Benchmarks pare losses; continue trading in red terrain

Indian equity benchmarks pared losses but continue to trade in the red terrain in the late afternoon session taking cues from weak global counterparts. The sentiments were on pessimistic mood after the annual rate of inflation, based on monthly WPI, came in at highest level since December 2013, at 6.01% for month of May, 2014, as compared to 5.20% and 4.58% during corresponding month in the previous year. Traders were seen piling up positions in IT, TECK and Realty, while selling was witnessed in Capital Goods, Auto and Bankex sector stocks. In scrip specific development, Idea Cellular was trading in green after the Reserve Bank of India (RBI) allowed an increase in the foreign institutional investment limit for the company. Yes Bank was trading in green after the bank’s advance tax payment rose 20.19% to Rs 125 crore in Q1 June 2014 over Q1 June 2013.

On the global front, the Asian markets were trading on a mixed note, while the European markets traded on pessimistic note. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 7,550 and 25,200 levels respectively. The market breadth on BSE was negative in the ratio of 1034:1770 while 96 scrips remained unchanged.

The BSE Sensex is currently trading at 25151.15, down by 77.02 points or 0.31% after trading in a range of 25268.41 and 25063.93. There were 12 stocks advancing against 18 stocks declining on the index.   

The broader indices were trading in red; the BSE Mid cap index was down by 0.10%, while Small cap index down by 0.35%.   

The gaining sectoral indices on the BSE were IT up by 1.60%, TECK up by 1.25%, Realty up 1.15%, Consumer Durables up 0.72% and HealthCare up by 0.38% while, Capital Goods down by 1.83%, Auto down by 0.89%, Bankex down by 0.82%, Metal down by 0.33% and Power down by 0.27% were the top losing indices on BSE.   

The top gainers on the Sensex were Gail India up by 2.69%, TCS up by 2.42%, Infosys up by 1.96%, Tata Power up by 1.74% and Bajaj Auto up by 1.74%. On the flip side, Axis Bank down by 3.24%, L&T down by 2.42%, Mahindra & Mahindra down by 2.32%, HDFC down by 1.78% and Tata Motors down by 1.60% were the top losers.   

Meanwhile, the global rating agency Fitch, in its latest report, has highlighted that a strong government at the Centre and stability in macro economic factors are likely to keep country's public sector banks' outlook stable in the near term.

Fitch further noted that the election of new government with a decisive mandate has abated the macroeconomic and political risks and improved business and investors’ sentiments in the country. Though, downside risks have contained, India will take time to achieve a full recovery for the economy and for the banks as well. Fitch added that the long term rating of Indian PSU banks continues to be at 'BBB-'.

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. Over the past two fiscal years, Indian economy has been struggling with slowdown and growth remained below 5 percent for the second time in a row at 4.7 percent during FY14. Industry, being highly correlated to economic scenario, is under pressure due to prevailing economic downturn leading to rise in NPAs of banks. The state-owned banks have been the most affected in terms of rise in their non-performing assets. The top 36 banks of India have reported gross NPAs of Rs 2,34,014 crore by March 2014, a 36 percent jump from Rs 1,71,853 crore on year-on-year basis.

The CNX Nifty is currently trading at 7515.00, down by 27.10 points or 0.36% after trading in a range of 7548.60 and 7487.55. There were 20 stocks advancing against 30 stocks declining on the index.   

The top gainers on Nifty were Gail India up by 3.06%, TCS up by 2.51%, Infosys up by 1.85%, BPCL up by 1.74% and DLF up by 1.59%. On the flip side, Axis Bank down by 3.19%, L&T down by 2.51%, Mahindra &Mahindra down by 2.49%, HDFC down by 2.06% and Ultratech Cement down by 1.79% were the top losers.   

Most of the Asian equity indices were trading on a mixed note; Hang Seng down by 0.08%, Nikkei down by 1.09%, and Jakarta Stock Index down by 0.79% while, Taiwan Weighted up by 0.07%, Shanghai Composite up by 0.74% and Straits Times up by 0.08%.

The European markets were trading in red; France’s CAC 40 lost 0.45%, Germany’s DAX dropped 0.34% and UK’s FTSE 100 was down by 0.21%.