Benchmarks pare some early losses; still continue to trade in red

Indian bourses continued to trade in red in the afternoon session as selling momentum in the equities persisted, however the marginal recovery from day's low levels was seen as buying appeared in defensive sector stocks such as heathcare, IT and Teck. Profit booking emerged in frontline blue chip stocks after the recent gains, which dragged the major indices down. Sentiments got a hit after the Indian Meteorological Department (IMD) highlighted that southwest monsoon may be below normal, with the country likely to receive 93 percent of the long-period average (LPA) rainfall. Further, there was cautiousness among investors ahead of the crucial macro economic data such as trade deficit, consumer price index (CPI) inflation data for May and the Index of Industrial Production (IIP) data for April. Metal and realty stocks were on dumped on the street, putting pressure on major indices. Further, shares of public sector undertaking (PSU) banks were under pressure falling by up to 6% on profit booking. Selling was broad based with small cap and mid cap indices were trading down by 0.50%. Among other stocks, BEML, extending its 17% rally in past three trading sessions, was trading higher by around 4% to Rs 810 amid hopes that the government will introduce new policies and liberalised foreign direct investment (FDI) in the defence sector.

On global front, most of the Asian equity indices were trading in green with Shanghai Composite up by 0.98% and Hang Seng up by 0.74%. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 7,650 and 25,500 levels respectively. The market breadth on BSE was negative, out of 2,763 stocks traded, 1,256 stocks advanced, while 1,440 stocks declined on the BSE.

The BSE Sensex is currently trading at 25,479.59 down by 100.62 points or 0.39% after trading in a range of 25,711.11 and 25,347.33. There were 11 stocks advancing against 19 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.61%, while Small cap index down by 0.55%.

The gaining sectoral indices on the BSE were Healthcare up by 2.05%, IT up by 1.51% and Teck up by 1.28%. On the flip side, Realty down by 3.22%, Metal down by 1.78%, Power down by 1.57%, Infrastructure index down by 1.42% and Oil and Gas down by 1.35% were the losing indecies on BSE.    

The top gainers on the Sensex were Cipla up by 2.13%, Wipro up by 2.02%, Coal India up by 1.96%, Dr Reddy’s Lab up by 1.85% and Bharti Airtel up by 1.84%. On the flip side, SSLT down by 4.03%, BHEL down by 3.02%, Tata Steel down by 3.02%, Tata Power down by 2.59% and Hindalco Inds down by 2.43% were the top losers on the BSE.

Meanwhile, amid growing expectations of a subnormal monsoon this year, the government has announced that it is making contingency plans to tackle the drought situation. Agriculture Minister Radha Mohan Singh has said his department will soon move a cabinet note to introduce a diesel subsidy scheme to provide irrigation facilities for protecting standing crops in the event of a rainfall deficit.

Further, Agriculture Minister said that besides the diesel subsidy, the agriculture department is working on a cabinet note to seek permission for other key measures which can be implemented quickly if states declare a drought. These measures include providing interest subvention in drought-hit areas, raising subsidy ceiling to buy seeds including drought-tolerant varieties and partially compensate farmers for re-sowing.

The Indian Meteorological Department (IMD), in its second-stage long-range forecast for the 2014 southwest monsoon, has highlighted that southwest monsoon may be below normal, with the country likely to receive 93 percent of the long-period average (LPA) rainfall. The department further indicated that probability of the El Nino effect, which may result in deficient rains, especially in the latter half of the monsoon season. Except for the northeast, every other part in India is predicted to get below normal rainfall this season. As per the IMD’s region-wise prediction, season rainfall over north-west India is likely to be 85% of LPA, 94% over central India, 93% over south peninsula and 99% of LPA over north-east India.

Monsoon rainfall in India is main source of irrigation for majority of India's farmers and a below normal monsoon could affect prospects of crops like rice and soybeans in the country. A poor agriculture directly affects India's economy as the agriculture sector represents around 15% share in India’s GDP.

The CNX Nifty is currently trading at 7,618 down by 36.60 points or 0.48% after trading in a range of 7,683.20 and 7,579.30. There were 16 stocks advancing against 34 declining on the index.

The top gainers of the Nifty were Tech Mahindra up by 2.52%, Cipla up by 2.16%, Wipro up by 2.01%, Lupin up by 1.99% and Sun Pharma up by 1.88%. On the flip side, SSLT down by 3.88%, DLF down by 3.87%, Tata Steel down by 3.37%, BHEL down by 2.91% and PNB down by 2.86% were the major losers on the index.

Most of the Asian equity indices were trading in green; Shanghai Composite up by 0.98% to 2,050.50, Hang Seng up by 0.74% to 23,289.45, Taiwan Weighted up by 0.65% to 9,222.37 and Jakarta Stock Index up by 0.86% to 4,927.20. While, Straits Times down by 0.32% to 3,295.27 and Nikkei down by 0.87% to 14,992.03