Barometer gauges continue to reel under pressure; Nifty languishes below 7650 mark

Local barometer gauges continue to reel under pressure on sustained profit booking activities by market-participants. Sentiment had turned sour after reports suggested of possibility of monsoon being the lowest in four years. According to the Indian Meteorological Department (IMD), the rainfall in June-September is likely to be below normal at 93% of the long period average, which in terms of quantity, could be the lowest in four years. Further, cautious approach ahead of release of the consumer price index (CPI) inflation data for May and the Index of Industrial Production (IIP) data for April due on Thursday, also added to the pessimistic milieu. However, losses of cyclical stocks turned out to gains for defensive stocks, like software and pharma, as investors looked to reduce volatility in their portfolios. Meanwhile, markets clearly shrugged off positive regional cues, while negative start of European shares could further pressurized the sentiment at Dalal Street. Languishing at day’s low, both Sensex and Nifty were trading below the crucial 25,500 and 7,650 levels respectively. Meanwhile, broader indices were also reeling under pressure, trading with cut of over 0.25%.

On the global front, Asian shares moved higher on account of in-line with expectation China inflation data, which though was higher than the previous month. China CPI in May rose 2.5% year-on-year, while PPI fell 1.4%.for May. The previous month saw CPI rise at 1.8%, and a 2.0% fall for PPI. Meanwhile, European stocks opened flat to lower on Tuesday, pausing after a three-day winning streak.

Closer home, majority of the sectoral indices on BSE were in the favour of red, with exceptions being stocks from healthcare, IT and Consumer Durable counters. On the flip side, stocks from Realty, Power and Metal counters were the major pillars of weakness. Meanwhile, FMCG stocks too lost steam on forecast of rains to be below normal this year, as the chances of El Nino occurring during monsoon being very high, given that most of these firms derive substantial revenue from rural India. The overall market breadth on BSE was in the favour of declines, which thumped advances in the ratio of 1213:670; while 10 shares remained unchanged.

The BSE Sensex is currently trading at 25467.2, down by 113.05 points or 0.44% after trading in a range of 25347.3 and 25711.1. There were 11 stocks advancing against 19 stocks declining on the index.   

The broader indices too were bleeding; with BSE Mid cap index trading lower by 0.52% and Small cap index shedding 0.33%.   

On the BSE sectoral front, most of the sectoral indices were reeling under pressure, prominent losers were Realty down by 3.27%, Power down by 1.81%, Metal down by 1.71%, India Infrastructure Index down by 1.48% and PSU down by 1.43%. While, Healthcare up by 1.97%, IT up by 1.72%, TECK up by 1.41%, Consumer Durables up by 0.05% were the top gainers on the index.

The top gainers on the Sensex were Wipro up by 2.46%, Dr Reddy’s Lab up by 2.06%, Cipla up by 2.04%, Sun Pharma up by 1.74% and Bharti Airtel up by 1.64%. On the flip side, SSLT down by 3.43%, BHEL down by 3.1%, Tata Steel down by 3.04%, Tata Power down by 2.73% and Hero MotoCorp down by 2.53% were the top losers.   

Meanwhile, the Reserve Bank of India (RBI) has eased customer verification norms for opening bank accounts. As per RBI’s new norms, the customers need to submit only one documentary proof of address either current or permanent while opening a bank account or while undergoing periodic updation. The move is likely to help migrant workers and employees with transferable jobs, who at present face cumbersome procedure to access banking services.

The central bank notified that in case the address mentioned as per 'proof of address' undergoes a change, fresh proof of address may be submitted to the branch within a period of six months. If the customer is not able to furnish local proof of address, the bank may take a declaration of the local address on which all correspondence will be made by the bank with the customer. Further, the RBI’s notification added that no proof is required to be submitted for correspondence/local address and may be verified by bank through positive confirmation such as acknowledgment of receipt of letter, cheque books, ATM cards, telephonic conversation. In case, there is a change in address, customer may intimate the new address for correspondence to the bank within two weeks of such a change. The RBI has also asked banks to revise their KYC policy and ensure strict adherence to the revised guidelines.

 The central bank decided to simplify the rigorous KYC norms after being approached by people facing problems while submitting current/permanent address proofs. Meanwhile, the RBI’s move is also expected to help the financial inclusion drive by banks.  Indian banking industry is the most dominant segment of the country’s financial sector and plays an important 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.

The CNX Nifty is currently trading at 7615.70, down by 38.9 points or 0.51% after trading in a range of 7579.3 and 7683.20. There were 15 stocks advancing against 35 stocks declining on the index.   

The top gainers on Nifty were Tech Mahindra up by 3.44%, Wipro up by 2.34%, HCL Technologies up by 2.1%, Dr Reddy up by 1.93% and Sun Pharma up by 1.92%. On the flip side, DLF down by 3.94%, SSLT down by 3.54%, Tata Steel down by 3.39%, GRASIM down by 3.12% and TATA Power down by 3.12%, were the top losers.   

Most of the Asian equity indices were trading in green; Shanghai Composite up by 0.98%, Hang Seng up by 0.96%, Taiwan Weighted up by 0.65% and Jakarta Stock Index up by 0.86%. While, Straits Times down by 0.25% and Nikkei down by 0.87% were the only losers among Asian pack.

European shares got off to a negative start; with United Kingdom’s FTSE 100 sliding by 0.32%, France’s CAC 40 declining 0.10% and Germany’s DAX lower by 0.21%.