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Local equities trade marginally lower amid weak Asian cues
Nov-21-2019

Mirroring weak Asian cues, local equity benchmarks continue to trade marginally in red in morning session on account of profit booking by investors in some specific sectors such as Telecom, Metal, and Energy. Market participants remain concerned with a private report stating that India’s economic growth probably hit a new low last quarter, with early forecasts showing expansion below 5%. However, downside remain capped with a report that Union Cabinet approved a bill to replace an ordinance promulgated to reduce corporate tax to 22% to boost the economy. Some support came with Commerce and Industry Minister Piyush Goyal’s statement that the government is considering a proposal to provide foreign exchange loan at cheaper interest rate to exporters. The government is considering a proposal to provide higher insurance coverage to the banks on their export-credit-disbursement. Besides, he also said that India offers huge business opportunities for the companies of central and eastern European countries. India and eastern European companies can join hands with Indian companies in areas like artificial intelligence, renewable energy and new-age manufacturing. On the sectoral front, sugar stock remain in focus with a report that India's sugar production declined 64% to 4.85 lakh tonnes till November 15 in the current marketing year that started last month as mills in Maharashtra have not yet begun their operations.

On the global front, Asian markets were trading lower, as worries grew over the possible delay of a preliminary trade deal between the United States and China. Back home, a report stated that non-food credit growth in the banking system fell to a two-year-low of 7.92% year-on-year (y-o-y) during the fortnight ended November 9. The credit growth figure is the lowest since October 2017.

The BSE Sensex is currently trading at 40612.56, down by 39.08 points or 0.10% after trading in a range of 40586.40 and 40744.85. There were 14 stocks advancing against 17 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.08%, while Small cap index was up by 0.15%.

The top gaining sectoral indices on the BSE were Capital Goods up by 1.23%, Industrials up by 0.97%, Auto up by 0.45%, IT up by 0.30% and Healthcare was up by 0.29%, while Telecom down by 2.34%, Metal down by 0.96%, Energy down by 0.59%, PSU down by 0.52% and Basic Materials was down by 0.46% were the top losing indices on BSE.

The top gainers on the Sensex were Larsen & Toubro up by 2.08%, Tata Motors up by 1.41%, Tata Motors - DVR up by 1.30%, Bajaj Auto up by 0.96% and Hero MotoCorp was up by 0.82%. On the flip side, Bharti Airtel down by 2.15%, ONGC down by 1.50%, NTPC down by 1.37%, Axis Bank down by 1.16% and Yes Bank was down by 1.14% were the top losers.

Meanwhile, Implementation of the BS-VI emission norms from April 1, 2020, rating agency India Ratings and Research has said this could lead to some short term headwinds for the commercial vehicle (CV) segment. Considering the sharp year-on-year fall in the sales volumes of CVs, especially since May 2019, the underwhelming pace of industrial activity and the higher cost of ownership of a BS-VI compliant CV, the implementation of BS-VI could add to the sector's woes.

Furthermore, given the excess supply and muted demand-side fundamentals in the economy, the rating agency believes the pre-buying of BS-IV CVs till end of the fourth quarter of the current fiscal is unlikely to be meaningful as compared with the earlier occasions when new emission norms had been implemented. It said for fleet owners, the ownership of BS-VI vehicle would be credit neutral as the benefits from fuel efficiency and maintenance would largely be offset by higher debt repayments.

It noted the revised axle load norms led to inorganic capacity expansion in the system while demand-side fundamentals have remained fairly muted as evident from the decline in the index of industrial production and the decrease in the aggregate volumes of manufacturing companies. Besides, the agency said that demand for CVs would remain challenged in the near term by the slowing growth of industries and the economy in general as well as by the impact of the extended monsoon on agricultural produce and rural demand.

The CNX Nifty is currently trading at 11981.70, down by 17.40 points or 0.15% after trading in a range of 11975.00 and 12028.20. There were 22 stocks advancing against 27 stocks declining, while 1 stock remain unchanged on the index.

The top gainers on Nifty were Zee Entertainment up by 7.15%, Adani Ports up by 2.39%, Larsen & Toubro up by 2.04%, Tata Motors up by 1.19% and Dr. Reddys Lab was up by 1.04%. On the flip side, Bharti Infratel down by 3.18%, BPCL down by 2.21%, Bharti Airtel down by 2.17%, ONGC down by 1.65% and Coal India was down by 1.43% were the top losers.

Asian markets were trading lower, Hang Seng decreased 429.98 points or 1.6% to 26,459.63, Nikkei 225 slipped 174.17 points or 0.75% to 22,974.40, Taiwan Weighted dropped 96.64 points or 0.83% to 11,534.56, Jakarta Composite lost 52.06 points or 0.85% to 6,103.05, KOSPI fell 34.72 points or 1.63% to 2,090.60, Straits Times trembled 26.68 points or 0.83% to 3,203.10 and Shanghai Composite declined 11.49 points or 0.39% to 2,899.56.
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