Local equities continue sluggish trend; Nifty below 10,850 mark

Local equities added losses to continue their weak trade in the morning session on account of selling in frontline counters. The frontline indices have fell even below the psychological 36,900 (Sensex) and 10,850 (Nifty) levels, as investors remained risk-averse due to uncertainties over economic growth. Sentiments remained negative with a report that the ongoing economic slowdown has started hurting corporates as well, with companies reporting a sharp decline in both revenue and profit growth numbers in the June quarter. Traders were concerned with a private report with showed that unemployment in India has shot up to a 3-year high of 8.3 per cent, as on August 20. With the urban unemployment rate close to 10%, job seekers in the urban areas are suffering more than those in the rural areas. Traders failed to get any sense of relief from Employees’ Provident Fund Organisation’s (EPFO) report which showed that reversing a month-on-month fall in May, the net employment generation in the formal sector grew 42.8% in June over the previous month.

On the global front, Asian markets were trading mostly in red as sentiments slew on weak corporate earnings and investors looked ahead to a speech by the US Federal Reserve chairman for clues about possible interest rate cuts. Back home, a private report stated that foreign investment in the Indian real estate sector has seen a boom in the last few years. The investment tripled to Rs 140,000 crore during 2014-18, compared to Rs 46,500 crore during 2009-13.

The BSE Sensex is currently trading at 36819.74, down by 240.63 points or 0.65% after trading in a range of 36808.90 and 37087.58. There were 4 stocks advancing against 27 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index slipped 1.09%, while Small cap index was down by 1.67%.

The sole gaining sectoral index on the BSE was FMCG up by 0.56%, while Realty down by 5.63%, Metal down by 1.82%, Basic Materials down by 1.64%, Oil & Gas down by 1.46%, PSU down by 1.40% were the top losing indices on BSE.

The few gainers on the Sensex were Hindustan Unilever up by 1.01%, ITC up by 0.87%, TCS up by 0.58% and Tech Mahindra was up by 0.02%. On the flip side, Yes Bank down by 5.35%, Vedanta down by 3.40%, ONGC down by 2.43%, IndusInd Bank down by 2.21% and Bajaj Finance was down by 1.80% were the top losers.

Meanwhile, with a view to cut down imports of chemicals and make India manufacturing hub, Chemicals and petrochemicals secretary P Raghavendra Rao has said the government is planning to boost domestic production of chemicals and petrochemicals. He added that the government wants that factories should come up in a cluster so that it could provide all infrastructure facilities at one place. To ensure quality, he said the ministry plans to make it mandatory some of the BIS standards for those chemicals which are used by masses.

Rao emphasized on the need for utilising the full manufacturing capacity of the industry for production of quality products. There is a need to increase the capacity utilisation in this industry from the current level of 75-80 per cent and cut unnecessary imports. He said that the government's focus is on strengthening the sector which would lead to higher domestic production and reduction in unnecessary imports. The ministry is also working towards attract investments in this sector.

Meanwhile, he expressed concerns over imports of chemicals and petrochemicals in the unknown other categories and said the government is providing specific codes to regulate inward shipments. He pointed out that the country's net imports have risen to Rs 1.21 lakh crore in 2018-19 from mere Rs 1,000 crore in 2004-05 and there is a projection that this figure could touch Rs 3 lakh crore in the next five years.

The CNX Nifty is currently trading at 10837.15, down by 81.55 points or 0.75% after trading in a range of 10828.40 and 10908.25. There were 5 stocks advancing against 45 stocks declining on the index.

The top gainers on Nifty were Britannia Industries up by 2.95%, Dr. Reddys Lab up by 1.20%, Hindustan Unilever up by 1.17%, ITC up by 1.10% and TCS was up by 0.62%. On the flip side, Indiabulls Housing Finance down by 7.90%, Yes Bank down by 5.28%, UPL down by 3.63%, Bajaj Finserv down by 3.43% and Vedanta was down by 2.82% were the top losers.

Asian markets were trading mostly in red; Hang Seng decreased 266.50 points or 1.01% to 26,003.54, Jakarta Composite lost 31.26 points or 0.5% to 6,221.71, KOSPI fell 7.65 points or 0.39% to 1,957.00, Shanghai Composite declined 5.29 points or 0.18% to 2,875.04 and Nikkei 225 was down by 1.84 points or 0.01% to 20,616.73.

On the other side, Taiwan Weighted strengthened 2.56 points or 0.02% to 10,528.36 and Straits Times was up by 3.75 points or 0.12% to 3,126.32.