Benchmarks extend losses: trade near intra-day low level

Indian bourses added losses to continue weak trade in the late afternoon session hovering near the lowest point of the day due to heavy selling in oil & gas stocks after the Cabinet Committee on Economic Affairs (CCEA) decided to defer revision in natural gas prices by three months. Selling witnessed in realty, power and metal stocks also dragged the major indices down. Further, investors’ sentiments dampened due to high volatility on the bourses on account of offloading of positions by market participants on the day of June month F&O expiry. Concerns over weak monsoon also weighed on the sentiments as prices of vegetables and onions continue to rise due to inadequate June rainfall, among the lowest in a century. The rainfall deficit for the country is 37%, even before El Nino has developed. However, investors were seen piling up position in consumer durables and auto stocks as government decided to extend excise duty concessions for automobiles and consumer durables sector by more six months till December 31 to stimulate demand and revive growth in the manufacturing sector. However, broader markets were outperforming the benchmarks with both mid cap and small cap indices trading up by 0.22% and 0.05%. Stock specific, NRB Bearings has rallied around 12% to Rs 94.50 after the company said Sundaram Mutual Fund has bought around one million shares of the company through the open market.

On global front, Asian equity indices were trading in green with Straits Times up by 0.33% and  Hang Seng up by 0.89% as global investors were optimistic that the US economy is emerging from a worse-than-estimated contraction last quarter. Back home, the NSE Nifty and BSE Sensex were trading above their psychological 7,550 and 25,500 levels respectively. The market breadth on BSE was positive, out of 2,600 stocks traded, 1,348 stocks advanced, while 1,146 stocks declined on the BSE.

The BSE Sensex is currently trading at 25,182.31 down by 131.43 points or 0.52% after trading in a range of 25,309.33 and 25,129.06. There were 13 stocks advancing against 17 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.22%, while Small cap index up by 0.05%.

The gaining sectoral indices on the BSE were Capital Goods up by 1.02%, Healthcare up by 0.42%, Consumer Durables up by 0.40%, Auto up by 0.29% and Teck up by 0.19%. On the flip side, Oil and Gas down by 3.15%, Realty down by 1.04%, Metal down by 0.33%, Power down by 0.11% and FMCG down by 0.06% were the losing indices on BSE. 

The top gainers on the Sensex were Wipro up by 1.35%, L&T up by 1.33%, Dr Reddy’s Lab up by 1.21%, BHEL up by 1.04% and M&M up by 0.91%. On the flip side, ONGC down by 5.35%, RIL down by 2.56%, NTPC down by 1.69%, Gail India down by 1.39% and HDFC down by 1.34% were the top losers on the BSE.

Meanwhile, with an aim to enhance the capital inflow in domestic equity markets, Finance Ministry has proposed allowing retirement and gratuity funds to invest up to 30 percent of their money in the equity market.

As per the Finance Ministry proposal, non-government pension, provident and gratuity funds can invest up to 15 percent in shares of companies that have derivatives or in mutual funds. Further, these funds can also invested up to 15 percent of their amount in exchange traded funds, index funds that replicate the portfolios of the Sensex or Nifty, or derivatives including credit default swaps. The draft proposal notified that index funds replicating Sensex or Nifty portfolios should be constructed in such a manner that investment in securities may be in the same weightage comprising an index. It added that the fund managers will have to choose which index they intend to track in advance on a yearly basis. The Retirement and gratuity funds will be permitted to invest up to 40 percent debt securities with a maturity period of three years. Finance Ministry proposes to make these investment guidelines effective from April 1, 2015.

According to the current norms, funds are not permitted to take any direct equity exposure. However, such funds can invest up to 55 percent of the total money in debt instruments such as government bonds. Retirement fund body EPFO is allowed to invest up to 5 percent in money market instruments, including equity linked schemes of mutual funds regulated by the Securities and Exchange Board of India.

However, trade unions have decided to oppose any move to invest part of over Rs 5 lakh crore corpus of retirement fund body Employees' Provident Fund Organisation (EPFO) in equity market. The unions are of the view that poor worker money should not be exposed to equity markets. Most of the trade unions in the country are in favour of setting up a workers' bank using EPFO funds to meet the credit requirements of the working class and earn better returns on investments.

The CNX Nifty is currently trading at 7,536.70 down by 32.55 points or 0.43% after trading in a range of 7,570.20 and 7,514.65. There were 21 stocks advancing against 29 declining on the index.

The top gainers of the Nifty were HCL Tech up by 1.41%, L&T up by 1.39%, Dr Reddy’s Lab up by 1.36%, Wirpo up by 1.15% and BHEL up by 1.12%. On the flip side, ONGC down by 5.25%, BPCL down by 3.51%, Reliance down by 2.55%, NTPC down by 1.82% and ONGC down by 1.49% were the major losers on the index.

Asian equity indices were trading in green; Straits Times up by 0.33% to 3,272.39, Hang Seng up by 0.89% to 23,070.13, Nikkei up by 0.21% to 15,298.55, Jakarta Stock Index up by 0.27% to 4,851.55, Shanghai Composite up by 0.70% to 2,039.77 and Taiwan Weighted up by 0.85% to 9,320.94