due higher costs and lower yields. Stocks related to banking sector were trading in red after latest data from the Reserve Bank of India showed that export credit provided by banks fell sharply by about 47% to Rs 21,900 crore as of July 20 from a year earlier.

The BSE Sensex is currently trading at 38340.57, up by 28.05 points or 0.07% after trading in a range of 38189.80 and 38518.56. There were 12 stocks advancing against 19 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index fell by 1.13%, while Small cap index down by 0.67%.

The few gaining sectoral indices on the BSE were IT up by 2.40%, TECK up by 1.86% and Energy up by 0.32%, while FMCG down by 1.79%, Basic Materials down by 1.28%, Metal down by 1.13%, Telecom down by 0.89% and Realty down by 0.84% were the top losing indices on BSE.

The top gainers on the Sensex were Infosys up by 3.56%, TCS up by 1.92%, Reliance Industries up by 1.00%, Wipro up by 0.99% and Maruti Suzuki up by 0.84%. On the flip side, Hindustan Unilever down by 3.39%, Asian Paints down by 2.46%, Indusind Bank down by 2.42%, Vedanta down by 1.40% and ITC down by 1.36% were the top losers.

Meanwhile, the India unit of Sydney-based Centre for Asia Pacific Aviation (CAPA) in its Mid-Year Aviation Outlook 2019 has said that the Indian airlines industry is likely to post higher losses at $1.65-1.90 billion in the year ending March 2019, up from the estimated $430-460 million, largely due to higher costs and lower yields. Besides, it stated that airlines need to raise over $3 billion in near-term based on June quarter estimates, with full service carriers requiring around $2.6 billion, while the low-cost peers needing $400 million.

According to the report, full service carriers are critically placed and could lose $1.75-2 billion in the current fiscal largely because of their uncompetitive cost base on domestic operations and a lack of profitability on international routes. Report also highlighted that the financial outlook for airlines has deteriorated dramatically since January even as passenger traffic grows unabated. It mentioned that at that time (since January) CAPA India forecast a consolidated industry loss of $430-460 million, subject to oil remaining below $70/barrel and the US dollar exchange rate at Rs 65-67. Besides, it said “our revised forecast is for an industry loss of $1.65-1.90 billion in FY19. These projections assume oil at $75-80 per barrel and the exchange rate at Rs 70-72.”

Observing that the domestic airlines industry is facing headwinds, but not a downward cycle as economic fundamentals are strong, CAPA India said that despite the challenges faced by the aviation sector, the wider macro-economic conditions remain strong. It noted that with airlines offering low fares, demand for travel will be stimulated because of which the domestic traffic is expected to grow at 18-20 per cent this year, and international at 10-12 per cent, consistent with the CAPA India forecast in January.

The CNX Nifty is currently trading at 11570.10, down by 12.25 points or 0.11% after trading in a range of 11532.05 and 11602.55. There were 10 stocks advancing against 40 stocks declining on the index.

The top gainers on Nifty were Infosys up by 3.41%, TCS up by 2.12%, Tech Mahindra up by 2.09%, HCL Tech. up by 1.90% and Wipro up by 1.31%. On the flip side, Hindustan Unilever down by 3.55%, Indiabulls Housing down by 3.02%, Asian Paints down by 2.79%, Indusind Bank down by 2.53% and Ultratech Cement down by 2.09% were the top losers.

Asian markets were trading mostly in green; Straits Times increased 3.10 points or 0.1% to 3,210.30, Taiwan Weighted surged 57.16 points or 0.52% to 11,021.38, Hang Seng soared 197.07 points or 0.71% to 27,909.61, Shanghai Composite increased 20.40 points or 0.74% to 2,741.13 and KOSPI was up 8.97 points or 0.39% to 2,316.00.

On the flip side, Jakarta Composite decreased 42.96 points or 0.73% to 5,924.62 and Nikkei 225 was down 6.92 points or 0.03% to 22,700.46.