Weak trade persists; Sensex loses over 300 points

Weak trade persisted on the street in late afternoon session, with Sensex and Nifty losing more than 300 and 90 points, despite higher opening in European markets. Trading sentiments remained lackluster with ICRA’s latest report stating that credit quality pressure on investment grade entities has risen in the six months of April-September 2018, with an increase in the downward rating pressure on them. This is also reflected in the rating drift of investment grade entities turning negative for the first time in four years, in the first half of financial year 2018-2019, as also the rise in the downgrade rate of investment grade entities. Anxiety also spread among traders after provisional estimate of the first phase of the 10th agricultural census showed that the average size of the Indian farmland shrank by over 6% between 2010-11 and 2015-16, with operational holding in the country dropping to 1.08 hectares from 1.15 hectares in 2010-11.

The street overlooked a private report stating that private equity (PE) players’ investments in Indian companies in the quarter ended September 2018 increased 60% over the same quarter last year to stand at $9.2 billion across 154 deals. On the sectoral front, stocks related to steel companies remained in focused amid reports that the Centre is considering a Steel Ministry's proposal to first merge the loss-making steel firms to create a single state-owned steel manufacturer to bring in efficiency. Back home, in scrip specific development, Coal India surged after the company reported provisional coal production of 40.24 million tonnes (MT) in September 2018, as against 38.76 MT reported during corresponding month of previous year.

On the global front, European markets were trading in green, after Italy's Prime Minister Giuseppe Conte said the euro was ‘unrenounceable’. Further, concerns about Italy's budget plan also eased amid the buzz that the country plans to reduce its budget deficit to 2% in 2021. On the data front, Euro area producer price inflation slowed for the first time in four months during August. As per preliminary data from the statistical office Eurostat, industrial producer prices on the domestic market rose 4.2% year-on-year following 4.3% in July, which was revised from 4%. However, Asian markets were trading in red, as worries about US-China trade tensions persisted and Japanese services sector data disappointed investors.

The BSE Sensex is currently trading at 36182.07, down by 344.07 points or 0.94% after trading in a range of 36178.20 and 36602.85. There were 11 stocks advancing against 20 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index was down by 0.15%, while Small cap index was up by 1.05%.

The top gaining sectoral indices on the BSE were Metal up by 2.95%, PSU up by 1.49%, Oil & Gas up by 0.96%, Capital Goods up by 0.76% and Basic Materials up by 0.63%, while Auto down by 1.85%, TECK down by 1.83%, IT down by 1.75%, Telecom down by 1.44% and Consumer Disc down by 1.15% were the top losing indices on BSE.

The top gainers on the Sensex were Yes Bank up by 6.96%, Vedanta up by 4.55%, Coal India up by 2.70%, ONGC up by 1.82% and Adani Ports & SEZ up by 1.53%. On the flip side, Mahindra & Mahindra down by 5.46%, TCS down by 3.41%, Axis Bank down by 2.80%, Infosys down by 1.74% and Kotak Mahindra Bank down by 1.73% were the top losers.

Meanwhile, providing some relief to the industries, credit rating agency, Crisil in its latest report has said that credit profiles of Indian corporates improved during the first half of the current fiscal year (H1FY19). As per the report, India Inc's credit ratio stood at 1.68 times in the April to September period as against 1.45 times in the preceding six months.

However, the rating agency pointed that credit profiles were moderated when compared to the same period last year (1.88 times in the first half of the previous fiscal year). Further, the report showed that the debt-weighted credit ratio of firms at 1.20 times during April- September 2018 against 1.53 times in the year-ago period and 3.19 times in the preceding six months.

Besides, Crisil listed the various risk factors for Indian companies in future such as the rupee depreciation, rising interest rates and tariff wars. But, Crisil-rated corporates are expected to sustain their credit risk profiles even in the face of headwinds, backed by strong demand, increased government spending towards infrastructure, and leaner balance sheets.

The CNX Nifty is currently trading at 10913.85, down by 94.45 points or 0.86% after trading in a range of 10900.40 and 10989.05. There were 18 stocks advancing against 32 stocks declining on the index.

The top gainers on Nifty were Yes Bank up by 6.62%, Hindalco up by 4.65%, HPCL up by 4.09%, Bajaj Finance up by 4.01% and Vedanta up by 3.93%. On the flip side, Mahindra & Mahindra down by 5.61%, Eicher Motors down by 5.39%, Bharti Infratel down by 5.14%, TCS down by 3.47% and UPL down by 3.34% were the top losers.

Asian markets were trading mostly in red; Nikkei 225 plunged 159.66 points or 0.66% to 24,110.96, Hang Seng decreased 35.12 points or 0.13% to 27,091.26, Taiwan Weighted fell 55.69 points or 0.51% to 10,863.94, Jakarta Composite declined 5.98 points or 0.1% to 5,869.64 and KOSPI was down by 29.31 points or 1.27% to 2,309.57. On the flip side, Shanghai Composite increased 29.58 points or 1.05% to 2,821.35 and Straits Times was up by 17.75 points or 0.54% to 3,260.40.

European markets were trading mostly in green; UK’s FTSE 100 increased 29.41 points or 0.39% to 7,503.96 and France’s CAC was up by 19.19 points or 0.35% to 5,487.08. ON the flip side, Germany’s DAX was down by 51.45 points or 0.42% to 12,287.58.