Dull End to the Day; PSU Stocks Fall for Second Consecutive Day

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Indian share markets continued to trade range bound in the afternoon session and finished marginally lower amid mixed international markets and North Korean missile test.

At the closing bell, the BSE Sensex closed lower by 16 points and the NSE Nifty finished lower by 9 points. The S&P BSE Mid Cap finished down by 0.2% while S&P BSE Small Cap finished flat. Losses were largely seen in metal sector, banking sector and PSU sector.

Asian stock markets finished mixed as of the most recent closing prices. The Nikkei 225 gained 0.49% and the Shanghai Composite rose 0.13%. The Hang Seng lost 0.19%. European markets are mixed today. The DAX is up 0.72% while the CAC 40 gains 0.51%. The FTSE 100 is off 0.52%.

Rupee was trading at Rs 64.41 against the US$ in the afternoon session. Oil prices were trading at US$ 57.63 at the time of writing.

Global rating agency, Moody's Investors Service in its first report on the domestic insurance sector has stated that Indian non-life insurance sector is expected to maintain its double-digit growth over the next three to four years, on the back of higher economic expansion and increased household spending.

Besides, it projected that gross domestic product (GDP) of the country will grow by 6.7% in the fiscal year ending March 2018, making it one of the fastest growing economies in the world. However, it noted that annual insurance penetration remains comparatively low in India at just 3.5% of GDP, but is likely to increase in line with household spending.

The rating agency further indicated that in 2016-17 fiscal, the top 10 non-life insurers, recorded 30% growth in gross direct premium to Rs 1 trillion, while their top five life counterparts reported a 14% rise in gross premium to Rs 3 trillion. It also pointed out that the large private insurers have benefited the most, growing premia by 42% year-on-year in the year to March 2017. It added that these insurers are well placed for continued expansion, given their strong brands and market positions.

The report also welcomed the liberalization in the reinsurance space, which is evident from eight private reinsurers, Munich Re, Swiss Re, Scor and RGA, entering the market this year.

Insurance stocks finished the day on a mixed note with ICICI prudential Life Insurance share price and HDFC Standard Life insurance share price leading the losses.

Nestle share price finished the day down by 0.2% after the district administration in Uttar Pradesh's Shahjahanpur has slapped a fine on Nestle India and its distributors after popular noodles brand Maggi allegedly failed to pass a lab test.

The district administration had imposed a fine of Rs 4.5 million on the company, Rs 1.5 million on its three distributors and Rs 1.1 million on its two sellers.

Moving on to news from airline stocks. As per an article in The Livemint, Jet Airways has entered into an agreement with Air France-KLM on India-Europe routes, providing a boost to its long-haul operations.

The agreement, which has been struck 20 months after Jet Airways shifted its European hub from Brussels to Amsterdam, signals its alignment with Air France-KLM and their partner airlines, Delta and Virgin Atlantic.

The agreement, referred to as a joint venture, involves the airlines sharing passenger traffic revenue on the India-Amsterdam and India-Paris routes. Cargo revenue will not be shared.

Jet Airways Group currently operates a fleet of 115 aircraft, while Air France-KLM has a fleet of 534 planes. The cooperation between the two airlines comes at a time when more airlines are looking at tapping the international market.

The aviation industry has been on a high the past year. Warren Buffett invested upwards of US$2 billion a piece into the four largest US airline stocks - American Airlines Group Inc, Delta Air Lines Inc, Southwest Airlines Co, and United Continental Holdings Inc. When crude prices crashed, the lower cost of air turbine fuel suddenly changed the economics of the aviation business.

Market Share of Indian Domestic Airlines - 2017 (%)

Despite recent positives, the airlines industry back home is plagued by cutthroat competition and rock-bottom fares. As a result, Indigo has been the only profitable airline in India in the recent past.

It'll take more than Buffett's endorsement of the US airlines to see a clear runway for the Indian aviation industry.

Jet airways share price finished the day up by 1.9%.

Moving on to news from engineering sector. Bharat Heavy Electricals (BHEL) has successfully commissioned the second unit of the 2x30 MW Tuirial Hydro Electric Project (HEP) in the state of Mizoram. Significantly, the unit has been commissioned by BHEL in less than a hundred days of the commissioning of the first unit.

Power generation from Tuirial HEP will contribute significantly to reduction of greenhouse gas emissions and contribute towards achieving a low carbon development path for the nation.

In another development, BHEL has won an order for setting up six decentralised sewage treatment plants (STPs) in Raipur, Chhattisgarh as part of its strategy to diversify into new areas.

Worth over Rs 640 million, the order for the STPs with a cumulative capacity of 25.4 Million Liters per Day has been placed by Raipur Development Authority (an Urban Development Authority under the Govt of Chhattisgarh).

The company is also setting up a 5 MW grid interactive Solar PV power plant near its 132 KV sub-station to encourage the use of sustainable energy through non-conventional resources. Once commissioned, this plant would generate about 92 lack units of electricity in a year which will meet about 20% of electricity demand of HEEP unit of BHEL Hardwar, resulting in a reduction in its annual electricity bill by approximately Rs 47.5 million.

BHEL share price finished the day down by 0.5% on the BSE.

Sector Focus: airline & engineering sector

Keywords: BSE Sensex, BSE, NSE Nifty, NSE, Indian stock markets, Indian share markets, BSE Midcap, BSE Small cap, Rupee Dollar exchange rate, share market today, stock market today, Sensex today, todays share market, fiscal deficit, share market India, indian economy, economic sector, pharma, Mining, oil & gas & banking sector, airline and engineering sector, BHEL share price, cement stocks, L&T share price, L&T.

Description: Indian share markets finished flat as Sensex finished lower by 16 points while Nifty closed down by 9 points.

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