Local equities show sluggish trend

Local equity benchmarks continued their sluggish trade in morning session, with Sensex and Nifty trading flat just below the neutral lines. Consumer Durables, FMCG and Telecom counters witnessed notable losses, while Power and IT sectors edged higher. Some cautiousness came with a report that India’s economic growth is expected to moderate in the second half of this financial year after a strong first quarter, owing to tighter financial conditions, high oil prices and slowing global growth. However, losses remained capped as traders are getting some solace with report that negotiations for better trade deals between the US and India that meet the needs of both the countries are at the beginning stages. Tradera were taking note of former Reserve Bank Governor Raghuram Rajan’s statement that the rupee will not go in for a free fall as the central bank is appropriately raising interest rate to control inflation. Meanwhile, ADB report stated that India’s share in the GDP of Asia and Pacific region has increased to 17.3% in 2017 from 14.6% in 2000.

On the global front, Asian markets were trading mostly in red, as investors awaited fresh developments on the trade-war front. With US yields on the rise again, a weakening yen gave Japanese stocks a boost. On the sectoral front, banking stocks were trading in green, despite former RBI Governor Raghuram Rajan’s statement that over optimistic bankers, slowdown in government decision making process and moderation in economic growth mainly contributed to the mounting bad loans.

The BSE Sensex is currently trading at 37882.14, down by 40.03 points or 0.11% after trading in a range of 37847.90 and 38043.27. 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 0.26%, while Small cap index was up by 0.07%.

The top gaining sectoral indices on the BSE were Power up by 0.50%, PSU up by 0.41%, Utilities up by 0.40%, IT up by 0.37% and Bankex up by 0.33%, while FMCG down by 1.71%, Consumer Durables down by 0.95% and Telecom was down by 0.70% were the few losing indices on BSE.

The top gainers on the Sensex were Mahindra & Mahindra up by 1.86%, Axis Bank up by 1.78%, Infosys up by 1.48%, Asian Paints up by 1.44% and SBI was up by 1.33%. On the flip side, ITC down by 2.65%, Hindustan Unilever down by 1.77%, Hero MotoCorp down by 1.56%, Coal India down by 1.29% and HDFC was down by 1.01% were the top losers.

Meanwhile, with vigorous steel demand, especially from the domestic construction, infrastructure and automotive sectors, Moody's Investors Service in its latest report has said that India will be the brightest spot for the steel sector over the next 12-18 months, even as rising costs for key inputs, coking coal and iron ore, pressure profitability. The report further underlined that India’s steel consumption is rising at least 5.5% to 6% every year on the back of a strong GDP growth of 7.3%-7.5% and will keep the Indian steel industry on a strong footing. India has set a target of increasing its steel making capacity to 300 million tonne by 2030-31.

Moreover, it said that India's steel sector consolidation will drive improvement in the industry's capacity utilisation levels and mute the pressure on profitability.  Besides, Moody's highlighted that the outlook for the Asian steel industry is stable, reflecting the consideration that the profitability of rated producers will increase moderately over the next 12 months against the backdrop of overall steady regional demand.

Additionally, it pointed out Asian steel demand will remain steady over the next 12 months to June 2019, due to solid growth in 2018 will offset a likely softening in 2019. The expected softening in demand in 2019 is because China's apparent demand will likely decrease by a low-single-digit percentage, reflecting likely slowdowns in the growth of the property sector and in infrastructure investments.

The CNX Nifty is currently trading at 11423.70, down by 14.40 points or 0.13% after trading in a range of 11415.95 and 11479.40. There were 26 stocks advancing against 24 stocks declining on the index.

The top gainers on Nifty were Bajaj Finance up by 1.96%, Bajaj Finserv up by 1.94%, Mahindra & Mahindra up by 1.91%, Axis Bank up by 1.71% and Infosys was up by 1.60%. On the flip side, ITC down by 2.87%, Titan Company down by 2.16%, Bharti Infratel down by 1.99%, Hindustan Unilever down by 1.88% and Hero MotoCorp was down by 1.75% were the top losers.

Asian markets were trading mostly in red; Hang Seng fell 78.77 points or 0.3% to 26,534.65, Taiwan Weighted declined 3.20 points or 0.03% to 10,722.60, Straits Times dropped 5.00 points or 0.16% to 3,115.92 and KOSPI was down by 5.34 points or 0.23% to 2,283.32.

On the other side, Shanghai Composite gained 8.06 points or 0.3% to 2,677.54 and Nikkei 225 was up by 251.64 points or 1.11% to 22,624.73.