Sensex Finishes Lower on Wider Trade Deficit; Metal Stocks Tank

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Indian share markets continued to witness selling pressure in the afternoon session as trade deficit widened to an almost 3-year high. The sentiments also remained subdued due to disappointing quarterly earnings and weak international markets.

At the closing bell, the BSE Sensex closed lower by 181 points and the NSE Nifty finished down by 69 points. The S&P BSE Mid Cap finished down by 1% while S&P BSE Small Cap finished down by 1.5%. Losses were largely seen in metal stocks, realty stocks and consumer durables' stocks.

BSE Metal index fell 3% after global commodity prices slumped. A Bloomberg gauge of commodity prices slumped the most in six months after Chinese data Tuesday pointed to slowing industrial output, fixed-asset investment and retail sales.

NALCO share price and Hindalco share price shed 5.7% and 3% respectively, while Vedanta share price, Jindal steel and power share price and SAIL share price declined 4.3%, 5% and 4.6% respectively.

Asian stock markets finished broadly lower today with shares in Japan leading the region. The Nikkei 225 is down 1.57% while Hong Kong's Hang Seng is off 1.03% and China's Shanghai Composite is lower by 0.79%. European markets are lower today with shares in Germany off the most. The DAX is down 0.84% while London's FTSE 100 is off 0.54% and France's CAC 40 is lower by 0.22%.

Rupee was trading at Rs 65.37 against the US$ in the afternoon session. Oil prices were trading at US$ 55.19 at the time of writing.

In news from the economy, pointing that revival of infrastructure sector is in the primitive stages, credit rating agency, ICRA in its latest report has said that infrastructure companies with exposure to airport and highway sectors are doing well by showing improvement in their operational and financial performance. However, many infrastructure players are struggling with stressed balance sheet problem.

As per ICRA's report, aggregate debt of infra companies at a standalone level as of March 2017 rose only marginally from March 2016, while at the consolidated level, debt declined by 12% year-on-year to Rs 1.39 trillion from Rs 1.58 trillion, on account of stake disinvestment in subsidiaries or projects by the infra companies.

The report also found that the order book position of most construction companies has improved to over three times their last reported annual revenues, with government's efforts to improve the country's infrastructure. ICRA however noted that the sector continues to face funding issues, as banks are still grappling with high Non-Performing Assets woes.

In news from software sector, Tech Mahindra share price finished the trading session on an encouraging note (up 1.2%) after it was reported that the company entered a strategic partnership with Toshiba Digital Solutions to work in a smart factory.

This partnership aims to leverage strengths of both sides and offer a one stop solution for manufacturer customers with the latest IoT technologies and system integration capabilities from both sides.

In another development, HCL Technologies has entered a five-year IT infrastructure services contract with Jardine Lloyd Thompson Group (JLT), one of the world's leading providers of insurance, reinsurance and employee benefits related advice, brokerage and associated services.

Through the agreement, HCL will be implementing a fully orchestrated and automated cloud management platform with advanced automation capabilities, supported through HCL's DRYiCE platform. In addition, HCL will continue to provide IT service desk services.

HCL Technologies share price finished the day down by 2.3% on the BSE.

Moving on to news from pharma sector. Sun Pharma share price finished the trading day down by 4% after the company reported a 59.19% dip in consolidated net profit to Rs 9.12 billion beating street estimates for the quarter ended on September 30, 2017compared to the year-ago quarter.

The company had posted a net profit of Rs 22.35 billion for the corresponding period of the previous fiscal. Consolidated total revenue from operations stood at Rs 66.50 billion. It was Rs 82.60 billion in the same period of previous year.

A challenging US generic pricing environment coupled with continued investments in building global specialty business has impacted the company's Q2 performance.

The US Food and Drug Administration (FDA) had issued a warning letter to the Halol unit in December 2015 for violation of good manufacturing practices. Since then, new product approvals have been held back by the regulator.

The company's sales in the US, which contributed 30% to the total revenue, fell 44% to US$309 million in the quarter due to pricing pressure in existing products and lower contribution from generic of cancer drug Gleevec.

Fortis Healthcare share price rose 7.2% after the company said its board has approved the proposed acquisition of an entire portfolio of Singapore-listed RHT Health Trust for an enterprise value of around Rs 46.5 billion.

Meanwhile, GMR Infrastructure's standalone net loss for the September quarter narrowed to Rs 2.76 billion due to a fall in provision for diminution in value of investments and advances.

The company had reported a net loss of Rs 7 billion in the year-ago period. Its total revenue declined to Rs 2.06 billion as against over Rs 3.31 billion a year ago.

GMR Infrastructure share price plunged 8.2% in today's trade.

In another development, India Inc's credit profile has further deteriorated with an elusive recovery in earnings. Its credit ratio - the number of upgrades to downgrades in debt paper - has slipped to a five-year low of 0.97. While rating agencies upgraded 189 debt papers in the first half of FY 17-18, the number of downgrades was a tad higher at 195. In value terms, the downgraded debt stood at Rs 2.6 trillion and was nearly 1.5 times that in FY17.

India Inc Caught in Whirlwind of Debt Downgrades

With companies already battling muted earnings growth, temporary disruptions such as notebandi and implementation of goods and service tax (GST) have diminished their cash flows. This has led to a jump in downgrades in debt paper by rating agencies. Even the low capacity utilisation by manufacturing companies has led to a surge in debt downgrades.

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