Bourses trade slightly lower in early noon session

Indian equity markets were trading slightly lower in early noon session with Sensex and Nifty trading below at 39,050 and 11,600 levels, respectively. Selling in frontline blue chip stocks such as Larsen & Toubro, Asian Paints, ONGC and HDFC Bank restricted the markets to go up. Markets cooled off with Agriculture Ministry’s report that the country’s foodgrain production is estimated slightly lower at 140.57 million tonnes in the kharif season of 2019-20 crop year on likely fall in rice and pulses output. Selling further crept in with former Union finance minister Yashwant Sinha’s statement that contraction in demand and reluctance to invest led to the current slowdown in the Indian economy. He said some corporates are sitting on a pile of cash, but are not making investments, thus affecting demand. However, downside remain limited with NITI Aayog vice chairman Rajiv Kumar’s statement that India has become a more attractive investment destination following the reduction in corporate tax rates but relocation of units from competitors such as China will depend on other factors as well, such as the ability of states to make their environment more business-friendly.

On the global front, Asian markets were trading mostly in green amid optimism about global economic growth after the US Treasury Secretary Steven Mnuchin's affirmation that US-China trade talks will resume in two weeks. Back on streets, in scrip specific developments, shares of Thomas Cook (India) declined despite clarifying that the company has not received intimation from the Ministry of Corporate Affairs (MCA) over any 'suspicious’ transaction with a Delhi-based forex trader. Besides, Bharti Airtel gained on partnering with Bharti AXA Life Insurance.

The BSE Sensex is currently trading at 39034.43, down by 55.60 points or 0.14% after trading in a range of 38971.25 and 39306.37. There were 13 stocks advancing against 18 stocks declining on the index.

The broader indices were trading in mixed; the BSE Mid cap index lost 0.45%, while Small cap index was up by 0.03%.

The top gaining sectoral indices on the BSE were Energy up by 2.26%, IT up by 1.99%, TECK up by 1.67% and Healthcare was up by 0.49%, while Capital Goods down by 1.69%, Bankex down by 1.55%, PSU down by 1.37%, Industrials down by 0.93% and Realty was down by 0.84% were the top losing indices on BSE.

The top gainers on the Sensex were Reliance Industries up by 4.27%, Tech Mahindra up by 2.90%, Sun Pharma up by 2.64%, Infosys up by 2.60% and Vedanta was up by 2.18%. On the flip side, Larsen & Toubro down by 2.56%, Asian Paints down by 2.21%, ONGC down by 1.98%, HDFC Bank down by 1.95% and Kotak Mahindra Bank was down by 1.93% were the top losers.

Meanwhile, the rating agency ICRA in its latest report has said the automotive industry, which accounts for almost half the manufacturing GDP of India, is likely to be one of the key beneficiaries of recent corporate tax revision. It noted that the reduction of corporate tax rates to globally competitive levels will incentivise original equipment manufacturers (OEMs) and their vendors to increase localisation, which augurs well for the industry. Given the escalating trade war between the U.S. and China, it said revision in corporate tax will attract foreign direct investment (FDI) in Indian manufacturing sector, as the revised tax structure is now in line with other emerging markets.

According to the report, India has imported auto components worth $17.6 billion during 2019-20 (till now) and this is likely to increase further in 2020-21 given the transitionary phase towards stricter safety and emission norms. In the current fiscal, it said the Indian automotive industry, especially passenger vehicle segment, has witnessed one of the worst slides in the last two decades due to multiple factors like tighter financing environment for consumers and liquidity crunch faced by dealerships. Besides, it noted that weak farm income and overall slowdown in economic activity has impacted consumer sentiments and purchasing behavior.

ICRA further stated that under the current weak demand conditions, OEMs are expected to pass on some benefits of tax revision to the end consumers. It said this implies that the price correction in coming months will to an extent address the demand side issues. Moreover, it said clarity from the government that there is no further GST/cess revision will help consumers who were waiting for improved clarity prior to their car purchase decision.

The CNX Nifty is currently trading at 11576.45, down by 23.75 points or 0.20% after trading in a range of 11556.20 and 11655.05. There were 20 stocks advancing against 30 stocks declining on the index.

The top gainers on Nifty were Reliance Industries up by 4.09%, Infosys up by 2.64%, Tech Mahindra up by 2.53%, Sun Pharma up by 2.23% and Vedanta was up by 2.15%. On the flip side, Eicher Motors down by 2.93%, Indian Oil Corporation down by 2.80%, JSW Steel down by 2.56%, Larsen & Toubro down by 2.52% and Bharti Infratel was down by 2.48% were the top losers.

Asian markets were trading mostly in green, Shanghai Composite gained 16.86 points or 0.57% to 2,993.94, Hang Seng increased 82.36 points or 0.31% to 26,304.76, KOSPI rose 6.45 points or 0.31% to 2,098.15, Straits Times advanced 15.27 points or 0.49% to 3,158.51 and Nikkei 225 was down by 34.92 points or 0.16% to 22,114.01.

On the flip side, Taiwan Weighted dropped 4.23 points or 0.04% to 10,914.79 and Jakarta Composite was down by 77.99 points or 1.26% to 6,128.21.