Local equities pare opening gains; Oil & Gas, PSU drag

Subsequent to a positive opening, local equity benchmarks have erased some of their gains and are trading flat in morning session, on account of some selling in frontline counters. Oil & Gas, Energy and PSU counters witnessed notable losses, while BANKEX and Consumer Durables sectors edged higher. Traders turned pessimistic with a report that the government’s efforts to drive ‘Make in India’ to success have not yet reflected in the country’s industrial output growth. India’s Index of Industrial Production (IIP) growth is expected to fall to 2 per cent in the current financial year 2019-20. However, downside remained capped with a report that the government is expected to realise Rs 39,500 crore from the Sabka Vishwas Scheme, a dispute resolution-cum-amnesty scheme for settling pending disputes of service tax and central excise. This will act as a big booster for the government, which is staring at revenue shortage from both direct and indirect taxes. Besides, after months of hard negotiations, India and the US have moved closer to a trade deal that will include New Delhi’s commitment to extend greater market access in medical devices and agriculture.

On the global front, Asian markets are trading mixed, as investors digested Chinese official manufacturing data that met expectations amid coronavirus fears. Back home, on the sectoral front, jewellery stocks were in focus as the Union commerce ministry has chalked out strategies to achieve $80 billion worth of exports in the next five years through setting up common facility centres across the country that will move gems and jewellery up the value chain.

The BSE Sensex is currently trading at 40944.76, up by 30.94 points or 0.08% after trading in a range of 40894.18 and 41154.49. There were 15 stocks advancing against 15 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index slipped 0.32%, while Small cap index was down by 0.15%.

The top gaining sectoral indices on the BSE were BANKEX up by 0.91%, Consumer Durables up by 0.51%, Realty up by 0.37%, Consumer Disc up by 0.36% and FMCG was up by 0.25%, while Oil & Gas down by 1.50%, Energy down by 1.21%, PSU down by 1.20%, Utilities down by 1.17% and Power was down by 0.93% were the top losing indices on BSE.

The top gainers on the Sensex were Kotak Mahindra Bank up by 4.12%, IndusInd Bank up by 2.61%, Bajaj Auto up by 2.57%, ITC up by 1.69% and Hero MotoCorp was up by 1.03%. On the flip side, ONGC down by 3.72%, Power Grid down by 2.57%, HCL Tech down by 1.72%, TCS down by 1.11% and Reliance Industries was down by 1.08% were the top losers.

Meanwhile, credit rating agency ICRA has said that the domestic airline industry is likely to post a net loss of about Rs 7,800 crore in current financial year (FY20) as against an estimated net loss of approximately Rs 10,000 crore in FY19. It expects the domestic passenger traffic in FY20 to be lower at 4.5 per cent, after five years of double-digit growth as many domestic airlines are focusing on expanding their international routes.

The agency further mentioned that improvement in the core growth drivers like economic environment, tourism demand and regulatory support is essential for improved passenger traffic growth. Though there have been steps towards improving airport infrastructure, the pace of implementation remains a key concern. ICRA’s Vice-President and Co-Head, Corporate Sector Ratings -- Kinjal Shah said that excluding Air India, the rest of the industry is expected to report a net loss of around Rs 1,500 crore in FY20 with a total debt of approximately Rs 7,000 crore as on March 31, 2020.

The industry’s prospects are expected to gradually improve, contingent on the movement in aviation turbine fuel prices. Moreover, shah stated that many of the industry players have weak balance sheet structure; and with continued losses in the near term, the industry will need approximately Rs 20,000-22,500 crore equity infusion over the next three years.

The CNX Nifty is currently trading at 12031.35, down by 4.45 points or 0.04% after trading in a range of 12016.65 and 12103.55. There were 20 stocks advancing against 30 stocks declining on the index.

The top gainers on Nifty were Kotak Mahindra Bank up by 4.12%, IndusInd Bank up by 2.93%, Bajaj Auto up by 2.56%, ITC up by 1.75% and Yes Bank was up by 1.28%. On the flip side, ONGC down by 3.42%, Tata Motors down by 2.95%, Indian Oil Corporation down by 2.90%, Power Grid down by 2.60% and UPL was down by 2.57% were the top losers.

Asian markets are trading mixed, Nikkei 225 surged 269.03 points or 1.17% to 23,246.78, Taiwan Weighted strengthened 123.45 points or 1.08% to 11,545.19 and Hang Seng increased 89.17 points or 0.34% to 26,538.30.

On the other side, Straits Times trembled 5.66 points or 0.18% to 3,165.02, KOSPI fell 5.78 points or 0.27% to 2,142.22 and Jakarta Composite was down by 90.73 points or 1.5% to 5,966.87.