Benchmarks trade lower in early deals

Indian equity benchmarks have made a sluggish start and are trading with a cut of over half a percent tracking weak cues from Asian markets. Most of the Asian counters were trading lower with the exception of Japanese Nikkei which hit a new seven-week high on Tuesday, extending gains for the fourth straight session on the back of encouraging data from Chinese and the US. Nikkei was up 0.9% while Hang Seng, Shanghai Composite and Straits Times were trading marginally lower.

Back home, Narendra Modi is still keeping his ministers guessing on portfolio allocation. Though, most of the names must be finalized and might be announced after the first Cabinet meeting today, investors are now awaiting pro-business policy action to make the next round of purchases. Depreciation in Indian rupee too dampened the sentiments. The Indian rupee was trading lower against the US dollar at Rs 58.96 amid demand for US dollars from oil importers. However, losses remained capped as some support came in after the Reserve Bank of India reported a sharp moderation in imports, especially of gold, helping India's current account deficit (CAD) to sharply narrow to 1.7 percent of GDP, in FY’14 from 4.7 percent in FY’13. Traders will also be eyeing the weakness in rupee and the movement in export-oriented stocks.

On the sectoral front, software, technology and healthcare witnessed the maximum gain in trade, while oil and gas, power and realty remained the top losers on the BSE sectoral space. The broader indices too were struggling to get any traction, while the market breadth on the BSE was negative; there were 801 shares on the gaining side against 1,057 shares on the losing side while 49 shares remain unchanged.

The BSE Sensex is currently trading at 24565.68, down by 151.20 points or 0.61% after trading in a range of 24777.31 and 24551.99. There were 8 stocks advancing against 22 declines on the index. The broader indices were trading in red; the BSE Mid cap index was down by 0.64% and Small cap index down by 0.40%.

The top gaining sectoral indices on the BSE were, IT up by 1.39%, TECK up by 0.97% and Health Care up by 0.95% while Oil & Gas  down by 2.36%, PSU down  by 2.10%, Power down  by 1.63%, Realty  down by 1.61%, and Metal up by 1.41%  were the top losers.

The top gainers on the Sensex were Wipro up by 2.07%, TCS up by 1.30%, Infosys up by 1.27%, Dr Reddys Lab up by 1.25% and L&T up by 0.70%. On the flip side, Gail India was down by  5.13%, SSLT was down by 4.48%, BHEL was down by 3.41% , ONGC was down by 3.11%  and Mahindra & Mahindra was down by 3.10%  were the losers on the Sensex.

Meanwhile, In order to boost the Indian financial sector, Finance Ministry has prepared a reforms agenda for the new government aimed at freeing up the financial sector which will put the country back on a high-growth trajectory. The Ministry’s draft includes proposals such as new monetary policy framework, a revamp of the stock and commodities markets, and implementation of recommendations made by the Financial Sector Legislative Reforms Commission (FSLRC). FSLRC had earlier suggested a uniform Indian Financial Code and limiting RBI's role to regulating banking operations, payment systems, monetary policy management and consumer protection.

Finance Ministry is also of the view that Commodities futures markets should be able to support price discovery of various commodities particularly in country's large farm sector. Therefore, it pitched for complete revamp of commodities and stock markets to deepen them. Further, the Finance Ministry has also sought for stricter measures to deal with non-performing loans. Ministry is of the view that recovery efforts will not make much progress unless banks' books are cleaned up and some innovative ideas are in the works to achieve this.

Gross NPAs of public sector banks rose to 4.44% of advances at the end of March as compared to 2.32% in the year ago. Delays in implementation of project due to hurdles like land and environment clearances during the past few years contributed to the rise in NPAs, particularly in the infrastructure sector. The ministry also recommended the new government to take realistic decision on Urjat Patel report on inflation targeting. The RBI’s panel led by Deputy Governor Urjit Patel has outlined inflation-targeting as part of the monetary policy framework and suggested central bank to bring down retail inflation to 6% by January 2016.

The CNX Nifty is currently trading at 7,313.05 down by 46.00 points or 0.63% after trading in a range of 7,372.95 and 7,304.85. There were 14 stocks advancing against 385 declines while 1 stock remained unchanged on the index.

The top gainers of the Nifty were HCL Tech up by 2.56%, Lupin up by 1.84%, Wipro up by 1.76%, Infosys up by 1.34% and DR Reddy up by 1.29%. On the flip side, Gail down by 5.19%, SSLT down by 4.48%, BHEL down by 3.45%, BPCL down by 3.35% and ONGC down by 3.21% were the top losers on the index.

Most of Asian markets traded in red; Shanghai Composite slipped 4.44 points or 0.22% to 2,037.04, Hang Seng dropped by 45.65 points or 0.20% to 22,917.53, Jakarta Composite tumbled 9.13 points or 0.18% to 4,963.92, Straits Times shed by 6.78 points or 0.21% to 3,276.10 and Seoul Composite was down by 15.73 points or 0.78% to 1,994.62.

On the flip side, KLSE Composite gained 3.05 points or 0.16% to 1,865.85, Nikkei 225 spurted by 108.88 points or 0.75% to 14,711.40 and Taiwan Weighted was up by 17.32 points or 0.19% to 9,053.44.