Local equities continue sluggish trend

Local equity benchmarks continued their sluggish trade in morning session, with Sensex and Nifty falling more than 250 and 80 points, respectively.  Investors remain concerned with India Ratings and Research’s report that it has revised downward the country’s gross domestic product (GDP) growth to 6.7% from an earlier estimate of 7.3% for the current fiscal due to weak consumption demand, monsoon and slowdown in manufacturing growth. Traders took note of a private report that India could increase its trade footprint in the midst of the US-China trade conflict, particularly under categories on which Washington has imposed tariffs on Beijing, India needs constructive domestic policies to counter global risks. Market participants failed to get some relief from a report that the Reserve Bank could transfer an additional Rs 1.23 trillion from its surpluses to the government, thanks to the gains from bond buying and a change in the accounting practices of its forex operations. These two heads alone have contributed as much as Rs 57,000 crore to the income of the central bank. Traders also ignored Singaporean minister K Shanmugam’s statement that India can explore many opportunities with the Southeast Asian grouping Asean and deepen the trade engagements with the region further. Besides, Iranian envoy to India Ali Chegeni stated that the preferential trade agreement with India could be signed by year-end as talks have entered ‘final phase’.

On the global front, Asian markets were trading mixed, as global tensions and the inverted US Treasury yield curve weighed on investors concerned about a global economic slowdown. Back home, the Government has relaxed conditions for single-brand retailers having foreign direct investment (FDI) for complying with the mandatory 30% local sourcing regulations by allowing them to adjust all of their purchases to meet this norm.

The BSE Sensex is currently trading at 37159.06, down by 292.78 points or 0.78% after trading in a range of 37158.52 and 37381.80. There were 6 stocks advancing against 25 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index slipped 0.44%, while Small cap index was down by 0.47%.

The few gaining sectoral indices on the BSE were Realty up by 0.44%, Healthcare up by 0.17% and Capital Goods was up by 0.02%, while BANKEX down by 1.16%, Energy down by 0.77%, Power down by 0.76%, Telecom down by 0.65% and Utilities was down by 0.62% were the top losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 3.09%, Vedanta up by 1.89%, Hindustan Unilever up by 0.47%, Maruti Suzuki up by 0.27% and Larsen & Toubro was up by 0.16%. On the flip side, Yes Bank down by 6.72%, ICICI Bank down by 2.01%, Tata Steel down by 1.97%, HDFC down by 1.57% and Bajaj Finance was down by 1.46% were the top losers.

Meanwhile, India Ratings and Research in its latest report has revised downward the India’s gross domestic product (GDP) growth to 6.7% (six-year low) from an earlier estimate of 7.3% for the current financial year (FY20) on account of slowdown in consumption demand, delayed and uneven progress of the monsoon so far, a decline in manufacturing growth and inability of Insolvency and Bankruptcy Code to resolve cases in a time-bound manner. It expects current financial year to be the third consecutive year of subdued growth.

It further said the rising global trade tension will also have an adverse impact on exports. Even on a quarterly basis, Q1 FY20 is expected to be the fifth consecutive quarter of declining GDP growth at 5.7%. The rating agency expects GDP growth to recover to 7.4% in the second half of FY20, mainly on account of the base effect.

Besides, it said the recent measures announced by the government to boost the economy are likely to support growth only in the medium term. Private consumption, which has been the mainstay of aggregate demand has come under pressure in urban as well as rural areas lately.

The CNX Nifty is currently trading at 10959.00, down by 87.10 points or 0.79% after trading in a range of 10956.10 and 11020.15. There were 10 stocks advancing against 40 stocks declining on the index.

The top gainers on Nifty were Sun Pharma up by 2.92%, Vedanta up by 1.78%, Coal India up by 1.78%, Eicher Motors up by 1.75% and Hindustan Unilever was up by 0.42%. On the flip side, Yes Bank down by 6.81%, Indiabulls Housing Finance down by 6.27%, ICICI Bank down by 1.99%, Tata Steel down by 1.97% and HDFC was down by 1.90% were the top losers.

Asian markets were trading mixed; Jakarta Composite soared 9.33 points or 0.15% to 6,290.98, Taiwan Weighted strengthened 7.80 points or 0.07% to 10,442.09, KOSPI rose 2.30 points or 0.12% to 1,943.39 and Straits Times was up by 1.39 points or 0.05% to 3,057.86.

On the other side, Shanghai Composite declined 3.47 points or 0.12% to 2,890.29, Hang Seng decreased 20.17 points or 0.08% to 25,595.31 and Nikkei 225 was down by 20.21 points or 0.1% to 20,459.21.