Local equities magnify losses; Nifty gives up 12,100 mark

Local equity benchmarks have magnified their losses in morning deals, hovering near the lowest point of the day on account of selling in frontline counters. The frontline indices have drifted even below the psychological 40,900 (Sensex) and 12,100 (Nifty) levels. Cautiousness remained in the markets as participants were keenly watching out for September quarter Gross Domestic Product (GDP) number scheduled to be released later in the day. Sentiments also remain dampened with a private report that India's economy probably expanded at its weakest pace in more than six years in the quarter to September, as consumer demand and private investment weakened further and a global slowdown hit exports. Investors remain concerned with Chief Economic Adviser Krishnamurthy Subramanian’s statement that the government recognised the need to cut the corporate tax to boost investments. For the last few quarters the cycle of growth has not been as it was earlier. India's economy grew at 5% in the first quarter of 2019-20 the slowest pace in over six years. On the sectoral front, textile stocks remain in focus as textiles minister Smriti Zubin Irani stated that the exports of apparel post-withdrawal of Generalised System of Preferences (GSP), has increased by 5% as compared to the corresponding period before withdrawal.

On the global front, Asian markets were trading in mostly in red, amid worries that tensions between the US and China over Hong Kong could delay a potential ‘phase one’ trade deal. Back home, Finance Minister Nirmala Sitharaman has sought Parliament approval to spend an additional Rs 21,246.16 crore, including over Rs 8,820 crore in the newly formed union territories of Jammu & Kashmir and Ladakh, in the current fiscal ending March 2020.

The BSE Sensex is currently trading at 40872.03, down by 258.14 points or 0.63% after trading in a range of 40858.50 and 41143.22. There were 8 stocks advancing against 23 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.59%, while Small cap index was up by 0.66%.

The top gaining sectoral indices on the BSE were Telecom up by 3.27%, Power up by 1.47%, Utilities up by 1.40%, Realty up by 0.46% and Industrials was up by 0.18%, while IT down by 0.74%, Auto down by 0.68%, Energy down by 0.59%, FMCG down by 0.53% and Capital Goods was down by 0.51% were the top losing indices on BSE.

The top gainers on the Sensex were Yes Bank up by 4.07%, Bharti Airtel up by 1.73%, NTPC up by 1.64%, Tata Motors up by 0.94% and Tata Motors – DVR was up by 0.55%. On the flip side, Tata Steel down by 1.18%, TCS down by 1.15%, ONGC down by 1.13%, HDFC down by 1.12% and Hindustan Unilever was down by 1.10% were the top losers.

Meanwhile, Road Transport and Highways Minister Nitin Gadkari has said share of private investment in total road construction was about Rs 98,100 crore during the last five years. Citing reasons behind weak participation of private sector in road projects, he stated said one of the reasons could be that major highway developers had capacity constraints, including over-leveraged financials, due to excessive exposure to infrastructure projects including highways.

Besides, lack of availability of debt products and some banks reaching the ceiling as per sectoral exposure norms could be the other reason. To encourage private sector participation through adequate incentives, he mentioned that the Ministry of Road Transport and Highways has adopted Hybrid Annuity Model (HAM) with an objective to maximise the quantum of implementation of highway projects within available financial resources of the government.

Under HAM, 40% of the project cost is to be provided by the government as 'construction support' to the private developer during the construction period and the balance 60% as annuity payments over the concession period along with interest on outstanding amount to the concessionaire.

The CNX Nifty is currently trading at 12080.95, down by 70.20 points or 0.58% after trading in a range of 12079.15 and 12147.40. There were 16 stocks advancing against 34 stocks declining on the index.

The top gainers on Nifty were Bharti Infratel up by 8.69%, Yes Bank up by 3.57%, Adani Ports up by 1.96%, Bharti Airtel up by 1.74% and NTPC was up by 1.69%. On the flip side, Dr. Reddys Lab down by 1.70%, Hindalco down by 1.62%, HDFC down by 1.22%, Hindustan Unilever down by 1.22% and Britannia was down by 1.15% were the top losers.

Asian markets were trading mostly in red; Hang Seng decreased 548.43 points or 2.04% to 26,345.30, Taiwan Weighted dropped 100.95 points or 0.87% to 11,516.13, Nikkei 225 slipped 93.60 points or 0.4% to 23,315.54, KOSPI fell 30.27 points or 1.43% to 2,088.33, Shanghai Composite declined 18.61 points or 0.64% to 2,871.08 and Straits Times was down by 13.05 points or 0.41% to 3,187.56. On the other side, Jakarta Composite was up by 42.84 points or 0.72% to 5,995.90.