Local equities continue lackluster trade

Local equity benchmarks continued their lackluster trade in late morning session following a monthly survey showed that India’s services sector activity growth eased in August as new business inflows rose at a slower pace; following which job creation and output expansion moderated. Traders also remain concerned with Care Ratings’ report that the ongoing economic slowdown that India is witnessing may be because of weak investment growth. Two catalysts of investment - demand and availability of funds - have witnessed weak growth in the preceding months. Low capacity utilization in most of the industries left them with surplus capacity and this surplus has pulled down the need for any more expansion. Traders took note of a private report that India's central bank recommended a slew of measures for developing a secondary market for corporate loans, including easing of regulations to allow foreign portfolio investors (FPIs) to directly purchase distressed loans from banks.

On the global front, Asian markets were trading mostly in green; following weakness in US manufacturing and wrangling in Britain over the country's departure from the European Union. Back home, on the sectoral front, Realty stocks remain in focus on report that the central government may soon come out with a slew of measures to boost the real estate sector in the country. This would be a part of series of steps taken since August 23 to give a boost to the economy facing slowdown.

The BSE Sensex is currently trading at 36451.63, down by 111.28 points or 0.30% after trading in a range of 36432.92 and 36636.67. There were 8 stocks advancing against 22 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index slipped 0.86%, while Small cap index was down by 0.33%.

The few gaining sectoral indices on the BSE were Telecom up by 0.93%, BANKEX up by 0.11%, TECK was up by 0.01%, while Auto down by 1.85%, Consumer Durables down by 1.44%, Consumer Disc down by 1.25%, Healthcare down by 0.88% and Energy was down by 0.71% were the top losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 1.57%, SBI up by 0.95%, HDFC Bank up by 0.49%, ICICI Bank up by 0.47% and ONGC was up by 0.38%. On the flip side, Tata Motors down by 4.88%, Tata Motors - DVR down by 4.59%, Sun Pharma down by 4.04%, Maruti Suzuki down by 3.04% and IndusInd Bank was down by 2.46% were the top losers.

Meanwhile, amid expectations of sluggish steel demand growth due to a mix of structural and cyclical concerns in auto and real estate construction, India Ratings and Research (Ind-Ra) has revised its outlook on the steel sector to 'stable-to-negative' from 'stable' for the rest of current financial year (FY20)  It has also revised downwards its FY20 steel demand growth expectation to about 4 percent from the earlier forecast of 7 percent.

According to the report, the outlook factors in increased import risks especially from Free Trade Agreement (FTA) countries like Japan and South Korea due to adverse domino impact of the slowing global growth and continuing trade frictions. It also believed that raw material availability and price risks may worsen in Q4 (Jan-Mar) of 2019-20 if the uncertainty over iron ore mine auctions extends.

However, Ind-Ra expects steel demand to recover in the second half of 2019-20, on the back of pick up in government investments, fiscal stimulus measures, improvement in market sentiment, among others. It further said that steel producers are likely to see moderation in cash flows from operations as strong margins moderate over FY20 from the highs of FY19. 

The CNX Nifty is currently trading at 10753.60, down by 44.30 points or 0.41% after trading in a range of 10752.80 and 10823.55. There were 12 stocks advancing against 38 stocks declining on the index.

The top gainers on Nifty were Bharti Airtel up by 1.53%, Dr. Reddys Lab up by 1.27%, SBI up by 0.88%, Wipro up by 0.61% and Cipla was up by 0.51%. On the flip side, Tata Motors down by 4.93%, Sun Pharma down by 4.19%, Maruti Suzuki down by 3.20%, Zee Entertainment down by 3.10% and IndusInd Bank was down by 2.57% were the top losers.

Asian markets were trading mostly in green, Hang Seng increased 332.28 points or 1.3% to 25,860.13, Taiwan Weighted strengthened 69.56 points or 0.66% to 10,627.77, Nikkei 225 surged 50.44 points or 0.24% to 20,675.60, Straits Times advanced 19.06 points or 0.62% to 3,109.69, Shanghai Composite gained 7.58 points or 0.26% to 2,937.73 and KOSPI was up by 6.65 points or 0.34% to 1,972.34.

On the other side, Jakarta Composite was down by 17.06 points or 0.27% to 6,244.53.