Local equities continue weak trend

Local equities added losses to continue their weak trade in the morning session hovering near the lowest point of the day on account of selling in frontline counters. Cautiousness crept in with Asian Development Bank’s (ADB) report that it has lowered India's gross domestic product (GDP) growth forecast to 6.5 percent for the current fiscal (FY20), weighed down by the GDP growth slipping to a six-year low in the April-June quarter of 2019-20. Traders took note of Communications and IT minister Ravi Shankar Prasad’s statement that India should aim to become the largest foreign direct investment (FDI) recipient globally as the country offers a huge market and investor-friendly policies. The sentiments remained in lackadaisical mood with a private report that against a full-year growth target of 17.4% for direct tax collections, the net of refunds between April 1, 2019, and September 17, 2019, this fiscal has come in at Rs 4.5 lakh crore, just about 6% higher than collections in the same period a year ago. Traders failed to get any sense of relief from a report that India and the US are close to finalising a bilateral trade deal that will help both the countries to achieve bilateral trade target of $500 billion a year.

On the global front, Asian markets were trading lower as investors watched for developments in the United States after lawmakers launched an impeachment inquiry into President Donald Trump. Back home, the Reserve Bank of India (RBI) Governor Shaktikanta Das has said that it made India a very attractive destination for foreign investment. He said ‘India's corporate tax now becomes very competitive compared to other emerging market economies in ASEAN and other parts of Asia.

The BSE Sensex is currently trading at 38700.15, down by 396.99 points or 1.02% after trading in a range of 38652.15 and 39087.20. There were 7 stocks advancing against 24 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index slipped 1.21%, while Small cap index was down by 0.79%.

The top gaining sectoral indices on the BSE were Power up by 1.01%, Utilities up by 0.54%, IT up by 0.40%, Energy up by 0.28%, TECK up by 0.26%, while Auto down by 2.26%, Metal down by 1.73%, BANKEX down by 1.73%, Realty down by 1.57%, PSU down by 1.29% were the top losing indices on BSE.

The top gainers on the Sensex were Power Grid up by 3.39%, TCS up by 1.15%, NTPC up by 1.13%, Yes Bank up by 0.80% and Reliance Industries was up by 0.76%. On the flip side, SBI down by 4.43%, Tata Motors - DVR down by 4.26%, Tata Motors down by 4.01%, HDFC down by 3.02% and Maruti Suzuki was down by 2.99% were the top losers.

Meanwhile, India Rating in its latest report has said that banks are staring at a spike in their credit cost, which is set to rise in the range of 1.9-4.6% for the second half (H2) of the current financial year (FY20) as Non-performing asset (NPA) resolution crawls. In its earlier assessment, the agency had estimated the system-wide credit cost floor at 1.9% and capped it at 4.4% for the second half of FY20.

For the second half, it has revised upwards the credit cost estimate for state-run banks by 30 basis points to 5.2%, while for private sector banks it is pegged at 3.2% at the same level as the previous estimate. It added that any pick up in stressed asset resolutions may result in lower net credit cost.

It said material incremental NPA generation for fiscal 2020 and 2021 may come from the agriculture and MSME sectors. It mentioned that with the RBI giving forbearance to MSMEs until March 2020, some of the incremental stress in this segment can show up in FY21, unless the economy picks up. Muted rural income growth, along with announcements or expectations of farm loan waivers continue to weigh on asset quality of farm loans.

The CNX Nifty is currently trading at 11473.15, down by 115.05 points or 0.99% after trading in a range of 11463.05 and 11564.95. There were 11 stocks advancing against 39 stocks declining on the index.

The top gainers on Nifty were Power Grid up by 3.36%, TCS up by 1.14%, Zee Entertainment up by 1.11%, Bajaj Finserv up by 1.06% and NTPC was up by 1.04%. On the flip side, SBI down by 4.49%, Tata Motors down by 4.13%, HDFC down by 3.03%, Eicher Motors down by 2.90% and Maruti Suzuki was down by 2.83% were the top losers.

All Asian markets were trading lower, Hang Seng decreased 283.22 points or 1.08% to 25,997.78, Nikkei 225 slipped 87.04 points or 0.39% to 22,011.80, Taiwan Weighted dropped 69.84 points or 0.64% to 10,848.17, Straits Times trembled 19.73 points or 0.63% to 3,135.73, KOSPI fell 19.13 points or 0.91% to 2,081.91, Shanghai Composite declined 17.09 points or 0.57% to 2,968.25 and Jakarta Composite lost 16.78 points or 0.27% to 6,120.83.