Benchmarks continue to trade in negative zone

Indian equity benchmarks continued to trade in red zone in early noon session. Stocks from Metal, Oil & Gas and Energy counters were trading lower, while Realty, IT and TECK counters were supporting the markets. Sentiments got undermined with Moody's Investors Service’s statement that the economic measures announced by Finance Minister Nirmala Sitharaman are unlikely to provide some form of confidence and improve business sentiment and consumer sentiment. Moody's, which has lowered India's gross domestic product (GDP) forecast to 6.4% for FY20, said there is significant uncertainty in terms of the growth prospects both because of domestic as well as external factors. However, downfall remain limited with industry’s self-regulatory organisation Sa-Dhan’s report that India’s microfinance industry is set to cross Rs 1 lakh crore loan portfolio during September quarter of the ongoing financial year. The industry witnessed 9% quarter-on-quarter growth in its gross loan portfolio (GLP) to Rs 98,107 crore during April-June 2019-20. Meanwhile, a private report stated that India and Russia are looking beyond energy and military hardware to expand their time-tested strategic ties with cross-investments into diamond cutting and polishing business, mining, dairy farming, pulp industry as well as tourism and hospitality business.

On the global front, Asian markets were trading mostly in green as investors watched for signs of progress on U.S.-China trade after Wall Street slid. Back home, shares of IDBI Bank slipped after S&P Global Ratings placed the bank’s 'BB/B' ratings on credit watch negative after capital breach. Besides, Power Grid gained on getting nod to invest in transmission system for solar energy zones in Rajasthan.

The BSE Sensex is currently trading at 37547.66, down by 93.61 points or 0.25% after trading in a range of 37456.59 and 37687.82. There were 12 stocks advancing against 19 stocks declining on the index.

The broader indices were trading in mixed; the BSE Mid cap index lost 0.11%, while Small cap index was up by 0.13%.

The top gaining sectoral indices on the BSE were Realty up by 1.10%, IT up by 0.66%, TECK up by 0.52%, Utilities up by 0.07% and Industrials was up by 0.05%, while Metal down by 1.89%, Oil & Gas down by 0.82%, Energy down by 0.80%, Telecom down by 0.67% and PSU was down by 0.56% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 1.83%, Tech Mahindra up by 1.72%, HCL Technologies up by 1.62%, Infosys up by 1.45% and Tata Motors - DVR was up by 1.16%. On the flip side, Yes Bank down by 2.49%, ONGC down by 2.47%, Tata Steel down by 2.28%, Vedanta down by 1.85% and Hindustan Unilever was down by 1.64% were the top losers.

Meanwhile, credit rating agency Crisil in its latest report has said that India’s automotive components industry is projected to log a lower 5-7 percent compounded annual growth rate (CAGR) over the fiscals 2020 and 2021 as compared to 12 percent in the previous two fiscals, on the back of the ongoing slump in the demand for vehicles. Besides, it said that the industry's topline growth is likely to recede to half in the next two fiscals, though tighter safety and emission norms for original equipment makers (OEMs) could give partial respite to the Rs 3.5 lakh crore industry.

The rating agency also revealed that capital expenditure spend will be discretionary and could be around 15 percent lower at Rs 12,000 crore in fiscals 2020 and 2021, compared with the preceding two fiscals. It also said that the upcoming safety and emission norms will boost demand for components like airbags, engine systems, exhaust management systems, and electronic and electrical parts. It noted that these new regulations alone are expected to account for 25-30 percent of the incremental demand for automotive components in the next two fiscals. It added that the growth in fiscal 2020 and 2021 would be even lower, but for the higher component intensity resulting from the regulatory changes, besides steady aftermarket sales and healthy exports.

According to the report, the production volume of the OEMs is estimated to either register a year-on-year decline or log low single-digit at best in the next two years. It also noted that higher insurance costs, lower availability of finance and low growth in rural wages is affecting off-take in fiscal 2020. Vehicle demand is also expected to be impacted by the new safety norms for passenger vehicles and two-wheelers, applicable in fiscal 2020, and the Bharat Stage (BS) VI emission norms, which would come into force from April 1, 2020, as these will drive up vehicle prices across categories. As per to Crisil, these factors are affecting new vehicle sales and in turn causing an impact on the automotive component sector, as OEMs account for 65 percent of component demand.

The CNX Nifty is currently trading at 11076.35, down by 29.00 points or 0.26% after trading in a range of 11052.60 and 11129.65. There were 18 stocks advancing against 31 stocks declining, while 1 stock remain unchanged on the index.

The top gainers on Nifty were Tata Motors up by 1.74%, Tech Mahindra up by 1.65%, Britannia Industries up by 1.64%, HCL Technologies up by 1.61% and Infosys was up by 1.48%. On the flip side, Yes Bank down by 2.79%, ONGC down by 2.51%, JSW Steel down by 2.46%, Indiabulls Housing down by 2.41% and Tata Steel was down by 2.29% were the top losers.

Asian markets were trading mostly in green, Nikkei 225 surged 23.34 points or 0.11% to 20,479.42, KOSPI rose 17.98 points or 0.93% to 1,942.58, Taiwan Weighted strengthened 47.06 points or 0.45% to 10,434.29, Jakarta Composite soared 2.76 points or 0.04% to 6,280.93, Straits Times advanced 0.53 points or 0.02% to 3,068.05 and Hang Seng was up by 1.82 points or 0.01% to 25,665.89. On the flip side, Shanghai Composite was down by 2.93 points or 0.1% to 2,899.26.