Local equities turn negative in morning deals

Local benchmarks erased all the gains to turn negative in morning session, both Sensex and Nifty were trading tad below the neutral lines. Cautiousness spread over the markets as participants were keenly watching out for the Reserve Bank of India's (RBI) monetary policy meeting outcome later in the day. Market participants are expecting another 25 basis points rate cut by the RBI for a fourth time in a row to boost economic activities. Some cautiousness came in with RBI’s data which showed that retail loans given by banks in H1FY19 (January-June 2019) touched a five-year low at 7.3%. Traders also remained concerned with economic think-tank NCAER report that India's GDP growth is likely to be 6.2 per cent during the current fiscal, down from 6.8 per cent in 2018-19, on account of flat growth in agriculture sector. The prospects for agricultural sector in 2019-20 depend largely on the south-west monsoon. Meanwhile, traders took note of Former RBI Governor Bimal Jalan statement that the government should borrow only long-term fund from the overseas market, and the quantum should not exceed 1.5% of GDP under any circumstances.

On the global front, Asian markets were trading mixed, as investors kept a close watch on the Chinese yuan amid an escalating trade dispute between the US and China. Back home, the Parliament has given its nod to the landmark Consumer Protection Bill, 2019, which aims to protect the rights of consumers by establishing authorities for timely and effective administration and settlement of consumers’ dispute.

The BSE Sensex is currently trading at 36953.12, down by 23.73 points or 0.06% after trading in a range of 36885.48 and 37066.59. There were 16 stocks advancing against 15 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.56%, while Small cap index was up by 0.85%.

The top gaining sectoral indices on the BSE were Healthcare up by 1.37%, TECK up by 0.89%, Utilities up by 0.81%, IT up by 0.79% and Power was up by 0.79%, while Consumer Durables down by 1.09%, Metal down by 1.05%, Energy down by 0.55%, Oil & Gas down by 0.48% and PSU was down by 0.24% were the top losing indices on BSE.

The top gainers on the Sensex were Yes Bank up by 5.33%, Sun Pharma up by 2.12%, Hero MotoCorp up by 1.77%, IndusInd Bank up by 1.72% and Hindustan Unilever was up by 1.64%. On the flip side, Tata Steel down by 2.87%, ONGC down by 1.52%, Mahindra & Mahindra down by 1.38%, Axis Bank down by 1.13% and Maruti Suzuki was down by 0.96% were the top losers.

Meanwhile, amid slowdown in the domestic automotive industry, ratings agency ICRA in its latest report has said that demand slowdown would curtail tyre industry's revenue growth to 3-4% in current financial year (FY20), and margins are expected to decline. It mentioned that the credit profile of Indian tyre industry may weaken in current fiscal affected by the ongoing slowdown in the domestic automotive industry, rising raw material (RM) prices and higher spend towards debt-funded capacity expansion.

It pointed out that subdued vehicle production due to weak consumer sentiments amidst slowing economic activities, the rising cost of vehicle ownership and softened rural demand will impact the tyre demand in FY20. However, it stated the long-term outlook on industry credit profile is stable.

The industry revenue growth is projected at 6-8% with operating and net margins at 12-13% and 4-5 percent respectively, in the period FY20-24. The industry capitalisation and coverage indicators are likely to remain comfortable over the long-term, although some moderation is expected in FY20/21.

The CNX Nifty is currently trading at 10936.95, down by 11.30 points or 0.10% after trading in a range of 10913.40 and 10970.20. There were 22 stocks advancing against 28 stocks declining on the index.

The top gainers on Nifty were Zee Entertainment up by 6.10%, Yes Bank up by 5.10%, Cipla up by 2.67%, Sun Pharma up by 2.06% and IndusInd Bank was up by 1.75%. On the flip side, Indiabulls Housing Finance down by 8.44%, Titan Company down by 3.34%, Tata Steel down by 3.01%, BPCL down by 1.77% and ONGC was down by 1.56% were the top losers.

Asian markets were trading mixed; Hang Seng decreased 117.59 points or 0.45% to 25,858.65, Nikkei 225 slipped 101.32 points or 0.49% to 20,483.99, KOSPI fell 8.22 points or 0.43% to 1,909.28 and Shanghai Composite was down by 0.20 points or 0.01% to 2,777.36.

On the other side, Straits Times advanced 4.51 points or 0.14% to 3,174.98, Taiwan Weighted strengthened 13.39 points or 0.13% to 10,408.14 and Jakarta Composite was up by 86.95 points or 1.42% to 6,206.42.