Local equities continue to trade slightly in red

Local equity benchmarks continued to trade slightly in red in morning session, with frontline gauges trading tad below their neutral lines owing to selling pressure in frontline counters. A level of pressure was seen on frontline stocks, especially Infosys and TCS. Traders remain concerned with a private report which stated that India’s budgets show the government’s been fixing unrealistic revenue targets, and in the process setting itself up for falling short of fiscal deficit goals. However, losses remain capped as the Prime Minister said that India is the fastest-growing large economy in the world and a recent report has estimated that it could be the second largest world economy by 2039.

On the global front, Asian markets were trading mostly in green, as investors watched key US-China trade talks aimed at averting punitive tariffs which could slow the global economy, and a weak yen boosted exporters.

Back home, on the sectoral front, infrastructure industry stocks were in focus as Ratings agency India Ratings & Research reported that it has maintained a ‘stable’ outlook on India’s road and aviation sector for the financial year 2019-20 on the back of ‘stable economic growth’. According to Ind-Ra, the per day road construction touched a record high of 31.4 km during 2018-19, constructing close to 11,000 km of roads and highways so far. Sugar industry stocks were on sidelines on a private report stating that world sugar prices are forecast to rise this year with the market swinging into deficit in the 2019/20 season. Raw sugar prices were expected to end the year at 14.60 cents per lb.

The BSE Sensex is currently trading at 36347.70, down by 47.33 points or 0.13% after trading in a range of 36312.21 and 36465.40. There were 17 stocks advancing against 14 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index gained 0.05%, while Small cap index was down by 0.37%.

The top gaining sectoral indices on the BSE were Metal up by 1.70%, Energy up by 0.92%, Basic Materials up by 0.51%, PSU up by 0.46% and Power was up by 0.40%, while IT down by 1.64%, TECK down by 1.54%, Telecom down by 1.17%, Realty down by 0.28%, Industrials was down by 0.24% were the top losing indices on BSE.

The top gainers on the Sensex were Coal India up by 1.90%, Tata Steel up by 1.77%, Vedanta up by 1.58%, Power Grid up by 1.23% and Yes Bank was up by 1.13%. On the flip side, Infosys down by 2.17%, TCS down by 1.83%, HCL Tech. down by 1.40%, Hero MotoCorp down by 1.32% and Bajaj Auto was down by 1.05% were the top losers.

Meanwhile, India Ratings & Research (Ind-Ra) in its latest report has maintained a stable outlook on India’s road sector for the financial year 2019-20 (FY20). As per report, it expects the infrastructure sector to remain stable in FY20 on the back of stable economic growth. The report highlighted that the per day road construction touched a record high of 31.4 km during 2018-19 (FY19), constructing close to 11,000 km of roads and highways so far.

However, it lagged caution for the government’s ambitious flagship highway construction programme, Bharatmala, stating that with only 13 % of projects being awarded under the programme so far, the project is yet to gain momentum. Works awarded under Bharatmala stand at an approximate value of 2,000 km, which is less than what the government had hoped for this year. Bharatmala is the government’s flagship highway construction programme which envisions to construct more than 60,000 km of national highways in two phases. The total estimated cost of the project is Rs 6.92 lakh crore. The first phase of the programme was launched in October 2017, which envisions to construct 34,800 km of national highways at an estimated cost of Rs 5.35 lakh crore.

Another revelation made by Ind-Ra was the shift from hybrid-annuity-model (HAM) to engineering-procurement-construction (EPC) model. According to the report, in the last one decade, builders opting for build-operate-transfer (BOT) model have been replaced by builders opting for HAM first and EPC later. The report noted ‘given the upfront availability of land in many Hybrid Annuity road projects, large and strong developers’ execution efficiency played in their favour with timely or earlier-than-scheduled construction in Ind-Ra portfolio’.

The CNX Nifty is currently trading at 10879.30, down by 9.50 points or 0.09% after trading in a range of 10862.25 and 10910.90. There were 31 stocks advancing against 19 stocks declining on the index.

The top gainers on Nifty were Indiabulls Housing Finance up by 3.57%, Tata Steel up by 1.77%, Coal India up by 1.74%, HPCL up by 1.68% and Zee Entertainment was up by 1.66%. On the flip side, Bharti Infratel down by 2.84%, Infosys down by 2.29%, TCS down by 1.98%, HCL Tech. down by 1.76% and Hero MotoCorp was down by 1.56% were the top losers.

Asian markets were trading mostly in green, Nikkei 225 surged 524.77 points or 2.58% to 20,857.94, Taiwan Weighted strengthened 85.00 points or 0.85% to 10,089.25, Shanghai Composite gained 19.23 points or 0.72% to 2,673.13, KOSPI rose 11.85 points or 0.54% to 2,192.58 and Straits Times was up by 0.25 points or 0.01% to 3,206.52.

On the other side, Hang Seng decreased 0.12 points to 28,143.72 and Jakarta Composite was down by 68.33 points or 1.05% to 6,426.67.