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Published on 31/07/2020 1:11:45 PM | Source: LKP Securities Ltd

Indian equities continue weak trade - LKP Securities

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

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Indian equities continue weak trade

Local equities continued their weak trade in afternoon session, with Sensex and Nifty losing 54 and 7 points, respectively, amid weak global cues. Energy, realty and banking counters witnessed notable losses, while healthcare, telecom and FMCG sectors edged higher. Sentiments remain pessimistic even as Piyush Goyal stated that his ministry is working for early resolution to Merchandise Export from India Scheme (MEIS) issue without having a serious impact on government finances. The commerce ministry has blocked the online system for exporters to apply for availing tax incentives under the MEIS from July 23, as the Department of Revenue decided to limit the benefits under the plan at Rs 9,000 crore for April-December 2020. Meanwhile, India Ratings and Research (Ind-Ra) stated that swelling of India's foreign exchange reserves in combination with benign oil prices and tepid imports have led to a current account surplus and helped the Indian rupee to remain broadly stable since mid-March.

On the global front, Asian markets were trading lower as with the risk aversion on dismal company earnings, and sluggish US jobs data in midst of mounting Corona virus infections around the globe. Back home, in scrip specific developments, Axis Bank gained on launching AI-powered conversational IVR and LT Foods jumped on reporting 85% rise in Q1 consolidated net profit. 

 

The BSE Sensex is currently trading at 37681.75, down by 54.32 points or 0.14% after trading in a range of 37537.80 and 37897.78. There were 22 stocks advancing against 8 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.29%, while Small cap index was up by 0.59%.

The top gaining sectoral indices on the BSE were Healthcare up by 2.80%, Telecom up by 1.10%, FMCG up by 1.03%, TECK up by 0.75% and IT was up by 0.68%, while Energy down by 1.08%, Realty down by 0.68%, Bankex down by 0.27%, Oil & Gas down by 0.24% and Metal was down by 0.05% were the top losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 2.32%, SBI up by 1.77%, HCL Tech up by 1.70%, ITC up by 1.66% and Hindustan Unilever was up by 0.90%. On the flip side, HDFC Bank down by 2.10%, Reliance Industries down by 1.39%, HDFC down by 1.10%, Tata Steel down by 0.72% and Kotak Mahindra Bank was down by 0.58% were the top losers.

Meanwhile, India Ratings and Research (Ind-Ra) in its latest report has said that Indian energy demand is showing signs of recovery as the decline in power demand narrowed in June 2020 as compared to May and April which was down 14.9 percent and 22.3 percent, respectively, due to the gradual lifting of lockdown for certain economic activities and an increase in domestic consumption with the extended summer season. However, it said the power demand for June was 10.9 percent lower than the corresponding period of 2019.

According to the report, in June 2020, the all-India energy demand contracted 10.9 percent y-o-y for the fourth consecutive month to 105.6 billion units, while energy supply also decreased 10.9 percent, resulting in the energy deficit remaining at 0.4 percent as compared to June 2019, when it stood at 0.5 percent. The power demand declined for June 2020, amid the coronavirus-led lockdown, on account of a decline in commercial and industrial demand from major manufacturing states such as Maharashtra, Gujarat and Tamil Nadu.

The report further stated that with the contraction in demand, electricity generation, excluding renewables, also declined 11.8 percent y-o-y to 99.5 billion units in June 2020 with thermal generation declining 17.7 per cent year-on-year (y-o-y). Thermal PLF (plant-load factor) declined to 49.5 percent in June 2020 on account of the lower demand. Thermal PLFs were the most impacted due to the decline in the power demand over 1QFY21, given the must-run status of nuclear, hydro and renewables. The short-term power price at Indian Energy Exchange was lower at Rs 2.35 per unit in June 2020 as compared to Rs 3.32 per unit last year, as the difference in buy and sell bid volumes widened to negative 5,502 million units.

The CNX Nifty is currently trading at 11094.25, down by 7.90 points or 0.07% after trading in a range of 11049.20 and 11150.40. There were 32 stocks advancing against 18 stocks declining on the index.

The top gainers on Nifty were Cipla up by 4.02%, Grasim Industries up by 3.52%, UPL up by 2.77%, Sun Pharma up by 2.75% and ITC was up by 1.66%. On the flip side, HDFC Bank down by 2.21%, Hero MotoCorp down by 1.68%, Reliance Industries down by 1.51%, Eicher Motors down by 0.99% and Zee Entertainment was down by 0.96% were the top losers.

Asian markets were trading mostly in red; Nikkei 225 slipped 629.23 points or 2.82% to 21,710.00, Hang Seng decreased 9.96 points or 0.04% to 24,700.63, Taiwan Weighted dropped 58.12 points or 0.46% to 12,664.80 and KOSPI was down by 17.64 points or 0.78% to 2,249.37. On the other side; Shanghai Composite was up by 16.79 points or 0.51% to 3,303.61.

 

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