Benchmarks trim losses in afternoon deals

Indian equity benchmarks trimmed most of their losses in afternoon session, but continue to trade below the neutral lines with Sensex and Nifty trading below at 50200 and 15100 respectively. Traders were concerned from rising inflationary pressure globally and increasing apprehension among investors about Federal Reserve's soft monetary stance due to sharp rise in CPI inflation. However, markets pared most of their losses as some support came in as UN data stated that India, China and South Africa have fared ‘relatively better’ than other major economies in imports and exports in the first quarter of this year as global trade recovery from the COVID-19 crisis hit a record high during in the same period. Meanwhile, foreign institutional investors (FIIs) were net buyers in the capital market as they purchased shares worth Rs 618.49 crore on May 18. On the global front, Asian markets were trading lower as uncertainties over inflation prompted investors to reduce exposure to riskier assets.

The BSE Sensex is currently trading at 50156.90, down by 36.43 points or 0.07% after trading in a range of 50015.57 and 50279.01. There were 15 stocks advancing against 15 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.72%, while Small cap index was up by 0.73%.

The top gaining sectoral indices on the BSE were Realty up by 1.92%, Power up by 1.40%, Healthcare up by 1.00%, Utilities up by 0.93% and IT was up by 0.68%, while Auto down by 0.56%, Telecom down by 0.55%, Oil & Gas down by 0.53%, Bankex down by 0.36% and Metal was down by 0.24% were the top losing indices on BSE.

The top gainers on the Sensex were Nestle up by 1.44%, Sun Pharma up by 1.38%, Tech Mahindra up by 1.22%, Reliance Industries up by 1.02% and Power Grid was up by 0.97%. On the flip side, ONGC down by 1.59%, Bajaj Finserv down by 1.51%, Mahindra & Mahindra down by 1.30%, Bharti Airtel down by 0.95% and Kotak Mahindra Bank was down by 0.89% were the top losers.

Meanwhile; Fitch Ratings in its latest report has said that the recent price increases by India’s cement companies will counter higher energy costs while the impact on profitability from a resurgence of coronavirus is likely to be limited. It also expected cement demand to be less affected by restrictions to curb the spread of Covid-19 this time around while larger cement companies' strong profitability in the financial year ended March 31 (FY21) should cushion their financial profiles against downside risks.

According to the report, key energy commodities including petroleum coke, imported coal and diesel which together account for more than 50 percent of cement makers' costs rose sharply, particularly after 3Q FY21. However, it said the impact on cement companies' costs was less apparent in 4Q FY21 as they switched to using lower priced imported coal and benefitted from lower-cost inventories and a lag in adjustments in freight costs. 

However, Fitch expects the economic impact of latest restrictions to be less severe than those last year which should drive pent-up demand for cement after the curbs are eased. It believed this should support moderate recovery in cement demand in FY22 from FY21 levels unless stricter or wider restrictions are imposed. It added that recovery after 1H FY21 limited the full-year decline in cement production to 12 percent.

The CNX Nifty is currently trading at 15095.65, down by 12.45 points or 0.08% after trading in a range of 15049.65 and 15133.40. There were 28 stocks advancing against 22 stocks declining on the index.

The top gainers on Nifty were UPL up by 2.31%, Cipla up by 1.82%, Nestle up by 1.47%, Shree Cement up by 1.37% and Sun Pharma was up by 1.33%. On the flip side, Tata Motors down by 4.38%, ONGC down by 1.68%, Bajaj Finserv down by 1.42%, Mahindra & Mahindra down by 1.25% and BPCL was down by 0.99% were the top losers.

Asian markets were trading in red; Taiwan Weighted dropped 13.32 points or 0.08% to 16,132.66, Nikkei 225 slipped 362.39 points or 1.28% to 28,044.45, Shanghai Composite declined 22.98 points or 0.65% to 3,506.03, Straits Times trembled 26.31 points or 0.84% to 3,116.32 and Jakarta Composite was down by 77.16 points or 1.32% to 5,757.23.