Local equities continue lackluster trade

Local equity benchmarks continued their lackluster trade in morning session, with losses of around one third a percent. IndusInd Bank, Yes Bank and Bajaj Auto were the prime losers among heavy-weights, pushing the Sensex lower. Some concerns came with ICRA’s research report stating that the earnings released by 642 companies in the Indian corporate sector revealed that the revenue growth in the fourth quarter (January-March) of FY18-19 hit a six-quarter low at 10%. However, losses remain capped, as traders took some support with a report that US Commerce Secretary Wilbur Ross urged the Modi government to carry out reforms that will open up the Indian economy and market. Traders took some solace with Reserve Bank of India statement that it will infuse Rs 12,500 crore into the financial system through bond purchases on June 20. The decision has taken based on a review of the evolving liquidity conditions and assessment of the durable liquidity needs going forward. Besides, the Governing Council of the Niti Aayog will meet on June 15 to deliberate on measures to address pressing issues such as drought situation, rain-water harvesting and structure reforms in agriculture.

On the global front, Asian markets were trading mostly in red, as geopolitical tensions rose after apparent attacks on two tankers near the Strait of Hormuz. Back home, the Confederation of All India Traders (CAIT) has urged for lowering GST rates on various items like auto parts and aluminium utensils etc. It also suggested to review items placed under different tax slabs under GST as many of the products are overlapping.

The BSE Sensex is currently trading at 39612.59, down by 128.77 points or 0.32% after trading in a range of 39560.47 and 39799.90. There were 9 stocks advancing against 22 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index slipped 0.38%, while Small cap index was down by 0.13%.

The top gaining sectoral indices on the BSE were Capital Goods up by 0.63%, Metal up by 0.37%, Industrials up by 0.30%, Power up by 0.29% and Utilities was up by 0.19%, while Realty down by 1.66%, Healthcare down by 0.89%, BANKEX down by 0.71%, Energy down by 0.50% and Consumer Disc was down by 0.41% were the top losing indices on BSE.

The top gainers on the Sensex were Larsen & Toubro up by 1.12%, Vedanta up by 0.71%, Tata Steel up by 0.64%, ONGC up by 0.62% and Power Grid was up by 0.41%. On the flip side, IndusInd Bank down by 2.73%, Yes Bank down by 2.65%, Bajaj Auto down by 1.16%, Kotak Mahindra Bank down by 1.03% and Tata Motors - DVR was down by 0.97% were the top losers.

Meanwhile, ICRA in its latest report has said that India Inc delivered six-quarter low revenue growth of 10% in the fourth quarter of last financial year (Q4FY19). The low revenue growth was mainly on account of weakness in consumer sentiments and softening commodity prices. The revenue growth in consumer-linked sectors was only 3.8% in Q4FY19 on a year-on-year basis, down from 27.9% in Q3FY19. Commodity-linked sectors revenue growth slowed to 12.4% in Q4FY19 as against 51.4% in Q3FY19. The agency said the Ebitda margin of its sample declined by 44 basis points on a YoY basis and 23 basis points on a quarter-on-quarter basis to 16.6 percent.

However, the report mentioned that several sectors such as airlines, cement, consumer food and consumer durables reported sequential improvement in margins because of price hike initiated by companies in select sectors, lower cost of imports and softening in commodity prices. Besides, the report highlighted that the weakness in the consumer-linked sectors was visible across most consumer-oriented sectors such as passenger vehicles, two-wheelers, consumer durables and FMCG since second half of FY19. The decline in consumer sentiments was visible in both urban and rural segments.

The rating agency expects the demand in the automobile sector to remain subdued owing to weak consumer sentiments following rising ownership cost, subdued rural demand and tight financing environment given the liquidity constraints in the financial markets. The growth in the sector will start stabilising most likely from the second half of current financial year (FY20) because of pre-buying related to the impending implementation of BS-VI norms from April next year, especially in the CV segment.

Despite the expectation of a slowdown in automobile sales, the auto component industry is expected to grow between 10-11% in FY20 supported by increasing content per vehicle owing to transition to BS-VI and safety norms. Also, In FY20, the cement demand growth is likely to be around 8%, while domestic steel demand growth will moderate to 7%.

The CNX Nifty is currently trading at 11863.30, down by 50.75 points or 0.43% after trading in a range of 11849.55 and 11911.85. There were 13 stocks advancing against 37 stocks declining on the index.

The top gainers on Nifty were Larsen & Toubro up by 1.25%, Bharti Infratel up by 1.14%, ONGC up by 0.71%, Wipro up by 0.62% and Tata Steel was up by 0.60%. On the flip side, Zee Entertainment down by 4.99%, IndusInd Bank down by 3.04%, Indiabulls Housing down by 2.97%, Yes Bank down by 2.48% and Dr. Reddys Lab was down by 1.76% were the top losers.

Asian markets were trading mostly in red; Hang Seng decreased 162.46 points or 0.6% to 27,132.25, Taiwan Weighted dropped 26.82 points or 0.25% to 10,534.19, Jakarta Composite lost 22.30 points or 0.36% to 6,250.78, Shanghai Composite declined 7.59 points or 0.26% to 2,903.15 and KOSPI was down by 9.49 points or 0.45% to 2,093.66.

On the other side, Straits Times advanced 1.32 points or 0.04% to 3,221.98 and Nikkei 225 was up by 64.81 points or 0.31% to 21,096.81.