Local equities enter into negative terrain in morning deals

Pressurized by feeble global cues, local equity benchmarks wiped out all of their early gains to enter into negative territory in the morning deals, breaching their crucial 38,400 (Sensex) and 11,500 (Nifty) levels. Traders turned cautious as Fitch Ratings in its latest report cut India’s economic growth forecast for the next financial year starting April 1, to 6.8% from its previous estimate of 7%, on weaker than expected momentum in the economy. Some pessimism also came 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 here saying that addressing the issue would be his top priority. However, the downfall is arrested with International Monetary Fund (IMF) report that India has been one of the fastest growing large economies in the world, asserting that the country has carried out several key reforms in the last five years, but more needs to be done. Meanwhile, Reserve Bank of India (RBI) data showed that Modi government’s sustained push in the infrastructure sector has led to rise in bank credit growth, reversing the fall seen in the last 2 years.

On the global front, Asian markets were trading mostly in red, as investors grappled with the consequences of a recent change in interest rate outlook at the US Federal Reserve. Back home, on the sectoral front, IT industry stocks were trading in red, despite Information Technology Minister Ravi Shankar Prasad stated that the IT sector has created 8.73 lakh new jobs in the past five years.

The BSE Sensex is currently trading at 38335.04, down by 51.71 points or 0.13% after trading in a range of 38331.32 and 38564.71. There were 15 stocks advancing against 16 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index slipped 0.08%, while Small cap index was down by 0.06%.

The gaining sectoral indices on the BSE were Capital Goods up by 1.27%, Realty up by 0.95%, Industrials up by 0.53%, Power up by 0.44% and Utilities was up by 0.28%, while Energy down by 0.63%, Auto down by 0.52%, Oil & Gas down by 0.51%, TECK down by 0.44% and IT was down by 0.43% were the top losing indices on BSE.

The top gainers on the Sensex were Larsen & Toubro up by 2.31%, Bharti Airtel up by 1.06%, Yes Bank up by 1.05%, NTPC up by 1.04% and Tata Steel was up by 0.97%. On the flip side, Coal India down by 2.15%, Mahindra & Mahindra down by 1.24%, TCS down by 1.03%, Maruti Suzuki down by 1.02% and Tata Motors - DVR was down by 0.90% 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 is currently trading at 11498.05, down by 23.00 points or 0.20% after trading in a range of 11497.20 and 11572.80. There were 19 stocks advancing against 31 stocks declining on the index.

The top gainers on Nifty were Larsen & Toubro up by 2.42%, Titan Company up by 1.33%, NTPC up by 1.08%, Indiabulls Housing Finance up by 1.02% and Yes Bank was up by 0.93%. On the flip side, Zee Entertainment down by 2.13%, HPCL down by 2.11%, Coal India down by 2.11%, BPCL down by 1.36% and Bharti Infratel was down by 1.28% were the top losers.

Asian markets were trading mostly in red; Hang Seng decreased 96.39 points or 0.33% to 28,975.17, Shanghai Composite declined 23.90 points or 0.77% to 3,077.56, Straits Times trembled 1.17 points or 0.04% to 3,212.48, KOSPI fell 3.66 points or 0.17% to 2,181.22, Jakarta Composite dropped 3.91 points or 0.06% to 6,497.87 and Nikkei 225 was down by 11.08 points or 0.05% to 21,597.84. On the other hand, Taiwan Weighted was up by 6.46 points or 0.06% to 10,616.01.