Local equities trade flat with positive bias

Local equity benchmarks were trading flat with positive bias in morning session. Traders were seen piling positions in Metal, Healthcare and Auto sector stocks, while selling was witnessed in Bankex, Realty and Consumer Durables sector stocks. Some support came with Commerce Minister Suresh Prabhu’s statement that India's merchandise and services export would touch $540-billion mark this fiscal. He said exports are growing at a healthy pace and shipments of goods would reach over $330 billion. However, gains remain capped with rating agency CRISIL is expecting a sharp slowdown in India Inc.’s top line growth during the fourth quarter, driven by lower commodity prices. According to the rating agency, recent decline in prices will translate into lower prices for commodity producers, leading to a moderation in overall top line growth. Besides, former RBI Governor Y V Reddy stated that the Niti Aayog suffers from a ‘wide mandate’ and ‘diffused focus’ and there is a need to reinvent the organisation in the context of fiscal federalism.

On the global front, Asian markets were trading mostly in green, putting them on course to end the week on a positive note with investors looking past a downgrade of US growth to focus on the next round of top-level China-US trade talks. Back home, Healthcare Industry stocks were in focus with the Ministry of External Affairs’ (MEA) statement that an agreement has been signed between India and the African Union to initiate and strengthen the cooperation in health sector in a structured and organised manner by establishing an India-Africa health sciences collaborative platform.

The BSE Sensex is currently trading at 38579.49, up by 33.77 points or 0.09% after trading in a range of 38546.68 and 38748.54. There were 18 stocks advancing against 13 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.76%, while Small cap index was up by 0.46%.

The top gaining sectoral indices on the BSE were Metal up by 2.25%, Healthcare up by 1.31%, Auto up by 1.26%, Telecom up by 1.10% and Capital Goods was up by 1.08%, while BANKEX down by 0.50%, Realty down by 0.39% and Consumer Durables was down by 0.23% were the few losing indices on BSE.

The top gainers on the Sensex were Vedanta up by 3.31%, Tata Motors up by 2.49%, Tata Steel up by 2.07%, Tata Motors - DVR up by 1.95% and Mahindra & Mahindra was up by 1.89%. On the flip side, IndusInd Bank down by 1.92%, Axis Bank down by 1.06%, ICICI Bank down by 0.97%, ITC down by 0.92% and Bajaj was Auto down by 0.80% were the top losers.

Meanwhile, CRISIL Research, a global analytical company providing ratings, research, and risk and policy advisory services, in its latest report has said that India Inc.’s revenue growth may halve in the fourth quarter of current financial year (Q4FY19) on account of slump in commodity prices. The decline will be led by key commodities such as steel products, aluminium, natural gas and petrochemicals, which have softened significantly, impacting realisations. The agency is expecting on-year corporate revenue growth for the current quarter to print at 8-9%, down sharply from the average of 16.5% in the previous three quarters.

However, it expects fall in input costs will shore up profitability of end-user industries. The decline in revenue growth will be cushioned by other consumer sectors. Among others, retail has support from positive demand sentiment, while airline services stand to benefit from a sharp increase in domestic fares this quarter. Export-linked sectors such as IT services and pharmaceuticals, on their part, stand to gain from a weakening in the rupee on a year-on-year basis, though it has strengthened quarter-on-quarter.

Besides, with lower top-line growth, India Inc. is staring at dampened profitability at the operating level. Growth in operating profit, or earnings before interest, tax, depreciation and amortisation, is expected to print lower, at 7% on-year compared with the 13% average in the preceding three quarters. The forecast is based on CRISIL Research’s analysis of 354 companies, which account for 67% of the market capitalisation of the National Stock Exchange, excluding banking, financial services and insurance (BFSI) and oil sectors.

The CNX Nifty is currently trading at 11583.25, up by 13.25 points or 0.11% after trading in a range of 11570.15 and 11630.20. There were 32 stocks advancing against 18 stocks declining on the index.

The top gainers on Nifty were Vedanta up by 3.68%, JSW Steel up by 3.14%, Tata Steel up by 2.33%, Tata Motors up by 2.20% and Mahindra & Mahindra was up by 1.97%. On the flip side, IndusInd Bank down by 1.96%, Titan Company down by 1.49%, GAIL India down by 1.42%, Bajaj Auto down by 1.36% and Eicher Motors was down by 1.24% were the top losers.

Asian market were trading mostly in green, Hang Seng increased 235.01 points or 0.82% to 29,010.22, Nikkei 225 surged 164.60 points or 0.78% to 21,198.36, Taiwan Weighted strengthened 72.69 points or 0.69% to 10,608.95, Shanghai Composite gained 70.81 points or 2.36% to 3,065.75, Straits Times rose 14.78 points or 0.46% to 3,218.36 and KOSPI was up by 9.48 points or 0.45% to 2,137.58. On the other hand, Jakarta Composite was down by 37.15 points or 0.57% to 6,443.64.