Local equities continue sluggish trend

Pressurized by mixed global cues, local equity benchmarks continued to show a sluggish trend in morning session, with losses of over half a percent. The frontline indices have drifted below the psychological 39,300 (Sensex) and 11,800 (Nifty) levels. Traders remain concerned with a report that housing finance growth is set to slow down to 13-15 percent this fiscal, lower than the average of the past three years, due to the lingering liquidity issues faced by non-banking lenders. There can also be an adverse impact on the outstanding housing credit, which stood at Rs 19.1 lakh crore as of March 2019. However, the downfall is arrested with a report that the trade war between the US and China has opened a window of opportunity for India to record additional exports in case of at least 354 items ranging from capital goods to base metals worth billions of dollars. Some support also came with a report that foreign investors remained net buyers in the domestic capital markets in June, pouring in a total of Rs 11,132 crore on a net basis this month so far. Foreign portfolio investors (FPI) pumped in a net sum of Rs 1,517.12 crore into equities and Rs 9,615.64 crore into debt during June 3-14. Besides, a private report stated that India has imposed higher customs duties on a raft of US goods in response to similar measures taken by Washington.

On the global front, Asian markets were trading mixed, as investors await a US Federal Reserve meeting set to happen later in the week stateside and the trade dispute between the US and China. Back home, a report stated that more central assistance to deal with farm sector distress and natural calamities, and compensation against loss of revenue on account of GST implementation beyond the five-year period were among the key demands raised by the states during the fifth Governing Council meeting of Niti Aayog.

The BSE Sensex is currently trading at 39251.31, down by 200.76 points or 0.51% after trading in a range of 39204.90 and 39540.42. There were 6 stocks advancing against 25 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index slipped 0.46%, while Small cap index was down by 0.56%.

The top gaining sectoral indices on the BSE were IT up by 0.15%, Healthcare up by 0.03% and TECK was up by 0.02%, while Energy was down by 1.49%, Metal down by 1.49%, Oil & Gas down by 1.34%, Basic Materials down by 1.21% and Realty was down by 0.84% were the top losing indices on BSE.

The top gainers on the Sensex were Yes Bank up by 0.69%, Mahindra & Mahindra up by 0.53%, TCS up by 0.22%, Infosys up by 0.22% and Sun Pharma was up by 0.06%. On the flip side, Tata Steel down by 2.10%, Vedanta down by 1.89%, Reliance Industries down by 1.67%, Axis Bank down by 1.32% and Bharti Airtel was down by 1.32% were the top losers.

Meanwhile, ICRA in its latest report has said that housing finance growth may slow down to 13-15% in current financial year (FY20), lower than the average of the past three years, due to the lingering liquidity issues faced by non-banking lenders. It highlighted the issues with the non-banking lenders since last September that has seen a slew of companies like DHFL and Reliance Capital suffering, slowed down credit growth of dedicated housing finance companies to 10% in last financial year (FY19). The overall industry loan growth for housing finance companies had slowed down to 15% for FY18.

It further mentioned that there can also be an adverse impact on the outstanding housing credit, which stood at Rs 19.1 lakh crore as of March 2019. It can be noted that the government is betting on housing sector as one of the major vehicles to push the sagging economic growth. However, given the under-penetration of mortgages, it expects growth to recover soon. The gross non-performing assets ratio from the overall housing finance exposures increased to 1.5 in March 2019, from 1.1 a year ago.

There could be some pressure on the asset quality owing to the challenging operating environment and the emerging risk factors. Besides, it said banks grew faster at 19% as against 13%, taking their overall market share to 64% from 62% in the year-ago period, and added that banks will lead the growth curve in FY20 as well.

The CNX Nifty is currently trading at 11755.00, down by 68.30 points or 0.58% after trading in a range of 11742.65 and 11844.05. There were 11 stocks advancing against 39 stocks declining on the index.

The top gainers on Nifty were Bharti Infratel up by 1.24%, Yes Bank up by 0.87%, Mahindra & Mahindra up by 0.43%, Indiabulls Housing up by 0.34% and Wipro was up by 0.33%. On the flip side, JSW Steel down by 2.38%, Tata Steel down by 2.26%, Grasim Industries down by 2.06%, Indian Oil Corporation down by 1.78% and Vedanta was down by 1.77% were the top losers.

Asian markets were trading mostly mixed; Jakarta Composite lost 19.41 points or 0.31% to 6,230.86, KOSPI fell 3.58 points or 0.17% to 2,091.83, Straits Times trembled 1.97 points or 0.06% to 3,220.66 and Shanghai Composite was down by 1.45 points or 0.05% to 2,880.52.

On the other side; Nikkei 225 surged 37.16 points or 0.18% to 21,154.05, Taiwan Weighted strengthened 28.72 points or 0.27% to 10,553.39 and Hang Seng was up by 214.63 points or 0.79% to 27,332.98.