Key indices keep head above water in early noon deals

Local equity benchmarks managed to keep their head above water in early noon deals with both Sensex and Nifty were trading above 41,150 and 12,100 marks, respectively. Buying in frontline stocks such as Sun Pharma, HDFC and Hero MotoCorp were aiding sentiment, while selling in Bharti Airtel, Tata Steel and Nestle kept the gains in the markets in check. Furthermore, Indian rupee strength against the US dollar following selling in American currency by banks and exporters supported the investors’ sentiment. Some comfort also came with report that Finance Minister Nirmala Sitharaman's first full year Budget is expected to provide short-term stimulants to boost consumer demand, and such measures will get a positive response from markets. However, gains remain capped with Nobel laureate and economist Abhijit Banerjee’s statement that the country could be passing through a phase of recession, and there is ‘nothing in the data’ that suggests otherwise. He added that the priority of the government should be on refinancing the banking sector, which is in ‘doldrums’.

On the global front, Asian equity benchmarks were trading bearish, as continued worries about China virus dulled the investors’ sentiment. Markets in Hong Kong, Taiwan and mainland China were closed today for Lunar New Year holidays. Back home, in scrip specific developments, shares of Dewan Housing Finance Corporation (DHFL) tumbled after Enforcement Directorate arrested Kapil Wadhawan, the promoter of company. Aptech slipped, after reports suggested Rakesh Jhunjhunwala, the billionaire stock market investor, is being probed by the market regulator Sebi in case of alleged insider trading in shares of the education firm.

The BSE Sensex is currently trading at 41178.49, up by 23.37 points or 0.06% after trading in a range of 41101.51 and 41333.25. There were 10 stocks advancing against 20 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.05%, while Small cap index was up by 0.26%.

The top gaining sectoral indices on the BSE were Realty up by 0.57%, Healthcare up by 0.53%, Bankex up by 0.44%, Consumer Durables up by 0.34% and Oil & Gas was up by 0.24%, while Telecom down by 2.17%, Metal down by 1.65%, Power down by 0.82%, TECK down by 0.67% and Energy was down by 0.63% were the top losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 2.73%, HDFC up by 2.25%, Hero MotoCorp up by 1.42%, Bajaj Finance up by 1.29% and HDFC Bank was up by 0.79%. On the flip side, Bharti Airtel down by 2.53%, Tata Steel down by 1.92%, Nestle down by 1.47%, Power Grid Corporation down by 1.35% and HCL Tech was down by 1.21% were the top losers.

Meanwhile, India Ratings and Research (Ind-Ra) in its latest report has said that the margins of cotton textiles are expected to improve in the coming period. It expects cotton prices to soften till March 2020 due to better yield leading to higher productivity of cotton in the current season. It highlighted that cotton prices had dropped in November 2019 however, December 2019 marked the beginning of an upward movement in prices by 2-3 percent year-on-year.

According to the report, while the arrival of cotton during first quarter of the current season (October to September) as expected by the Cotton Corporation of India (CCI) will improve by 8.5 percent, the impact on actual prices is not visible. It said the CCI has maintained its forecast for cotton production at 35.4 million bales during the current season. Further, it said the yield per hectare is expected to improve by more than 6 per cent over the previous season due to higher acreage and better monsoon.

The report has stated that the demand for fabric exports has contracted owing to weak market sentiments and increased competition from southeast Asian countries. Fabric exports fell 12 percent year-on-year in November and improved 12 percent year-on-year. It pointed out that crude oil prices could remain volatile in the short-run owing to geopolitical tensions and production cuts by OPEC, which impacts the man-made textile margins. Besides, it said man-made fibres saw the third consecutive month of low volatility until November of raw material prices on the back of stable crude oil prices, which has helped the segment maintain stable EBITDA (earnings before interest, taxes, depreciation, and amortisation) margins and improve credit metrics.

The CNX Nifty is currently trading at 12122.00, up by 3.00 points or 0.02% after trading in a range of 12095.35 and 12163.55. There were 19 stocks advancing against 31 stocks declining on the index.

The top gainers on Nifty were Sun Pharma up by 2.69%, HDFC up by 2.25%, BPCL up by 1.68%, Hero MotoCorp up by 1.42% and Bajaj Finance was up by 1.38%. On the flip side, Vedanta down by 2.79%, Bharti Airtel down by 2.60%, Tata Steel down by 1.84%, Coal India down by 1.76% and JSW Steel was down by 1.71% were the top losers.

Asian markets were trading lower, Nikkei 225 slipped 134.45 points or 0.58% to 23,209.06, KOSPI fell 69.73 points or 3.1% to 2,176.40, Jakarta Composite lost 60.97 points or 0.99% to 6,072.24 and Straits Times was down by 83.20 points or 2.57% to 3,156.82.