Post Session: Quick Review

In volatile session of trade, Indian equity benchmarks pared all of their losses to end flat on Tuesday, as investors awaited corporate results for the April to June quarter of current financial year for further cues. Domestic indices made a slightly negative start, tracking weakness in Asian peers. Markets extended their fall, as traders remained cautious with CARE Ratings’ report that economic slowdown has begun to dent the credit profile of India Inc. There has been a deterioration in the credit quality of entities rated in the first quarter of the current financial year, showing effect of the prevailing slowdown in the Indian economy. It added that the credit rating downgrades have been largely on account of liquidity pressure leading to, at times, delays in debt servicing, high debt levels, weakening profit margins, decline in scale of operations. Some worry also came in with a private report that India’s decision to raise duties on gasoline and diesel is unlikely to threaten the inflation outlook, keeping alive expectations of more interest rate cuts from the central bank.

However, markets reversed their entire losses in dying hour of trade, as traders found some support with the Reserve Bank of India (RBI) Governor Shaktikanta Das’ statement the financial system is hugely surplus with liquidity and this would facilitate the better transmission of rate cuts implemented by the RBI. Some optimism also came with Union minister Nitin Gadkari stating that innovative funding modules are on the anvil for the ambitious Rs 7.5-lakh-crore highway building programme as the sector can help achieve government’s dream of making India a $5 trillion economy.

On the global front, Asian markets ended mostly in red on Tuesday, while European markets were trading in red as diminished hopes of a rate cut from the US Federal Reserve this month continued to dampen market sentiment. Back home, telecom stocks were in focus with report that regulator Trai has stuck to its recommendation on base price and valuation of the spectrum, including for 5G radiowaves, making it clear to the telecom department that it has considered all relevant factors while giving views on prices. Sugar stocks were in focus with private report stating that India’s sugar production could fall by 18% in 2019/20 as last year’s drought forced farmers to curtail their sugar cane plantings while lower monsoon rains this year are limiting the crop’s growth. The lower production could help India to reduced stockpiles that have risen because of two years of record production and lower-than-expected exports.

The BSE Sensex ended at 38730.82, up by 10.25 points or 0.03% after trading in a range of 38435.87 and 38814.23. There were 15 stocks advancing against 15 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index rose 0.63%, while Small cap index was up by 0.05%. (Provisional)

The top gaining sectoral indices on the BSE were Realty up by 2.81%, Healthcare up by 1.81%, Energy up by 1.77%, Capital Goods up by 1.65% and Oil & Gas up by 1.11%, while Consumer Durables down by 6.76%, Consumer Discretionary Goods & Services down by 1.01%, IT down by 0.98%, FMCG down by 0.96%, TECK down by 0.77% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Bajaj Finance up by 5.60%, Sun Pharma up by 5.34%, Hero MotoCorp up by 3.14%, Larsen & Toubro up by 2.54% and Reliance Industries up by 2.44%. (Provisional)

On the flip side, TCS down by 2.42%, ITC down by 1.66%, HCL Technologies down by 1.65%, Asian Paints down by 1.32% and Maruti Suzuki down by 1.30% were the top losers. (Provisional)

Meanwhile, S&P Global Ratings in its latest report has said that a higher disinvestment and dividend target for state-owned entities (SOEs) may strain their credit profiles, especially if an SOE has to buy a government stake in another SOE or pay more dividends than free cash flow allows, to support these policy objectives. But, it also said steps toward private participation in rail infrastructure are likely to create growth opportunities for corporates. It said the government’s growing emphasis on private sector participation reflects its limited fiscal space.

The rating agency forecasted that the general government’s net indebtedness at 67.1 per cent of Gross Domestic Product (GDP) by the end of the current fiscal year against a projected fiscal deficit of 6.7 per cent of GDP. The Budget 2019-20 has set a disinvestment target of Rs 1.05 lakh crore, while Rs 57,487 crore is expected to come from central public sector enterprises (CPSEs) as dividend.

Capital expenditure as a percentage of total proposed expenditure remains very low at just 12.1 per cent, approximately equal to total expenditure on subsidies. S&P further said elevated general government deficits and indebtedness will continue to cap direct infrastructure investment. It also said general government deficits will remain elevated despite the marginal decline at the central government level to 3.3 per cent of GDP this fiscal year projected in the budget.

The CNX Nifty ended at 11555.90, down by 2.70 points or 0.02% after trading in a range of 11461.00 and 11582.55. There were 25 stocks advancing against 25 stocks declining on the index. (Provisional)

The top gainers on Nifty were Bajaj Finance up by 5.56%, Sun Pharma up by 5.34%, Indian Oil Corporation up by 5.10%, Bajaj Finserv up by 3.46% and Hero MotoCorp up by 2.69%. (Provisional)

On the flip side, Titan Company down by 12.26%, UPL down by 3.33%, GAIL India down by 2.62%, TCS down by 1.93% and Yes Bank down by 1.93% were the top losers. (Provisional)

European markets were trading in red; UK’s FTSE 100 decreased 27.34 points or 0.36% to 7,521.93, France’s CAC decreased 40.03 points or 0.72% to 5,549.16 and Germany’s DAX decreased 165.02 points or 1.32% to 12,378.49.

Asian markets ended mostly lower on Tuesday as sentiment turned cautious ahead of Fed Chairman Jay Powell's two-day testimony to Congress on Wednesday and Thursday, with markets waiting to see whether the language will be dovish enough after the release of a stronger-than-expected jobs report. Powell is due to testify before the House Financial Services Committee on Wednesday and before the Senate Banking Committee on Thursday. Chinese shares ended down as investors fretted about a lack of clarity in US-China trade talks following last week's G20 summit in Japan. Seoul shares retreated on economic concerns as a Japanese minister ruled out a withdrawal of restrictions on Japanese high-tech exports to South Korea, saying the curbs did not violate World Trade Organization rules. Though, Japanese markets eked out small gains even as technology shares slumped after Rosenblatt Securities downgraded its rating on Apple's stock to ‘Sell’ from ‘Neutral’.