Markets reverse gears; trade into negative territory with cut of around 0.25%

Local equity markets reversing gears, nosedived to-day’s low point on intense selling pressure that dragged bourses into negative territory on renewed concerns over rising crude prices. Nevertheless, trade remained range-bound since start of session in absence of any positive triggers, while growing caution in the run-up to budget, which will unveil key details about the fiscal deficit target and government borrowing for the remainder of the fiscal year ending in March 2015, also spooked the sentiment. However, further slide will be limited on account of good monsoon reports. As per the weather department, monsoon has strengthened at the start of the key planting month after recording the weakest first month of the June-September rainy season in five years. Back on Dalal Street, both Sensex and Nifty languishing at day’s low point, were trading below the crucial 25,750 and 7,650 levels respectively, with losses of over quarter of a percent. However, broader indices outperforming larger peers, were managing to hold the fort into positive territory.

On the global front, European stocks paused for a breather on Friday after brisk gains since the start of July set key regional indexes on course for their biggest weekly gains in several months and close to major technical resistance levels. Meanwhile, Asian shares giving up early gains, looked set to clock mixed session of performance on Friday. These shares were buoyed following an upbeat employment report in the U.S.

Closer home, much of pressure were exerted by stocks belonging to Metal, Capital Goods and Power counters, while those from Realty, IT and TECK counters were the top gainers of the session. Meanwhile, shares of railways related stocks were moving higher ahead of the Railway Budget on July 8 on hopes of increase in government spending and reforms. The overall market breadth on BSE was in the favour declines which thumped advances in the ratio of 1386:1342; while 116 shares remained unchanged.

The BSE Sensex is currently trading at 25728.49, down by 95.26 points or 0.37% after trading in a range of 25698.47 and 25893.31. There were 8 stocks advancing against 22 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.08%, while Small cap index up by 0.22%.

The gaining sectoral indices on the BSE were Realty up by 0.46%, IT up by 0.04%, TECK up by 0.03% while, Metal down by 1.22%, Capital Goods down by 0.98%, Power down by 0.87%, PSU down by 0.74%, Bankex down by 0.54% were the top losing indices on BSE.

The top gainers on the Sensex were Dr. Reddys Lab up by 1.48%, Infosys up by 0.66%, Bharti Airtel up by 0.47%, Reliance Industries up by 0.38% and HDFC Bank up by 0.22%. On the flip side, Wipro down by 2.01%, Mahindra & Mahindra down by 1.86%, Coal India down by 1.84%, Sesa Sterlite down by 1.50% and Tata Power down by 1.50% were the top losers.

Meanwhile, the telecom department (DoT) is mulling introducing a new category of license that will enable cable TV players and DTH operators to offer broadband services in the country, to be called Cable TV Internet Service Providers licence, which will be part of the broadband policy.

Under the existing broad-band policy, operators with either the unified licence or an ISP licence are allowed to offer broadband services. While some of the cable TV players have taken ISP licence, the broadband policy of 2004 had permitted using the country's cable TV infrastructure as a franchisee network of internet service providers for providing broadband services. However, this has not found many takers.

Further, the new broadband policy is also expected to explore ways to attract large investments from potential developers of fibre-to-the-home (FTTH) networks, since driving broadband growth in the medium and long term, especially to transform cities and towns into an always connected society, will require huge investments.

Nevertheless, the new BJP-led government's renewed focus on broadband is influenced by a recent International Telecom Union report which suggests that every 10% rise in broadband penetration will trigger 0.31% GDP growth and a 0.28% jump in jobs creation.

The CNX Nifty is currently trading at 7680.15, down by 34.65 points or 0.45% after trading in a range of 7672.70 and 7733.50. There were 12 stocks advancing against 38 stocks declining on the index.

The top gainers on Nifty were Dr. Reddys Lab up by 1.78%, Asian Paints up by 0.96%, HCL Tech. up by 0.93%, Lupin up by 0.78% and BPCL up by 0.57%. On the flip side, Indusind Bank down by 2.28%, Mahindra & Mahindra down by 2.04%, Wipro down by 2.03%, United Spirits down by 2.03% and PNB down by 1.83% were the top losers.

The Asian equity indices were trading mixed; Straits Times increased 4.34 points or 0.13% to 3,277.49, Jakarta Composite increased 16.51 points or 0.34% to 4,905.24, Hang Seng increased 19.46 points or 0.08% to 23,550.90 and Nikkei 225 increased 88.84 points or 0.58% to 15,437.13. On the flip side, Taiwan Weighted decreased 16.18 points or 0.17% to 9,510.05, Shanghai Composite decreased 3.52 points or 0.17% to 2,059.71, FTSE Bursa Malaysia KLCI decreased 1.33 points or 0.07% to 1,887.36 and KOSPI Index decreased 1.31 points or 0.07% to 2,009.66.

European markets got off to a cautious start; with France’s CAC 40 declining by 0.17%, Germany’s DAX sliding by 0.02% and United Kingdom’s  FTSE 100 losing 0.07%.