Published on 20/05/2020 1:28:46 PM | Source: LKP Securities Ltd

Bourses Remain Firm; Oil and Gas Stocks Gain Most -LKP Securities

Posted in Market Outlook| #Market Outlook #LKP Securities Ltd

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Indian equity benchmarks remained in green terrain during noon deals, despite negative cues from other Asian markets. Heavy buying in Oil & Gas and Capital Goods stocks helped markets to maintain their positive trade in noon deals, while firm trade also witnessed in the broader indices. Market participants paid no heed towards a report that rating agency CRISIL joined analysts sceptical about the near-term benefits of the Rs 20 lakh crore stimulus package on growth and also flagged the absence of any dedicated steps for the most troubled sectors. It said that while most steps from government are steps in the right direction, it is unlikely to stimulate demand/consumption given that the package is more focussed on supply-side reforms.
 On the global front, Asian markets were trading in red, after China left its benchmark lending rates unchanged, as widely expected, after easing last month, amid the economy struggling to recover from the impact of the coronavirus outbreak. The one-year loan prime rate was retained at 3.85 percent and the five-year loan prime rate at 4.65 percent.

The BSE Sensex is currently trading at 30407.78, up by 211.61 points or 0.70% after trading in a range of 30157.75 and 30596.17. There were 21 stocks advancing against 9 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.64%, while Small cap index was up by 0.42%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 1.87%, Capital Goods up by 1.83%, Realty up by 1.52%, Energy up by 1.49% and FMCG up by 1.49%, while Telecom down by 1.75%, TECK down by 0.54% and IT down by 0.27% were the only losing indices on BSE.

The top gainers on the Sensex were Larsen & Toubro up by 3.04%, Tata Steel up by 2.79%, ITC up by 2.52%, Mahindra & Mahindra up by 2.52% and Titan Co up by 1.61%. On the flip side, Indusind Bank down by 3.63%, Hero MotoCorp down by 3.52%, Bharti Airtel down by 1.18%, Infosys down by 0.89% and TCS down by 0.41% were the top losers.

Meanwhile, ratings agency ICRA in its latest report has said that demand for steel in India is likely to decline by upwards of 20 percent in ongoing financial year (FY21), which will be the sharpest fall on record. Consequently, it has revised its outlook for the sector to negative from stable as the domestic steel demand is expected to remain subdued until the COVID-19 pandemic is brought under control.

The rating agency has stated that quickly rebooting the steel industry from hibernation is going to be a tough task. It warned that the first half of financial year 2020-21 is expected to be especially challenging for steelmakers. It also said many buyers could prefer to sit at the sidelines, given the uncertain demand environment and liquidity pangs of steel consumers, amid dwindling sales and fixed cost obligations.

According to the report, despite higher borrowing levels of state governments that have been allowed subject to conditions, infrastructure spending by the Centre and states could be partly deferred to the next fiscal due to dwindling tax collections currently, limiting the possibility of a sharp bounce back in steel demand post the lockdown. It noted that key steel consuming states like Maharashtra, Gujarat, Delhi, Tamil Nadu, Andhra Pradesh, Telangana, Rajasthan and Punjab have a sizeable portion of their population living in districts marked as red zones, and with around 51 percent of the urban population living in red zones, the steel demand from the construction and real estate sectors could take some time to return to the pre-COVID-19 levels.

The CNX Nifty is currently trading at 8946.80, up by 67.70 points or 0.76% after trading in a range of 8875.35 and 9000.05. There were 37 stocks advancing against 13 stocks declining on the index.

The top gainers on Nifty were UPL up by 4.96%, BPCL up by 4.07%, GAIL India up by 3.54%, Mahindra & Mahindra up by 3.13% and Larsen & Toubro up by 3.00%. On the flip side, Bharti Infratel down by 6.51%, Indusind Bank down by 3.52%, Hero MotoCorp down by 3.50%, Bharti Airtel down by 1.09% and Infosys down by 0.95% were the top losers.

Asian markets were trading mostly lower; Straits Times fell 23.03 points or 0.89% to 2,558.30, Hang Seng declined 22.88 points or 0.09% to 24,365.25, Jakarta Composite slipped 22.10 points or 0.49% to 4,526.56 and Shanghai Composite was down by 13.04 points or 0.45% to 2,885.54. On the other hand, Nikkei 225 surged 202.35 points or 0.99% to 20,635.80, Taiwan Weighted rose 21.85 points or 0.20% to 10,882.29 and KOSPI increased 4.91 points or 0.25% to 1,985.52.

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