Frontline equities extend losses in morning deals

Pressurized by feeble global cues, frontline equity indices extended their losses in morning session, with the Sensex and the Nifty falling around 350 and 80 points, respectively. A level of pressure was seen on frontline stocks, especially Infosys, Reliance Industries and TCS. Sentiments were downbeat with report stating that after the strong upswing in April-June quarter, GDP growth for July-September is expected to dip to 7.2 per cent due to sluggishness in agriculture and industry. Market participants remained pessimistic with report that India's crude oil imports in October rose to their highest level in at least more than seven years. Crude imports in October climbed 10.5 percent from a year earlier to 21.02 million tonnes, the highest monthly import figure in PPAC data going back to April 2011. Traders shrugged off EPFO payroll data reported that Job creation more than doubled to 9.73 lakh in September, the highest monthly addition since September 2017, compared to 4.11 lakh in the same month last year. Besides, a private report stated that the World Bank has suggested that India reorient its policies in a way that helps companies across sectors achieve high growth rates instead of focussing exclusively on startups and hi-tech firms.

On the global front, Asian markets were trading mostly in red, following the continued weakness overnight on Wall Street as disappointing corporate earnings results, the plunge in crude oil prices and US-China trade tensions added to worries about global economic growth. Back on domestic turf, on the sectoral front, banking stocks were trading in green with the Reserve Bank of India stating that Indian banks may get a reprieve of about Rs 13,400 crore in capital exemption. The biggest beneficiary of this would be the government, because the RBI decision would lessen the burden on it to bridge a capital shortage at several state-run banks.

The BSE Sensex is currently trading at 35120.01, down by 354.50 points or 1.00% after trading in a range of 35112.49 and 35494.25. There were 11 stocks advancing against 20 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index slipped 0.15%, while Small cap index was down by 0.52%.

The top gaining sectoral indices on the BSE were Healthcare up by 0.59%, Telecom up by 0.34%, Realty up by 0.32%, Oil & Gas up by 0.22% and PSU was up by 0.15%, while IT down by 3.31%, TECK down by 2.81%, Energy down by 1.37%, Utilities down by 0.98% and Power was down by 0.98% were the top losing indices on BSE.

The top gainers on the Sensex were Yes Bank up by 3.01%, Asian Paints up by 1.35%, ONGC up by 1.02%, Bharti Airtel up by 0.98% and Sun Pharma was up by 0.63%. On the flip side, Infosys down by 4.15%, TCS down by 3.41%, Reliance Industries down by 2.71%, Power Grid Corporation down by 1.68% and Mahindra & Mahindra was down by 1.53% were the top losers.

Meanwhile, global rating agency Moody’s Investors Service in its latest report has said that the decision of the Reserve Bank of India’s (RBI) board to extend the timeline for the full implementation of Basel 3 norms by a year is a credit-negative for Indian public sector banks (PSBs). It also said that the decision to restructure stressed standard assets of micro, small and medium enterprises (MSME) borrowers with aggregate credit facilities of up to Rs 25 crore too has the potential for having negative implications for the credit profiles of Indian banks.

The US-based rating agency expects that all PSBs would have a core equity tier 1 (CET1) ratio of at least 8 percent by the end of March 2019, based on the government's commitment that it would capitalize all these banks to a level sufficient to meet the minimum regulatory capital norms. It said 'with the regulatory timelines now extended, it may be a case that at least some of the rated public sector banks' CET1 ratios over the next 12 months would be lower than what we currently expect.'

Talking about RBI's proposed MSME loan restructuring scheme, the report noted that the track record of such asset classification, when seen over the last few years in India, has shown that they have largely been unsuccessful in addressing the underlying stress. On the contrary, it said that keeping stressed loans in the standard category has led to an underestimation of the extent of underlying asset quality issues by bank managements, and consequently the severity of the actions that they need to take to address the issue.

The CNX Nifty is currently trading at 10573.35, down by 82.85 points or 0.78% after trading in a range of 10562.35 and 10671.30. There were 21 stocks advancing against 29 stocks declining on the index.

The top gainers on Nifty were Dr Reddys Lab up by 6.80%, Yes Bank up by 3.28%, Indian Oil Corporation up by 2.91%, BPCL up by 2.66% and HPCL was up by 2.20%. On the flip side, Infosys down by 4.16%, TCS down by 3.37%, Tech Mahindra down by 3.21%, Reliance Industries down by 2.50% and HCL Tech was down by 2.10% were the top losers.

Asian markets were trading mostly in red; KOSPI slipped 9.96 points or 0.48% to 2,072.62, Jakarta Composite declined 56.76 points or 0.95% to 5,948.54, Shanghai Composite fell 3.39 points or 0.13% to 2,642.46, Nikkei 225 dropped 63.39 points or 0.29% to 21,519.73 and Taiwan Weighted was down by 5.79 points or 0.06% to 9,738.20.

On the other hand; Straits Times gained 12.68 points or 0.42% to 3,039.67 and Hang Seng was up by 6.99 points or 0.03% to 25,847.33.