Weak trade persists on Dalal Street

Bears held their grip on the markets in late afternoon session, with both the larger peers, Sensex and Nifty continuing their weak trade, on the back of heavy selling in IT and TECK stocks. Domestic sentiments got hit with a private report stating that continuing their selling spree in the September quarter, foreign investors pulled out $900 million from the Indian equity market on widening current account deficit due to a surge in oil prices and depreciating rupee. Traders were taking note of reports that the government intends to impose higher penalties on companies if they fail to report cases of a data breach of Indian users to concerned authorities. However, the markets managed to trim some losses, as traders got some relief as the Finance Ministry is confident of achieving the disinvestment target of Rs 80,000 crore set for the current fiscal. Any shortfall in disinvestment target would only further worsen the fiscal deficit situation, weakening investor confidence.

 On the sectoral front, stocks related to oil industry were trading higher, buoyed by Fitch Ratings’ latest report showing that India’s Oil Marketing Companies (OMCs) are likely to invest between $35 billion and $40 billion over the next five years in capacity expansion and refinery upgradation to meet the new emission standards in 2020. Further, sugar stocks were in sweet spot amid private report that India poised to topple Brazil as the world's biggest sugar producer.

On the global side, European markets were trading in green, despite reports that Germany's industrial producer prices rose at the fastest pace in 18 months during October. The figures from the Federal Statistical Office showed that producer prices rose 3.3 percent year-on-year following a 3.2 percent increase in September. Meanwhile, France's jobless rate was unchanged in the third quarter from the previous three months. As per preliminary data from INSEE, the ILO unemployment rate for the metropolitan France was 8.8 percent, unchanged from the second quarter, but was 0.5 points lower than a year ago. The number of unemployed rose by 22,000 sequentially to 2.6 million persons. Asian markets were trading mixed, as investors fret about slowing global growth and the outlook for corporate earnings.

The BSE Sensex is currently trading at 35325.19, down by 149.32 points or 0.42% after trading in a range of 35112.49 and 35494.25. There were 16 stocks advancing against 15 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.58%, while Small cap index was up by 0.11%.

The top gaining sectoral indices on the BSE were Realty up by 1.71%, Healthcare up by 1.31%, Bankex up by 0.88%, Telecom up by 0.82% and Consumer Durables up by 0.81%, while IT down by 2.61%, TECK down by 2.18%, Energy down by 0.95%, Power down by 0.62% and Metal down by 0.56% were the top losing indices on BSE.

The top gainers on the Sensex were Yes Bank up by 3.27%, Axis Bank up by 2.31%, Adani Ports & SEZ up by 2.00%, Sun Pharma up by 1.74% and Maruti Suzuki up by 1.69%. On the flip side, TCS down by 3.24%, Infosys down by 2.82%, Power Grid Corporation down by 2.21%, Bajaj Auto down by 2.02% and Wipro down by 1.88% were the top losers.

Meanwhile, credit rating agency, Fitch Ratings is expecting $35-40 billion of investment over 5 years by India’s oil marketing firms in capacity expansion and refinery upgradation, in order to meet the new emission standards in 2020.

In its latest report, the rating agency however expressed concerns that the profitability of Indian Oil (IOC), Bharat Petroleum (BPCL) and Hindustan Petroleum (HPCL) in 2018-19, may get hit by the government’s move to lower retail fuel prices, before being reversed the next fiscal. As per the report, the three companies’ credit metrics are likely to weaken moderately in 2019 as a result of lower retail and refining margins and large ongoing capex.

The report further pointed that the fuel-price reduction highlights the regulatory risks for Indian OMCs as a result of rising crude oil prices and the weakening rupee, especially with the upcoming elections in 2019 and continuing margin pressure through 2019-20. The agency also said that strong GDP growth expectations in India over the next two years should support petroleum product consumption growth in a range between 4% and 5% and the focus on cleaner fuel together with strong growth plans in city gas distribution is likely to support stable consumption growth in natural gas.

The CNX Nifty is currently trading at 10632.70, down by 23.50 points or 0.22% after trading in a range of 10562.35 and 10671.30. There were 28 stocks advancing against 22 stocks declining on the index.

The top gainers on Nifty were Dr. Reddy’s Lab up by 6.71%, Yes Bank up by 3.57%, Bajaj Finserv up by 2.89%, UPL up by 2.83% and Grasim Industries up by 2.55%. On the flip side, TCS down by 3.31%, Infosys down by 3.02%, Power Grid Corporation down by 2.79%, Zee Entertainment down by 2.27% and HCL Tech. down by 2.07% were the top losers.

Asian markets were trading mixed; Straits Times increased 12.67 points or 0.42% to 3,039.66, Shanghai Composite rose 5.66 points or 0.21% to 2,651.51, Hang Seng jumped 131.13 points or 0.5% to 25,971.47 and KOSPI decreased 6.03 points or 0.29% to 2,076.55. On the flip side, Jakarta Composite decreased 68.06 points or 1.15% to 5,937.24, Taiwan Weighted lost 2.47 points or 0.03% to 9,741.52 and Nikkei 225 was down by 75.58 points or 0.35% to 21,507.54.
 
All European markets were trading in green; UK’s FTSE 100 increased 41.57 points or 0.59% to 6,989.49, France’s CAC added 27.90 points or 0.56% to 4,952.79 and Germany’s DAX was up by 103.28 points or 0.92% to 11,169.69.