Local equities continue sluggish trend

Tracking weak global cues, local equity benchmarks continued to show a sluggish trend in morning session. Both, Sensex and Nifty were trading below their crucial 37,800 and 11,250 marks, respectively. Traders remain concerned with a private report that deal activity remained subdued in the first half of calendar year 2019 that saw deals worth $32.1 billion, compared with $74.4 billion in the same period last year. However, further losses remain capped with Employees’ State Insurance Corporation (ESIC) payroll data which showed that around 12.66 lakh jobs were created in May, a tad higher than 11.15 lakh jobs in April this year. Gross enrolments of new subscribers with the ESIC were 1.49 crore during 2018-19. Some support also came with Niti Aayog CEO Amitabh Kant's statement that India was pursuing a policy of import substitution so far, and in future the country’s policy will essentially focus on export-led growth. Besides, a report stated that India is likely to get above-average rainfall in the next two weeks after receiving below average rains in the past two weeks.

On the global front, Asian markets were trading in red, amid expectations the US Federal Reserve could be less aggressive than expected with monetary policy when it meets next week. Back home, a private survey showed that India and China are expected to surpass the US as the global centers of tech innovation by 2035 as balance of power shifts towards new economies.

The BSE Sensex is currently trading at 37714.43, down by 116.55 points or 0.31% after trading in a range of 37690.47 and 37888.36. There were 16 stocks advancing against 15 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index gained 0.04%, while Small cap index was down by 0.22%.

The top gaining sectoral indices on the BSE were Auto up by 0.54%, Industrials up by 0.18%, BANKEX up by 0.14%, Consumer Disc up by 0.11% and Healthcare was up by 0.11%, while IT down by 1.31%, TECK down by 1.11%, Oil & Gas down by 0.93%, Energy down by 0.70% and Telecom was down by 0.65% were the top losing indices on BSE.

The top gainers on the Sensex were Bajaj Finance up by 4.44%, Yes Bank up by 3.82%, Tata Motors - DVR up by 2.37%, Tata Motors up by 2.11% and Mahindra & Mahindra was up by 1.79%. On the flip side, Bharti Airtel down by 2.43%, Vedanta down by 2.42%, TCS down by 1.41%, Infosys down by 1.38% and Tech Mahindra was down by 1.18% were the top losers.

Meanwhile, rating agency Fitch in its latest report has said that the government measures to provide partial credit guarantee to public sector bank on their asset purchases from non-banking financial companies (NBFCs) can ease funding pressure only for the short-term. The report mentioned that, in the budget, the government had said for purchase of high-rated pooled assets of financially-sound NBFCs, amounting to Rs 1 trillion during the current financial year, it will provide a one-time six months' partial credit guarantee to public sector banks for their first loss of up to 10 percent. Though, it said the step does not address investors' long- term concerns about the exposure of NBFCs' to stressed real estate.

Besides, it highlighted that the guarantee is more than enough to cover typical losses. The government will cover up to Rs 1 trillion of issuance. The agency estimated that this will cover their liquidity needs for about six months. The provision refers only to financially-sound NBFCs, which suggests that weaker entities in need of funds may still have to fend for themselves.

However, the report said NBFCs will benefit more from the Rs 70,000 crore recapitalisation of state-owned banks, which will increase their capacity to lend more. Investor confidence in the NBFC sector could also be boosted by a potential asset-quality review of wholesale non- banking lenders, leading to greater transparency and more robust capital requirements.

The CNX Nifty is currently trading at 11237.65, down by 14.50 points or 0.13% after trading in a range of 11210.05 and 11267.75. There were 24 stocks advancing against 26 stocks declining on the index.

The top gainers on Nifty were Bajaj Finance up by 4.64%, Bajaj Finserv up by 4.46%, Yes Bank up by 3.99%, Bharti Infratel up by 2.81% and Zee Entertainment was up by 2.69%. On the flip side, Indian Oil Corporation down by 3.00%, Vedanta down by 2.57%, Bharti Airtel down by 2.18%, TCS down by 1.27% and Infosys was down by 1.21% were the top losers.

Asian markets were trading in red; Hang Seng decreased 138.01 points or 0.48% to 28,456.29, Nikkei 225 slipped 134.42 points or 0.62% to 21,622.13, Jakarta Composite lost 85.64 points or 1.34% to 6,315.73, Shanghai Composite declined 4.76 points or 0.16% to 2,932.60, Straits Times trembled 28.62 points or 0.85% to 3,352.64, Taiwan Weighted dropped 41.38 points or 0.38% to 10,900.03 and KOSPI was down by 12.35 points or 0.6% to 2,062.13.