Local equities continue choppy trade in morning deals

Local equity benchmarks continued their choppy trade in morning deals with frontline gauges trading tad above their neutral lines owing to some buying in frontline blue-chip counters. Realty, Capital Goods and Power have elevated with gains on their respective front line stocks. Some optimism came with Agriculture Minister Narendra Singh Tomar’s statement there was ‘no cause of concern’ about monsoon following the latest IMD estimate, but the government is keeping a close watch on it. Support also came with Commerce Minister Piyush Goyal’s statement that formation of a Cooperative Sector Exports Promotion Forum (CSEPF) to achieve the target of doubling farm exports to $60 billion by 2022. He added the first-ever ‘International Cooperative Trade Fair’ will be organised between October 11 and 13 at Pragati Maidan in the national capital to promote exports by cooperatives. Traders took some solace with Finance Minister Nirmala Sitharaman’s statement that India still continues to be the fastest growing economy and demonetisation had no effect on the Indian economy. 

On the global front, Asian markets were trading in red as some concerns came over the latest US-China trade truce was overtaken by fresh concerns over Washington's threat of tariffs on additional European goods. Back home, the government may impose anti-dumping duty on imports of certain types of steel products from the EU, Japan, the US and South Korea, as the commerce ministry has started an investigation into an alleged dumping of the item following complaints from domestic players.

The BSE Sensex is currently trading at 39835.37, up by 18.89 points or 0.05% after trading in a range of 39732.38 and 39908.47. 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 0.08%, while Small cap index was up by 0.21%.

The top gaining sectoral indices on the BSE were Realty up by 0.79%, Capital Goods up by 0.64%, Industrials up by 0.44%, Power up by 0.42% and Telecom was up by 0.40%, while Metal down by 0.38%, Healthcare down by 0.35%, IT down by 0.22%, TECK down by 0.11% and Consumer Durables down by 0.08% were the top losing indices on BSE.

The top gainers on the Sensex were IndusInd Bank up by 1.74%, Asian Paints up by 1.45%, Yes Bank up by 1.14%, Larsen & Toubro up by 1.06% and Power Grid was up by 0.77%. On the flip side, Vedanta down by 1.80%, Tata Motors down by 0.73%, HDFC down by 0.68%, ONGC down by 0.60% and HCL Tech was down by 0.59% were the top losers.

Meanwhile, Ratings agency Crisil in its latest report has stated that scaling up and the need to build digital capabilities will lead to faster consolidation among the mid-tier information technology (IT) companies in India. As per report, exit by promoters of tier II firms in the past two years who are capitalising on higher valuations and better growth prospects will also drive this trend. It mentioned that the IT companies' legacy businesses such as time and material contracts have become commoditised, posing significant growth and profitability challenges.

It has analysed 22 such mid-tier IT firms with turnover between Rs 1,000 - Rs 10,000 crore and found that there is a consolidation opportunity in Rs 33,000 crore worth of market capitalisation. Without taking any names like Bengaluru's Mindtree which is being acquired by L&T, it said moves entailing switch of ownership for Rs 18,000 crore are already in progress.

Besides, it said scale is very important in the IT business as clients prefer to work with established players with proven execution records, and pointed out to slower revenue growth of 13 per cent posted by mid-tier players between FY13-19, which is 3 percentage points slower than the tier-I firms. The tier-II companies have been slower in embracing the digital services arena, which has grown at 30 per cent over the past three years. Accordingly, digital revenues for tier-II firms have grown at a slower pace (15 to 22 per cent in three years), than the same for tier-I firms (17 to 29 per cent).

The CNX Nifty is currently trading at 11911.35, up by 1.05 points or 0.01% after trading in a range of 11887.05 and 11932.15. There were 27 stocks advancing against 23 stocks declining on the index.

The top gainers on Nifty were Indiabulls Housing Finance up by 2.47%, IndusInd Bank up by 1.76%, Asian Paints up by 1.45%, Yes Bank up by 1.14% and Larsen & Toubro was up by 1.03%. On the flip side, Vedanta down by 1.86%, GAIL India down by 1.30%, Dr. Reddy’s Lab down by 1.20%, Hindalco down by 1.17% and Eicher Motors was down by 1.06% were the top losers.

Asian markets were trading in red; Nikkei 225 slipped 149.35 points or 0.69% to 21,604.92, Taiwan Weighted dropped 124.47 points or 1.15% to 10,740.65, Hang Seng decreased 44.99 points or 0.16% to 28,830.57, Jakarta Composite lost 35.46 points or 0.56% to 6,349.44, KOSPI fell 23.54 points or 1.11% to 2,098.48, Shanghai Composite declined 21.21 points or 0.7% to 3,022.73 and Straits Times was down by 11.16 points or 0.33% to 3,359.64.