Bourses end sluggish day with over half a percent cut

Equity benchmarks saw sluggish trading session on Friday, with Sensex and Nifty closing lower by over half a percent each. The start of the day was positive, aided by the International Monetary Fund’s (IMF) statement that the country has been one of the fastest growing large economies in the world, with growth averaging about 7% over the past five years. IMF said important reforms have been implemented and it feel that more reforms are needed to sustain this high growth, including to harness the demographic dividend opportunity, which India has. Some support also came with report that Finance Minister Arun Jaitley has made a case for setting up GST Council-like federal institutions to promote healthcare, rural development and agriculture sectors by optimally utilising resources of the centre and states. He said agriculture, rural development and healthcare is one area where the central government spends a lot of money on supporting farmers, creating infrastructure and building health centres for poor population.

But, bourses failed to hold gaining momentum and turned negative in noon deals, as Fitch Ratings in its Global Economic Outlook lowered India’s Gross domestic product (GDP) growth forecast to 6.8% for fiscal year 2020  from 7% estimated earlier, on the back of weaker than expected momentum in the economy. Some anxiety also came in with a report that India expressed concern over the widening trade deficit with China which has ballooned to over $58 billion, with the country’s new envoy saying that addressing the issue would be his top priority. Sentiments also remained downbeat with a private report that the liquidity crisis in the non-banking finance companies (NBFC) space triggered by the default of infrastructure ending major IL&FS last September is continuing to have an impact on mutual fund (MF) deployments in the sector. The overall exposure of debt MFs to NBFCs stood at Rs 2.2 lakh crore in February, a drop of Rs 45,386 crore since July 2018 when the liquidity stress first emerged.

On the global front, European markets were trading in red, as weak euro zone data rekindled growth worries. A gauge of Eurozone manufacturing activity dropped further to a 71-month low of 47.6 in March versus 49.5 expected and 49.3 in the previous month. The services PMI also dipped to 52.7 from 52.8, raising concerns that the economic downturn is gaining momentum. Besides, UK consumer price inflation unexpectedly accelerated in February for the first time in six months. The preliminary data from the Office for National Statistics showed that the consumer price index rose 1.9 percent year-on-year following a 1.8 percent increase in January. Asian markets ended mostly in green, ahead of US-China trade talks beginning in Beijing next week. A new round of high-level US-China trade negotiations will take place next Thursday and Friday while Chinese Vice Premier Liu He is expected to meet officials in Washington in early April.

Back home, airlines stocks ended higher, after the domestic air passenger volume rose at growth of 5.62% in the month of February 2019. According to the Directorate General of Civil Aviation (DGCA) data, domestic airlines flew 113.49 lakh passengers in February 2019, as against 107.44 lakh passengers carried in the same month of last year. Further, sugar sector stocks remained in focus, amid reports that the food ministry asked states to ensure that sugar mills are not selling the sweetener at below the minimum selling price (MSP), which has been increased recently to Rs 31 a kilogram from Rs 29. It said all mills have to sell sugar at Rs 31 a kg plus GST and transportation charges and action may be taken against mills selling sugar below floor price.

Finally, the BSE Sensex lost 222.14 points or 0.58% to 38,164.61, while the CNX Nifty was down by 64.15 points or 0.56% to 11,456.90.

The BSE Sensex touched a high and a low of 38,564.71 and 38,089.36, respectively and there were 09 stocks advancing against 22 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index declined 0.59%, while Small cap index down by 0.44%.

The top gaining sectoral indices on the BSE were Power up by 0.85%, Realty up by 0.70%, Capital Goods up by 0.60%, Utilities up by 0.50% and Basic Materials up by 0.08%, while Energy down by 2.01%, Telecom down by 1.42%, Auto down by 1.26%, Oil & Gas down by 1.25% and PSU down by 1.07% were the top losing indices on BSE.

The top gainers on the Sensex were NTPC up by 3.67%, Larsen & Toubro up by 1.54%, Asian Paints up by 1.08%, Tata Steel up by 0.90% and Power Grid up by 0.53%. On the flip side, Tata Motors - DVR down by 2.80%, Tata Motors down by 2.47%, Reliance Industries down by 2.44%, Coal India down by 2.21% and Maruti Suzuki down by 1.84% were the top losers.

Meanwhile, ICRA in its latest report has said that as many as 52 road projects worth Rs 37,019 crore were sold between 2015 and 2018 on account of liquidity crisis faced by their promoters or the special purpose vehicles executing them. Of the total 52 projects, 6 were sold at a discount, while the remaining projects were sold at a premium ranging between 2 and 21%. It mentioned that M&As in the road sector, which saw an improvement post-relaxation of the exit policy in May 2015, has seen slowdown after mid-2016, possibly due to the introduction of the toll-operate-transfer (TOT) model.

The report further highlighted most road projects gave low returns to promoters. Developers with a weak credit profile sold their assets at a loss due to liquidity crisis more. It added that the change of ownership has significantly improved the refinancing ability of these projects. Moreover, it said many projects have refinanced debt with longer tenure and lower interest rate. Around one-third of the assets saw steep rating upgrades, the median upward rating transition in these cases is five notches.

Besides, it also stated that execution of projects grew at an annual growth rate of 23% between FY14 and FY18 and stood at 6,715 km during the first nine months of FY19. On the hybrid annuity projects, it noted that around 60% contracts awarded have achieved financial closure till date with private sector banks taking lead as many state-run banks are under principal component analysis. For around 34% of total HAM awards, there is a delay in announcing the appointed date, despite achieving financial closure due to the lack of possession of 80% of the right of way. Meanwhile, the raging agency in report mentioned stable outlook for the sector given the significant pipeline of projects to be awarded which will boost the order book of road developers/EPC contractors.

The CNX Nifty traded in a range of 11,572.80 and 11,434.55. There were 19 stocks advancing against 31 stocks declining on the index.

The top gainers on Nifty were NTPC up by 3.75%, Larsen & Toubro up by 1.76%, Asian Paints up by 1.03%, JSW Steel up by 0.96 % and Infosys up by 0.82%. On the flip side, BPCL down by 3.12%, Bharti Infratel down by 3.00%, Tata Motors down by 2.72%, HPCL down by 2.51% and IOC down by 2.36% were the top losers.

All the European markets were trading in red; UK’s FTSE 100 lost 66.37 points or 0.9% to 7,288.94, France’s CAC declined 49.64 points or 0.92% to 5,329.21 and Germany’s DAX was down by 51.70 points or 0.45% to 11,498.26.

Asian markets ended mostly higher on Friday, even though the initial euphoria over Fed's dovish stance faded and investors looked ahead to a new round of high-level US-China trade negotiations beginning in Beijing next week for direction. Brexit developments also remained in spotlight after EU leaders agreed on a plan to delay the Article 50 process. Japanese shares ended tad higher as chipmakers rallied amid the buzz that Apple is preparing to release the AirPower sometime soon. On the economic front, the latest survey from Nikkei revealed that the manufacturing sector in Japan continued to contract at a steady pace, with a manufacturing PMI score of 48.9. That's unchanged from the February reading.