Markets trade flat with positive bias in range-bound session of trade

In the extremely range-bound session of trade, Indian equity benchmarks altering between positive and negative territory, were now trading flat with bit of positive bias on selective buying by funds and retail investors and covering up of pending short positions ahead of tomorrow's monthly expiry in the derivatives segment. Sentiment on the street got some support from report that foreign institutional investors (FIIs) bought shares worth a net Rs 284.61 crore on June 24, 2014. Holding slender gains, both Sensex and Nifty were trading little short of the crucial 25,400 and 7,600 levels respectively. Moreover, there was some buying in the broader markets. The mid and small cap indices gained over 0.5% each, clearly outperforming the BSE benchmark index. However, gains remained capped after United Nations Conference on Trade and Development in its latest World Investment Report said that India’s macroeconomic uncertainties remain a major concern for investors even as the country saw a 17% increase in foreign direct investment (FDI) to $28 billion in 2013.

Meanwhile, Shares of non-banking finance companies (NBFCs) such as SKS Microfinance, Magma Fincorp surged after the Reserve Bank of India (RBI) allowed such entities to work as banking correspondents (BCs) of commercial banks, to offer basic banking services in areas where the parent bank does not have branches. In scrip specific development, shares of DCM Shriram surge after the company said that it sold its spinning mill for Rs 17.1 crores. On the other hand, shares of Reliance Communications declined after raising Rs 48 billion ($804 million) in its share sale that was announced on Tuesday, as the company looks to cut debt.

The trade is likely to turn choppy in the near future ahead of the June series expiry on June 26, 2014. On the global front, Asian shares were down taking overnight cues from the Wall Street as the deepening crisis in Iraq and a report that the US could be loosening restrictions on crude exports triggered a rally in oil prices. Back home, stocks from Power, Consumer Durables and Metal counters were supporting the markets’ uptrend, while those from Oil and Gas, FMCG and Banking counters were adding to the underlying cautious undertone. The market breadth on BSE was positive, out of 2289 stocks traded, 1359 stocks advanced, while 833 stocks declined on the BSE.

The BSE Sensex is currently trading at 25381.68 up by 12.78 points or 0.05% after trading in a range of 25427.80 and 25329.27. There were 19 stocks advancing against 11 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.64%, while Small cap index gained 0.59%.

The top gaining sectoral indices on the BSE were, Power up by 0.71%, Consumer Durables up by 0.68%, Metal up by 0.64%, PSU up by 0.61% and Auto up by 0.59%, while Oil and Gas down by 0.37%, FMCG down by 0.33% and Bankex down by 0.04% were the only losers on the sectoral index.

The top gainers on the Sensex were Bajaj Auto up by 2.24%, Coal India up by 1.70%, Tata Power up by 1.35%, Gail India up by 1.25% and Tata Motors up by 1.05%. On the flip side, Bharti Airtel was down by 2.07%, ITC was down by 0.87%, ICICI Bank was down by 0.74%, Axis Bank was down by 0.62% and ONGC was down by 0.58% were the top losers on the Sensex.

Meanwhile, Much in line with expectations, Finance secretary Arvind Mayaram unveiled that Modi government's maiden budget would be 'growth-oriented' with some major changes to lift the economy from the doldrums to higher growth orbit. He also highlighted that policy reforms, including those for taxation and financial sector could also be announced in the budget, which is scheduled to be announced on July 10. The Finance Secretary underscored that while many policy initiatives have been announced by respective ministries after Modi took charge as PM, the finance ministry will present in details the capital expenditure and outlays for various schemes including infrastructure.

He further highlighted that some tough decisions, especially on subsidies, could be announced to curb wasteful expenditure and raise capital outlays. This was merely reiteration of Modi’s statement that bitter medicine was required to put economy back on track. However, he emphasized though Finance minister Arun Jaitley, in the budget, may focus on fiscal prudence and adhere to the fiscal target of close to 4.1% of GDP for 2014-15, but at the same time may not be too over-ambitious in cutting the deficit beyond 4.1% by curtailing capital expenditure.

During the last few years of UPA regime, the finance ministry squeezed capital expenditure to 1.7% of GDP during 2013-14 from 1.9% in 2010-11 and 2.4% during the pre-Lehman crisis of 2007-08, even though the total expenditure remained near about 14% in the last four years.

Meanwhile, in separate development, Finance secretary averred that the country would prefer FDI route over FII inflows if overseas resources were required to be generated to spur economic expansion to its potential level of 8%.

The CNX Nifty is currently trading at 7,584.05 up by 3.85 points or 0.05% after trading in a range of 7,589.25 and 7,566.00. There were 28 stocks advancing against 22 declining on the index.

The top gainers of the Nifty were Bajaj Auto up by 2.20%, Coal India up by 1.81%, Tata Power up by 1.69%, Gail up by 1.37% and HCL Tech up by 1.20%. On the flip side, Bharti Airtel down by 2.10%, DLF down by 1.28%, ICICI Bank down by 0.91%, ITC down by 0.87% and Axis Bank down by 0.71% were the major losers on the index.

Most of the Asian equity indices were trading in red; Nikkei 225 tumbled by 0.60%, KOSPI Index decreased by 0.61%, Jakarta Composite dropped by 0.24%, Shanghai Composite slipped 0.66%, FTSE Bursa Malaysia KLCI declined by 0.16% and Taiwan Weighted was down by 0.04%. On the flip side, Hang Seng increased by 0.07% and Straits Times was up by 0.13%.