Local equities magnify losses in morning deals

Local equity markets have magnified their losses in morning deals, both Sensex and Nifty were trading below their crucial 33,700 and 10,150 marks, respectively. Metal, Telecom, Basic Materials and Power counters witnessed notable losses, while Healthcare and IT sectors edged higher. A level of pressure was seen on frontline stocks, especially Tata Steel and Bharti Airtel. Traders remained concerned with a report stating that Indian stocks are over-valued and that earnings growth could slow in the wake of macro headwinds, foreign funds have been taking risk off the table. The chances of capital losses in the bond markets, as yields rise, has seen money move out of the debt market too. Market participant also remained on the sidelines with a private report stating that India, which presently has a rich demographic dividend, will need 9.94 crore additional jobs over the decade. It highlighted warning that lack of concrete efforts could push India into ‘jobless growth’. Moreover, 80% of the new jobs demand will come from Tier 2 and Tier 3 districts of just 10 states.

On the global front, Asian markets were trading mostly in green, following a bounce on Wall Street, with attention turning to the release of key US jobs data later in the week. Back home, on the sectoral front, Power industries stocks fell, as CRISIL reported that as much as 35 giga-watt (GW) of conventional power generation capacity is expected to be added between FY19-23 compared with 88 GW added over the past five fiscals. The slowdown has been attributed to the diminishing scope for new long-term power purchase agreements (PPAs) as major distribution companies (discoms) have already tied up excessive long-term PPAs to meet their respective demand.

The BSE Sensex is currently trading at 33677.52, down by 213.61 points or 0.63% after trading in a range of 33587.24 and 34050.12. There were 4 stocks advancing against 27 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index slipped 0.44%, while Small cap index was down by 0.33%.

The few gaining sectoral indices on the BSE were IT up by 1.27%, TECK up by 0.68% and Healthcare was up by 0.01%, while Metal down by 3.40%, Telecom down by 2.45%, Basic Materials down by 1.76%, PSU down by 1.32% and Power was down by 1.27% were the top losing indices on BSE.

The top gainers on the Sensex were Infosys up by 2.31%, HDFC up by 1.63%, Hero MotoCorp up by 0.50% and Sun Pharma was up by 0.46%. On the flip side, Tata Steel down by 5.92%, Bharti Airtel down by 4.09%, Coal India down by 3.44%, Maruti Suzuki down by 2.67% and Tata Motors – DVR was down by 2.07% were the top losers.

Meanwhile, the high-level the Financial Stability and Development Council (FSDC), headed by the finance minister has discussed interest rates and liquidity issue faced by the non-banking financial companies (NBFCs). The meeting assumes importance as the FSDC was meeting for the first time after RBI Deputy Governor Viral Acharya raised the issues regarding the independence of the central bank.

Reserve Bank Governor Urjit Patel has said that the liquidity problem in NBFCs is not as severe as was being projected, but assured the government that the central bank would ensure adequate liquidity in the system. He also informed the government that there is no liquidity crunch in the system, barring certain sectors and assured they are keeping a close watch on the financial sector. The government, on its part, asked the RBI to prevent spreading of IL&FS crisis to other sectors of the economy. Among other things, the issue regarding cyber-security in financial markets also came up for discussion. The meeting also deliberated on the need for identifying and securing critical information infrastructure in financial sector.

The FSDC comprises Reserve Bank Governor, Sebi Chairman, and heads of other regulators like PFRDA, IRDAI, and also Chairman of the Insolvency and Bankruptcy Board (IBBI). It was set up to strengthen and institutionalise the mechanism for maintaining financial stability, enhancing inter-regulatory coordination and promoting financial sector development.

The CNX Nifty is currently trading at 10143.10, down by 55.30 points or 0.54% after trading in a range of 10105.10 and 10246.00. There were 11 stocks advancing against 39 stocks declining on the index.

The top gainers on Nifty were Tech Mahindra up by 4.15%, Infosys up by 2.65%, Indiabulls Housing Finance up by 2.45%, HDFC up by 1.79% and UPL was up by 1.52%. On the flip side, Tata Steel down by 5.46%, Dr. Reddy’s Lab down by 4.24%, Bharti Airtel down by 4.14%, Coal India down by 3.34% and Hindalco down was by 2.79% were the top losers.

Asian markets were trading mostly in green, Taiwan Weighted surged 189.22 points or 1.95% to 9,715.33, Hang Seng strengthened 160.49 points or 0.65% to 24,746.02, Nikkei 225 soared 389.23 points or 1.78% to 21,846.52, KOSPI gained 5.49 points or 0.27% to 2,020.18, Shanghai Composite advanced 29.00 points or 1.12% to 2,597.05 and Straits Times was up by 19.24 points or 0.64% to 2,985.69.

On the other hand, Jakarta Composite was down by 19.00 points or 0.33% to 5,770.10.