Local equities continue lackluster trade

Local equity benchmarks continued their lackluster trade in morning session, with losses of over half a percent, tracking pessimism in Asian markets and heavy selloff by investors amid fresh trade war concerns. Traders also remain concerned with a private report that despite the policymakers’ efforts to revive the sagging growth momentum, the economy is set to print in a 5.7 percent uptick in the June quarter and is likely to bottom out from there. Traders failed to get some sense of relief from a report that the Reserve Bank of India (RBI) has relaxed end-use provisions under the external commercial borrowings (ECBs) framework for corporates and NBFCs. The NBFCs can raise 10 year forex debt for on-lending for working purposes and 7 year forex loans for domestic CAPEX. Market participants also ignored Governments’ report that India received the highest-ever foreign direct investments (FDI) inflow of $64.37 billion during the fiscal ended March 2019. According to the Annual Report 2018-19 of the Department for Promotion of Industry and Internal Trade (DPIIT), foreign direct investments (FDI) worth $286 billion were received in the country in past five years.

On the global front, Asian markets were trading lower, rattled by fresh trade war concerns following threats from President Donald Trump to Beijing, while increasing worries about a ‘no-deal’ BREXIT kept the pound under pressure. Back home, the ministry of new and renewable energy (MNRE) has revised the benchmark costs of solar pumps for FY20. The latest bench-marking comes at a time when the government is preparing to install 17.5 lakh stand-alone solar pumps and connect 10 lakh existing agriculture pumps with solar power. On the sectoral front, stocks related to textile industry were in focus on a report that the export of cotton yarn has dropped 35% in the first quarter of FY20 to $696 million compared to $1.063 billion in the same period last fiscal.

The BSE Sensex is currently trading at 37199.46, down by 197.78 points or 0.53% after trading in a range of 37135.93 and 37349.71. There were 11 stocks advancing against 20 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index declined 0.94%, while Small cap index was down by 1.16%.

The few gaining sectoral indices on the BSE were Auto up by 0.46%, Oil & Gas up by 0.14%, Metal up by 0.06%, while Realty down by 2.91%, Telecom down by 2.00%, Consumer Durables down by 1.28%, TECK down by 1.24%, IT down by 1.04% were the top losing indices on BSE.

The top gainers on the Sensex were Hero MotoCorp up by 2.73%, IndusInd Bank up by 2.48%, Yes Bank up by 2.44%, Sun Pharma up by 1.83% and Power Grid was up by 0.98%. On the flip side, Axis Bank down by 4.18%, Tech Mahindra down by 3.46%, Bajaj Finance down by 2.24%, Bharti Airtel down by 1.87% and Infosys was down by 1.08% were the top losers.

Meanwhile, with an aim to tighten norms pertaining to Corporate Social Responsibility (CSR) spending for corporates, strengthen enforcement provisions and help unclog National Company Law Tribunal (NCLT), Parliament has cleared amendments to the companies law. Corporate Affairs & Finance Minister Minister Nirmala Sitharaman has said ‘we are trying to bring in ease of doing business, bring in a robust framework through which the Companies Act can be implemented. We are also trying to rationalise and re-categorise minor offences for civil defaults.’

About CSR norms, she said companies used to comply with the requirement fully or partly and then explain and get away with it. Now, there would be a provision wherein the unspent CSR amount would be transferred to an escrow account for three financial years. Subsequently, if the amount remains unspent then the same would be moved to funds specified in Scheduled VII of the Companies Act. Under the Act, certain class of profitable companies are required to shell out at least two per cent of their three-year annual average net profit towards CSR activities.

Sitharaman said that the amended bill will de-clog the NCLT by shifting routine matters out of it. To crack down on shell companies, she stated it has been made mandatory to have physical address and register to ensure such companies exist on ground. She further mentioned that four lakh companies have so far been de-registered as they did not file financial results for two years and did not even apply for dormant status.

The CNX Nifty is currently trading at 11017.80, down by 67.60 points or 0.61% after trading in a range of 11010.30 and 11072.95. There were 18 stocks advancing against 32 stocks declining on the index.

The top gainers on Nifty were Hero MotoCorp up by 2.89%, Yes Bank up by 2.56%, IndusInd Bank up by 2.45%, Sun Pharma up by 1.80% and Grasim Industries was up by 1.24%. On the flip side, Zee Entertainment down by 4.51%, Axis Bank down by 4.34%, Bharti Infratel down by 4.07%, Tech Mahindra down by 3.47% and Cipla was down by 2.40% were the top losers.

All Asian markets were trading in red; Hang Seng decreased 308.92 points or 1.1% to 27,837.58, Nikkei 225 slipped 147.22 points or 0.68% to 21,562.09, Jakarta Composite lost 16.36 points or 0.26% to 6,360.64, KOSPI fell 5.06 points or 0.25% to 2,033.62, Straits Times trembled 9.75 points or 0.29% to 3,340.79, Shanghai Composite declined 16.51 points or 0.56% to 2,935.83 and Taiwan Weighted was down by 1.75 points or 0.02% to 10,829.15.