Bourses manage to trade above neutral lines in morning deals

Key benchmark indices pared some of their initial gains but managed to trade above their neutral lines in morning deals, on account of buying in frontline blue chip counters. Investors were taking support from Defence Minister Rajnath Singh’s statement that the current size of the Indian economy is around $2.7 trillion and the government's goal is to make it to $5 trillion by 2024 and subsequently to $10 trillion by 2030. He said defence is one of the sectors that will help contribute towards it. Traders also took note of Niti Aayog chief executive Amitabh Kant’s statement that structural reforms in agriculture and exports are needed to bring growth rate back to higher levels. He also said the fundamentals of the economy are intact which will help the government take back the economy to the higher growth trajectory soon despite the global slowdown. On the sectoral front, IT services stocks were in focus with rating agency ICRA’s statement that growth of IT services companies is expected to remain in 6-8 per cent range in US dollar terms in 2019-20, even as the profitability of these firms declined in the first quarter on account of higher employee expenses. On the currency front, the rupee recovered 37 paise to 71.41 against the US dollar in early trade on heightened selling of the US currency by exporters and banks.

On the global front, Asian markets were trading mostly in green, with attention turning to the Federal Reserve's key policy decision later in the day, while investors remain on alert for developments in the Middle East after the attack on Saudi oil facilities rocked markets. Back home, the BSE Sensex is currently trading at 36543.48, up by 62.39 points or 0.17% after trading in a range of 36465.92 and 36712.99. There were 18 stocks advancing against 13 stocks declining on the index.
The broader indices were trading in green; the BSE Mid cap index rose 0.30%, while Small cap index was up by 0.20%.

The top gaining sectoral indices on the BSE were Metal up by 1.15%, Realty up by 0.77%, Oil & Gas up by 0.48%, Energy up by 0.39% and Consumer Durables up by 0.37%, while Auto down by 0.43%, Telecom down by 0.34%, FMCG down by 0.17%, Utilities down by 0.13% and Power down by 0.07% were the top losing indices on BSE.

The top gainers on the Sensex were Bajaj Finance up by 2.31%, Tata Steel up by 2.31%, Vedanta up by 1.72%, Kotak Mahindra Bank up by 1.18% and SBI up by 0.97%. On the flip side, Yes Bank down by 2.23%, Maruti Suzuki down by 1.48%, Sun Pharma down by 1.02%, ONGC down by 0.69% and Bharti Airtel down by 0.65% were the top losers.

Meanwhile, following dip in sales of automobile over the past few quarters, rating agency ICRA has revised the outlook on auto components sector to negative from stable. It said aftermarket demand for components, which accounts for 18 per cent of the industry turnover, has also slowed down with decline in goods movement and the consequent weakness in freight activity. It added that liquidity issues across the aftermarket dealer channel have led to de-stocking, curtailing fresh demand from component manufacturers.

It also said that with global automotive outlook turning negative with decline in sales across geographies, partly due to heightened trade tensions and other geopolitical factors, export demand for Indian component manufacturers could also be impacted in the coming quarters. It said despite accommodative commodity prices, weakness in original equipment manufacturer (OEM) demand will impact credit metrics for component manufacturers. This comes amidst rapid and mandatory technological advancements in vehicle safety and emissions, which has led to sizeable capital expenditure by component manufacturers over the past few years.

The rating agency said most players in the auto component sector are taking a relook at their capital expenditure plans; consequently, across segments Icra estimates a cut back ranging between 15-25 per cent by most players. Large manufacturers, who have used their cashflows from the upcycle to develop a strong balance sheet and product capabilities, are expected to be more resilient to the current downturn. On the other hand, entities with leveraged balance sheet are likely to face stress.

The CNX Nifty is currently trading at 10828.25, up by 10.65 points or 0.10% after trading in a range of 10804.85 and 10885.15. There were 29 stocks advancing against 21 stocks declining on the index.

The top gainers on Nifty were Bajaj Finance up by 2.23%, Tata Steel up by 2.10%, JSW Steel up by 2.04%, BPCL up by 1.76% and Vedanta up by 1.69%. On the flip side, Yes Bank down by 3.76%, Britannia Industries down by 2.87%, UPL down by 2.71%, Eicher Motors down by 2.12% and Maruti Suzuki down by 1.62% were the top losers.

Asian markets were trading mostly in green; Taiwan Weighted strengthened 58.30 points or 0.54% to 10,932.80, Jakarta Composite soared 28.48 points or 0.46% to 6,265.17, Shanghai Composite gained 11.63 points or 0.39% to 2,989.75 and KOSPI rose 10.56 points or 0.51% to 2,072.89.
On the flip side, Hang Seng decreased 2.29 points or 0.01% to 26,787.95, Straits Times trembled 11.74 points or 0.37% to 3,171.26 and Nikkei 225 slipped 28.71 points or 0.13% to 21,972.61.