Local equities continue southward journey

Local equity benchmarks continued their southward journey and are trading in the red in morning deals tailing weak global cues. A level of pressure was seen on frontline stocks, especially Yes Bank and Sun Pharma. Market participants remain concerned 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. Traders ignored Reserve Bank Governor Shaktikanta Das’ statement that the central bank will discuss issuance of overseas sovereign bonds with the government. He added that the system has sufficient liquidity and the Budget for 2019-20 has made provision for shadow banking (NBFC) sector. Traders paid no heed to a report that the government has expressed confidence that the deficit in kharif sowing will be covered by the end of the month after rains rebounded in many parts in the past few days. Besides, S&P Global Ratings said that a higher disinvestment and dividend target for state-owned firms may strain their credit profiles but steps toward private participation in rail infrastructure are likely to create growth opportunities for corporates.

On the global front, Asian market were trading mostly in red as investors came to terms with sharply reduced expectations the Federal Reserve will deliver a large interest rate cut at the end of July. Back home, Telecom Regulatory Authority of India (Trai) stuck to its recommendation on the reserve price of spectrum, including 5G band, which the government wants to put up for auctions later this year. Meanwhile, the country’s finished steel imports rose 4.7% to 7.83 million tonne (MT) in 2018-19. The country had imported 7.48 MT of finished steel in 2017-18.

The BSE Sensex is currently trading at 38446.02, down by 274.55 points or 0.71% after trading in a range of 38435.87 and 38754.47. There were 13 stocks advancing against 18 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index slipped 0.64%, while Small cap index was down by 0.32%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 0.94%, Energy up by 0.82%, Realty up by 0.64%, Utilities up by 0.62% and PSU was up by 0.58%, while Consumer Durables down by 7.59%, Consumer Disc down by 1.66%, IT down by 1.22%, TECK down by 1.09% and FMCG was down by 0.83% were the top losing indices on BSE.

The top gainers on the Sensex were Yes Bank up by 3.81%, Sun Pharma up by 2.29%, Power Grid Corporation up by 1.29%, Bajaj Finance up by 1.24% and ONGC was up by 1.21%. On the flip side, Asian Paints down by 3.11%, HDFC down by 2.68%, TCS down by 2.52%, Kotak Mahindra Bank down by 2.37% and HDFC Bank was down by 1.33% were the top losers.

Meanwhile, Minister of State for Finance Anurag Singh Thakur stated that the government has infused over Rs 3.15 lakh crore into public sector banks (PSBs) in the 11 years through 2018-19 (FY09 to FY19). He also said as per RBI guidelines, banks in India are required to maintain a minimum capital to risk-weighted assets ratio (CRAR) of 9 per cent. As on March 31, 2019, all 18 PSBs meet this minimum CRAR requirement.

PSBs' source capital through internal capital generation, mobilisation of capital from markets, and infusion by the government.  Thus, capital infusion by the government complements PSBs' internal capital generation and mobilisation of capital from markets.

Thakur further said PSBs have mobilised Rs 2,81,616 crore of capital during the period from the FY09 to FY19 through sources other than government, and have posted a net profit of Rs 98,373 crore, of which a sizeable proportion has contributed to internal capital generation. During the same period, the government has infused capital of Rs 3,15,721 crore in PSBs.

The CNX Nifty is currently trading at 11471.20, down by 87.40 points or 0.76% after trading in a range of 11461.00 and 11537.55. There were 21 stocks advancing against 29 stocks declining on the index.

The top gainers on Nifty were Yes Bank up by 3.60%, Indian Oil Corporation up by 3.37%, Sun Pharma up by 2.96%, Bajaj Finance up by 1.88% and Cipla was up by 1.53%. On the flip side, Titan Company down by 13.47%, UPL down by 3.57%, Asian Paints down by 3.31%, TCS down by 2.85% and HDFC was down by 2.65% were the top losers.

Asian markets were trading mostly in red; Hang Seng decreased 218.06 points or 0.77% to 28,113.63, Taiwan Weighted dropped 61.46 points or 0.57% to 10,689.76, Shanghai Composite declined 16.58 points or 0.57% to 2,916.78, Straits Times trembled 8.20 points or 0.25% to 3,326.03 and KOSPI was down by 4.06 points or 0.2% to 2,060.11.

On the other hand; Jakarta Composite soared 17.24 points or 0.27% to 6,369.07 and Nikkei 225 was up by 19.41 points or 0.09% to 21,553.76.