Key indices continue to trade lower in afternoon deals

Indian equity benchmarks continued their weak trade in afternoon session, on the back of sustained selling activities by market-participants. The mood on the street remained cautious with Moody’s Investors Service’s statement that weak growth prospects for India will complicate the government's fiscal consolidation efforts, weighing on the sovereign's credit quality. Some concern also came in with Ratings agency Crisil in its latest report stating that corporate India is expected to register 5-6% revenue growth in Q1 (April-June) of 2019-20, the slowest pace in two years. It pointed out that the slow pace of revenue growth can be attributed to a broad-based slowdown in consumption, which has affected sectors such as automobiles and fast-moving consumer goods (FMCG). On the sectoral front, auto stocks were trading lower, impacted with data released by the Society of Indian Automobile Manufacturers (SIAM) that domestic passenger vehicle (PV) sales declined by 17.54 per cent to 2,25,732 units in June from 2,73,748 units in the year-ago period.

On the global front, Asian markets were trading mostly in green, as investors await comments from U.S. Federal Reserve Chairman Jerome Powell for possible clues on the central bank’s next move on interest rates. Back home, the BSE Sensex is currently trading at 38595.96, down by 134.86 points or 0.35% after trading in a range of 38545.13 and 38854.85. There were 9 stocks advancing against 22 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index fell 0.50%, while Small cap index was down by 0.39%.

The top losing sectoral indices on the BSE were Capital Goods down by 2.04%, Industrials down by 1.74%, Metal down by 1.66%, Telecom down by 1.03% and Basic Materials was down by 0.94%, while there were no gainers on the BSE sectoral front.

The top gainers on the Sensex were Yes Bank up by 1.42%, Infosys up by 0.57%, Kotak Mahindra Bank up by 0.40%, ICICI Bank up by 0.37% and Power Grid was up by 0.37%. On the flip side, Tata Motors - DVR down by 3.61%, Tata Steel down by 3.47%, Tata Motors down by 3.21%, Larsen & Toubro down by 2.47% and Bajaj Finance was down by 2.12% were the top losers.

Meanwhile, Ratings agency Crisil in its latest report has said that corporate India is expected to register 5-6% revenue growth in Q1 (April-June) of 2019-20, the slowest pace in two years. It noted that average revenue growth stood at 14-15% in the previous four quarters. It pointed out that the slow pace of revenue growth can be attributed to a broad-based slowdown in consumption, which has affected sectors such as automobiles and fast-moving consumer goods (FMCG).

According to the report, automobiles, one of the key sectors driven by consumption spending, continues to reel under a demand slowdown. It noted that higher cost of ownership continues to dampen consumer sentiment for passenger vehicles, while commercial vehicle sales are being impacted by new axle norms, inventory build-up and liquidity crunch. It pointed out that this also impacts ancillary sectors such as auto components and tyres, which are expected to report lower growth.

For FMCG, Crisil said weakened rural consumption and a high base are expected to cause a moderation in growth. It said adding to the pain from a slowdown in consumption is a fall in realisations in key commodity categories, which supported revenue growth in fiscal 2019, especially the first half. It stated that a slower weakening of the rupee, at around 4% on-year compared with around 8% on average over fiscal 2019, is also expected to scrape some growth off key export-linked sectors like information technology (IT) services. It added that revenue growth for the latter is expected to moderate to around 12% on year compared with the around 17% average growth rate over the past four quarters.

The CNX Nifty is currently trading at 11514.45, down by 41.45 points or 0.36% after trading in a range of 11499.85 and 11593.70. There were 16 stocks advancing against 34 stocks declining on the index.

The top gainers on Nifty were Yes Bank up by 1.59%, Coal India up by 1.57%, Wipro up by 0.94%, Zee Entertainment up by 0.84% and Infosys was up by 0.55%. On the flip side, Tata Steel down by 3.44%, Tata Motors down by 3.31%, JSW Steel down by 3.22%, Larsen & Toubro down by 2.50% and Bajaj Finance was down by 1.84% were the top losers.

Asian markets were trading mostly in green; Taiwan Weighted strengthened 95.70 points or 0.89% to 10,798.48, Hang Seng increased 82.52 points or 0.29% to 28,198.80, Jakarta Composite soared 15.46 points or 0.24% to 6,403.78, Straits Times advanced 10.59 points or 0.32% to 3,340.05 and KOSPI was up by 6.75 points or 0.33% to 2,058.78.

On the flip side, Shanghai Composite declined 16.41 points or 0.56% to 2,911.82 and Nikkei 225 was down by 31.67 points or 0.15% to 21,533.48.