Benchmarks continue lackluster trade slightly in red

Indian equity benchmarks continued their lackluster trade slightly in red in afternoon session, as caution set in ahead of key economic data for July IIP and August CPI. Investors’ sentiment remain dented with private 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. It expects real GDP growth to slow to 7-7.3% in the second half of this fiscal from 8.2% in June 2018 quarter. Some anxiety also remained among the local traders with India Meteorological Department (IMD) data showing that the countrywide monsoon saw the highest rain deficiency of the season in August -- ironically the month when a large part of Kerala was submerged and many other states received excess rainfall. On the sectoral front, telecom sector was in focus after Manoj Sinha, telecom minister, has confided in the public that no more telecom operators will lose out to the increasing competition in the industry. Also, he said that the concerns rising after the consolidation in the sector need to be dispelled.

On the global front, Asian markets were trading mostly in red, as the specter of a further escalation in the Sino-U.S. trade war haunted investors. Back home, the BSE Sensex is currently trading at 37850.19, down by 71.98 points or 0.19% after trading in a range of 37793.27 and 38043.27. There were 15 stocks advancing against 16 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.15%, while Small cap index was up by 0.02%.

The top gaining sectoral indices on the BSE were Bankex up by 0.30%, Healthcare up by 0.29%, PSU up by 0.24%, IT up by 0.22% and Energy up by 0.15%, while FMCG down by 1.66%, Telecom down by 1.22%, Consumer Durables down by 1.00%, Realty down by 0.30% and Basic Materials down by 0.20% were the top losing indices on BSE.

The top gainers on the Sensex were SBI up by 1.86%, Mahindra & Mahindra up by 1.70%, Axis Bank up by 1.25%, Infosys up by 1.18% and Indusind Bank up by 1.13%. On the flip side, ITC down by 2.55%, Hero MotoCorp down by 2.08%, Power Grid down by 1.45%, Bharti Airtel down by 1.36% and Hindustan Unilever down by 1.16% were the top losers.

Meanwhile, global credit rating agency, Moody’s Investors Services in its latest report has said that the ongoing free fall in the value of the rupee against the US dollar is credit negative for Indian companies especially for those which generate revenue in rupees, but rely on US dollar debt to fund their operations and have significant dollar-based costs, including capital expenses. It noted that so far in 2018, the Indian rupee has depreciated by 13 percent against the dollar.

Moody’s said that nevertheless, most rated India-based corporates have protections in place -- including natural hedges, some US dollar revenues and financial hedges to limit the negative credit implications of a potential further 10 percent weakening of the rupee to the US dollar from September 6 rate of 72.11 a dollar.

According to the report, the 24 Moody's-rated India-based corporates across the high-yield and investment grade categories, 12 generate most of their revenue in US dollars or have contracts priced in US dollars, providing a natural hedge, and thus limiting the effect a weakening in the rupee could have on their cash flows. It noted that these 24 corporates include those in the IT, oil and gas, chemicals, automobiles, commodities, steel, and real estate development sectors.

The CNX Nifty is currently trading at 11430.85, down by 7.25 points or 0.06% after trading in a range of 11399.80 and 11479.40. There were 25 stocks advancing against 25 stocks declining on the index.

The top gainers on Nifty were SBI up by 2.09%, Bajaj Finserv up by 1.86%, Mahindra & Mahindra up by 1.80%, Sun Pharma up by 1.41% and Infosys up by 1.33%. On the flip side, Titan Co down by 2.75%, ITC down by 2.54%, Hero MotoCorp down by 2.07%, Bharti Infratel down by 2.01% and Power Grid down by 1.50% were the top losers.

Asian markets were trading mostly in red; Straits Times decreased 8.78 points or 0.28% to 3,112.14, Hang Seng was down by 97.44 points or 0.37% to 26,515.98, Shanghai Composite shed 9.96 points or 0.37% to 2,659.52 and KOSPI fell 5.46 points or 0.24% to 2,283.20.

On the flip side, Taiwan Weighted increased 26.50 points or 0.25% to 10,752.30 and Nikkei 225 surged 291.60 points or 1.29% to 22,664.69.