Benchmarks continue lackluster trade slightly in red

Indian equity benchmarks continued their lackluster trade slightly in red in afternoon session on the back of selling activities by market-participants. Investors’ sentiments remain dented with Fitch Ratings stating that the ongoing NBFC crisis and the consequential credit squeeze may severely affect the economic growth, which is likely to be print at a six-year low of 5.5 percent in FY20. Moreover, disappointing quarterly earnings by some blue-chip companies weighed on the sentiments. However, losses were limited as traders found some support with Finance Minister Nirmala Sitharaman’s statement that efforts will be made to further simplify Goods and Services Tax, and expressed hope that it will help in further improving India’s ranking in the World Bank’s ease of doing business index. On the sectoral front, construction sector remained in focus as India Ratings and Research (Ind-Ra) maintained a stable outlook for the sector for the rest of FY20 mainly on account of the current order book position. 

On the global front, Asian markets were trading mostly in green, tracking small gains in world markets as positive earnings offset economic growth concerns. Back home, the BSE Sensex is currently trading at 38974.15, down by 46.24 points or 0.12% after trading in a range of 38950.11 and 39241.61. There were 13 stocks advancing against 18 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index rose 0.18%, while Small cap index was down by 0.07%.

The top gaining sectoral indices on the BSE were PSU up by 1.13%, Oil & Gas up by 1.02%, Metal up by 0.41%, IT up by 0.40% and Bankex was up by 0.26%, while Telecom down by 3.08%, Power down by 0.78%, Industrials down by 0.53%, Healthcare down by 0.52% and Auto down was by 0.30% were the top losing indices on BSE.

The top gainers on the Sensex were SBI up by 2.97%, Tata Steel up by 1.75%, ICICI Bank up by 1.61%, Sun Pharma up by 1.11% and HCL Technologies was up by 0.97%. On the flip side, Tata Motors - DVR down by 4.18%, Tata Motors down by 4.01%, Yes Bank down by 2.48%, HDFC down by 1.82% and Tech Mahindra was down by 1.70% were the top losers.

Meanwhile, India Ratings and Research (Ind-Ra) has maintained a stable outlook for the construction sector in India for the rest of FY20 mainly on account of the current order book position. The agency has maintained stable outlook despite a slowdown in awarding projects in the transport and irrigation sectors. It also said that most construction firms are likely to experience healthy revenue growth and stable credit metrics over H2 FY20, supported by the strength of their existing order books.

Rating agency has noted that the likely slowdown in the new order inflows in the roads, bridges and highways and the irrigation segments would be compensated by strong order inflows from the urban infrastructure including housing, metro, water supply, sewage treatment and railways segments. It also opined that construction companies focused on road EPC sub-segment are likely to experience minimal developments with respect to their ratings during H2 FY20, as they would continue to execute their order book in a timely manner, supported by their strong execution capabilities and timely realisation of receivables, resulting from the presence of strong counter parties in their order book.

Ind-Ra further said the overall improvement in the financial profile of construction companies are more likely to be determined by their ability to manage their existing working capital resources in a prudent manner, given the working capital- intensive nature of the sector and the increasing risk- averse approach adopted by lenders towards the construction sector. However, it noted that the revenue visibility of these companies might be affected by the slow pace of awarding for road projects, which remains a key rating monitorable.

The CNX Nifty is currently trading at 11567.20, down by 15.40 points or 0.13% after trading in a range of 11559.15 and 11646.90. There were 25 stocks advancing against 25 stocks declining on the index.

The top gainers on Nifty were BPCL up by 3.39%, SBI up by 2.99%, Tata Steel up by 2.10%, Indian Oil up by 1.91% and ICICI Bank was up by 1.62%. On the flip side, Bharti Infratel down by 7.72%, Tata Motors down by 4.01%, Yes Bank down by 2.90%, Tech Mahindra down by 2.06% and HDFC was down by 1.86% were the top losers.

Asian markets were trading mostly in green; Nikkei 225 surged 49.21 points or 0.22% to 22,799.81, Shanghai Composite gained 16.53 points or 0.56% to 2,957.45, Straits Times advanced 16.14 points or 0.51% to 3,185.01 and KOSPI was up by 2.23 points or 0.11% to 2,087.89.

On the flip side, Taiwan Weighted dropped 24.02 points or 0.21% to 11,296.12, Jakarta Composite lost 36.17 points or 0.57% to 6,303.48 and Hang Seng was down by 93.10 points or 0.35% to 26,704.85.