Benchmarks trade lower in early deals

Indian equity benchmarks made a sluggish start and are trading with a cut of one third of a percent, as traders remained on sidelines ahead of first quarter (April-June) results. IT major Tata Consultancy Services (TCS) is all set to report its numbers later in the day. Traders also 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. Traders paid no heed towards 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.

Global cues too remained sluggish with most of the Asian counters are trading in red at this point of time following overnight fall on Wall Street. The US markets declined on Monday as dimming prospects that the Federal Reserve will cut interest rates anytime soon weighed on equities.

Back home, telecom stocks remained 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. Stocks related to metal space remained buzzing with report that the country's finished steel imports rose 4.7 percent to 7.83 million tonne (MT) in 2018-19.

The BSE Sensex is currently trading at 38593.91, down by 126.66 points or 0.33% after trading in a range of 38466.74 and 38754.47. There were 17 stocks advancing against 14 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.03%, while Small cap index was up by 0.10%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 1.09%, Energy up by 0.98%, Capital Goods up by 0.69%, Healthcare up by 0.65 and PSU was up by 0.59%, while Consumer Durables down by 5.19%, Consumer Discretionary Goods & Services down by 0.74%, IT down by 0.67%, TECK down by 0.58% and FMCG was down by 0.44% were the losing indices on BSE.

The top gainers on the Sensex were Yes Bank up by 3.01%, Sun Pharma up by 1.16%, Larsen & Toubro up by 1.06%, Hero Moto up by 0.93% and Reliance Industries up by 0.84%. On the flip side, HDFC down by 2.04%, Asian Paints down by 1.93%, TCS down by 1.79%, Kotak Mahindra Bank down by 1.17% and Hindustan Unilever down by 0.90% were the top losers.

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 is currently trading at 11517.55, down by 41.05 points or 0.36% after trading in a range of 11477.65 and 11537.55. There were 28 stocks advancing against 22 stocks declining on the index.

The top gainers on Nifty were Indian Oil up by 3.44%, Yes Bank up by 2.63%, BPCL up by 1.69%, Sun Pharma up by 1.57% and Larsen & Toubro up by 1.13%. On the flip side, Titan down by 10.06%, UPL down by 2.39%, Asian Paints down by 2.03%, HDFC down by 2.01% and TCS down by 1.88% were the top losers.

Asian counters are trading mostly in red; , Nikkei 225 declined 0.79 points to21,533.56,  Straits Times dipped 8.02 points or 0.24% to 3,326.21, Hang Seng decreased 225.47 points or 0.80% to28,106.22, Taiwan Weighted shed 67.85 points or 0.63% to 10,683.37, Kospi dropped 4.34 points or 0.21% to 2,059.83 and Shanghai Composite was down by16.58 points or 0.57% to 2,916.78 . On the other hand, Jakarta Composite was up by 16.72 points or 0.26% to 6,368.55.