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Local equities continue weak trend; Sensex below 36,300 mark
Sep-19-2019

Local equity benchmarks extended losses to continue their weak trade in morning session, with losses of around one percent, following Asian clues, after the US Federal Reserve cut interest rates. Most of the sectoral indices were trading in red with Metal and PSU as the top losing indices trading down by over 1.20%. Sentiments remained pessimistic on a report that as against a steep 17.5% higher tax collection budgeted for the full year, the government could mop-up only 4.7% more so far this year, with the direct tax kitty growing to Rs 5.50 lakh crore as of September 17, up from Rs 5.25 lakh crore a year-ago. The lower mop-up reflects the deepening slump in demand and overall growth. Traders also remain anxious with a private report that India’s slowdown and a simmering shadow banking crisis is putting Prime Minister Narendra Modi’s goal of crafting a $5 trillion economy by 2025 at risk. However, traders ignored a report that the bilateral trade between India and America has the potential to double and reach $280 billion in the next five years, amidst intense negotiations between the two countries to resolve their trade differences.

On the global front, Asian markets were trading mostly in red after projections by officials at the US Federal Reserve signaled a smaller chance for further interest-rate cuts. Back home, on the sectoral front, Coal industry stocks remain in focus, as Credit rating agency, ICRA reported that economic slowdown has impacted coal import cargo in the first half of this fiscal, as overall cargo growth at major ports registered a marginal growth of 1.9% to 294 million tonnes.

The BSE Sensex is currently trading at 36277.74, down by 286.14 points or 0.78% after trading in a range of 36266.02 and 36613.93. There were 5 stocks advancing against 26 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index slipped 0.71%, while Small cap index was down by 0.74%.

The lone gaining sectoral index on the BSE was Telecom up by 0.47%, while Metal down by 1.43%, PSU down by 1.42%, Realty down by 1.32%, BANKEX down by 1.27% and Oil & Gas was down by 1.27% were the top losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 0.97%, Asian Paints up by 0.69%, Hindustan Unilever up by 0.47%, Maruti Suzuki up by 0.38% and Tata Motors was up by 0.04%. On the flip side, Yes Bank down by 5.38%, Tata Steel down by 2.71%, IndusInd Bank down by 2.67%, ICICI Bank down by 2.32% and Vedanta was down by 1.94% were the top losers.

Meanwhile, ratings agency ICRA in its latest report has stated India’s steel consumption growth may decelerate to 6% in the current financial year (FY20) as compared to 7.9% in last financial year (FY19) on the back of an unprecedented slowdown in economic activity, as reflected by GDP (gross domestic product) growth tapering down to 5% in Q1 FY20.

Consequently, it said the margin outlook for steelmakers has weakened in the second quarter of FY20 due to a sharp fall in steel prices and firm raw material costs. However, the profitability of steelmakers may recover somewhat in the third quarter of FY20, with a sharp fall in prices of coking coal, key steel-making ingredient, in August 2019, and expectation of better demand from the construction sector during that quarter.

It estimated the industry's operating margin to decline to around 18% in FY20, compared with 23% inFY19, and demand worries will continue to keep steel prices under pressure, which are currently trading at a discount to imported offers. Besides, the report mentioned that globally, steel production growth remained healthy at 4.6% in 7M CY2019 (seven months of the calendar year 2019) on the back of a high output growth in China in H1 CY2019.

The CNX Nifty is currently trading at 10740.15, down by 100.50 points or 0.93% after trading in a range of 10739.60 and 10845.20. There were 5 stocks advancing against 45 stocks declining on the index.

The top gainers on Nifty were Bharti Airtel up by 0.86%, Asian Paints up by 0.49%, Britannia up by 0.43%, Hindustan Unilever up by 0.40% and Tata Motors was up by 0.08%. On the flip side, Yes Bank down by 5.69%, Zee Entertainment down by 3.28%, Tata Steel down by 3.13%, IndusInd Bank down by 2.88% and Vedanta was down by 2.64% were the top losers.

Asian markets were trading mostly in red, Hang Seng decreased 338.53 points or 1.27% to 26,415.59, Taiwan Weighted dropped 39.08 points or 0.36% to 10,890.37, Jakarta Composite lost 25.11 points or 0.4% to 6,251.52, Straits Times trembled 6.12 points or 0.19% to 3,160.72 and Shanghai was down by 1.08 points or 0.02% to 2,984.61.

On the other hand; KOSPI rose 5.69 points or 0.27% to 2,076.42 and Nikkei 225 was up by 118.30 points or 0.54% to 22,079.01.

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