Benchmarks extend early losses; trade near intra-day low

Indian equities  continued their weak trade in the late afternoon session hovering near the lowest point of the day, as traders remained cautious ahead of the expiry of May F&O contracts later today. Profit booking at higher level has dragged the markets lower and most of the sectoral indices were trading in red. Further, sharp selling witnessed in frontline blue chip stock such as Infosys, SSLT and Hindalco among others forced the major indices to extend early losses. IT was the top losing index, down by 3.07% followed by tech and metal indices both trading down by over 1%. Sentiment weakened further as foreign institutional investors (FIIs) continued to remain net seller of Indian equities over the past three sessions. Selling was broad based as both mid and small cap indices were trading in negative territory. However, investors were seen piling up position in consumer durables, healthcare and banking stocks. 

Infosys’ share was under pressure and down by around 7% after B G Srinivas, President and Board member tendered his resignation from the company. Hero MotoCorp dipped by 1% to Rs 2,317 after its net profit for the quarter ended March dropped by 3%. On the other hand, HPCL rose 2.5% after reporting net profit at Rs 4,609 crore for Q4 FY14 as against net profit of Rs 7,679 crore in the same period a year ago.

On global front, most of the major Asian equity indices were trading in green with Nikkei 225 up by 0.12% and Hang Seng up by 0.09%. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 7,300 and 24,500 levels respectively. The market breadth on BSE was negative, out of 2,556 stocks traded, 1,190 stocks advanced, while 1,271 stocks declined on the BSE.

The BSE Sensex is currently trading at 24,380.05 down by 176.04 points or 0.72% after trading in a range of 24,528.20 and 24,357.95. There were 12 stocks advancing against 18 stocks declining on the index.

The broader indices were trading in down; the BSE Mid cap index was down by 0.06%, while Small cap index down by 0.07%.

The gaining sectoral indices on the BSE were Consumer Durables up by 0.33%, Healthcare up by 0.19% and Bankex up by 0.02%. While, IT down by 3.07%, Teck down by 2.30%, Metal down by 1.44%, Realty down by 1.18% and Oil and Gas down by 0.90% were the losing indices on BSE.   

The top gainers on the Sensex were Bharti Airtel up by 1.54%, Tata Power up by 1.27%, Dr Reddy’s Lab up by 1.20%, HDFC up by 0.86% and Gail India up by 0.79%. On the flip side, Infosys down by 7.35%, SSLT down by 2.46%, Hindalco Inds down by 2.14%, Wipro down by 1.87% and ONGC down by 1.29%.

Meanwhile, to address the challenges posed by stressed assets in the banking system, Industry body FICCI has suggested setting up of a National Asset Management Company (NAMCO). Highlighting the need for pro-active and preventive approach to ensure speedy revival of the economy, FICCI President Sidharth Birla said that it is imperative for the government and the RBI to establish NAMCO which will take over stressed assets from the banking system for effective recovery and rehabilitation.

According to the industry chamber suggestions, NAMCO should be established as a ‘special purpose’ asset reconstruction company (ARC) with sponsorship of the government with initial capitalisation of up to Rs 5,000 crore that will allow it to build up a sizeable portfolio of stressed assets. Further, it recommended that private sector should hold majority stake at 51 percent in the company, while the government must encourage public sector banks to participate in equity of NAMCO up to 49 percent. NAMCO should issue security receipts of up to 12 years maturity period for long term assets acquired by it. FICCI further suggested that NAMCO should focus on large ticket stressed assets mainly in Infrastructure, Power, Steel and Telecom sectors.

Indian banking industry is the most dominant segment of the country’s financial sector and plays an imperative role in the economic development of the country. Banks help to boost economic growth by allocating savings to investments that have potential to yield higher returns. Industry, being highly correlated to economic scenario, is under pressure due to prevailing economic slowdown leading to rise in NPAs level of banks. The top 36 banks of India have reported gross NPAs of Rs 2,34,014 crore by March 2014, a 36 per cent jump from Rs 1,71,853 crore on year-on-year basis.

The CNX Nifty is currently trading at 7,286.05, down by 43.60 points or 0.59% after trading in a range of 7,325.40 and 7,279.90. There were 21 stocks advancing against 29 declining on the index.

The top gainers of the Nifty were Ultratech Cement up by 2.32%, Bharti Airtel up by 1.58%, Tata Power up by 1.42%, Kotak Bank up by 1.14% and HDFC up by 1.05%. On the flip side, Infosys down by 2.94%, SSLT down by 2.48%, Jindal Steel down by 2.18%, Hindalco Inds down by 2.17% and Cairn down by 2.09% were the major losers on the index.

Asian equity indices were trading in green; Nikkei 225 up by 0.12% to 14,668.98, Hang Seng up by 0.09% to 23,101.53, Jakarta Index up by 0.44% to 4,985.58 and Straits Times up by 1.01% to 3,306.44. While, Shanghai Composite down by 0.27% to 2,043.66 and Taiwan Weighted down by 0.14% to 9,109.