Benchmarks continue to trade in red in late morning session

Indian bourses continued to trade in red in the late morning session as funds and retail investors indulged in booking profits at prevailing levels. Besides, a weakening trend on the other Asian markets following overnight losses on the US bourses also influenced the sentiment. Most of major indices were trading in red and selling witnessed in front line blue chip stocks took the markets to lower levels. However, gains in Healthcare stocks have restrained the market to extend losses. Some support also came in from reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 198.57 crore on July 07, 2014. Meanwhile, Railway-related stocks fall on profit-taking ahead of railway budget later in the day. In scrip specific development, ITI has soared nearly 9%, extending its past one week rally, after the company has bagged two advance purchase orders from BSNL amounting to Rs 2,984 crore.  Besides, shares of Shrenuj & Company have surged after the Reserve Bank of India (RBI) allowed foreign suppliers to provide credit to Indian buyers of rough, cut and polished diamonds for upto 180 days from shipment date.

On global front, Asian stocks declined as Wall Street turned cautious ahead of the corporate reporting season and as earnings guidance from regional tech heavyweight Samsung came in well short of forecasts. Back home, the rupee was trading at 59.91/92 compared with its Monday close of 60.0125/0225, tracking gains in other Asian currencies versus the dollar and on expectations of continued foreign fund inflows into local shares.

The overall market breadth on BSE was in the favour of declines which thumped advances in the ratio of 1412: 877; while 88 shares remained unchanged.

The BSE Sensex is currently trading at 26051.87, down by 48.21 points or 0.18% after trading in a range of 26190.44 and 25982.97. There were 9 stocks advancing against 22 stocks declining on the index.   

The broader indices were trading in red; the BSE Mid cap index was down by 0.32%, while Small cap index down by 0.50%.   

The gaining sectoral index on the BSE was, Healthcare up by 1.16%, while Metal down by 1.15%, Realty down by 0.91%, Power down by 0.77%, PSU down by 0.67% and Auto was down by 0.60% were the top losers on the sectoral index.

The top gainers on the Sensex were Sun Pharma up by 2.84%, Cipla up by 1.96%, HDFC up by 1.66%, GAIL up by 1.15% and Infosys up by 0.34%. On the flip side, SSLT was down by 2.23%, Coal India was down by 1.26%, M&M was down by 1.21%, Wipro was down by 0.97% and ONGC was down by 0.90% were the top losers on the Sensex.

Meanwhile, Having done a pre-Budget hike of 14.2% in passenger fares and raising freight rates, Railway Minister Sadananda Gowda's will present his maiden Rail Budget amidst expectation of big ticket announcements, such as high speed railway projects and station infrastructure improvements through private partnership.

Railway Minister D.V. Sadananda Gowda is expected to propose steps to boost revenues as the Indian Railways is saddled with a huge cash crunch of Rs 26,000 crore, amidst a decline in the growth in passenger earnings. Though, Modi Government's pre-budget decision to hike passenger fare by 14% may give additional revenue of Rs 8000 crore annually, some more strategies will be unveiled to mobilize alternative sources of funding to modernize and upgrade the crucial logistics sector.

The railway is likely to spell out strategy to earn additional revenue to reach the target in the current fiscal. It may also announce some new projects on priority basis in the Rail Budget 2014-15 and some bold plans to improve the service that transports 23 million Indians every day.

With government grappling with ever-increasing fuel cost, harnessing alternative energy like solar power and bio-diesel in a big way is likely to feature in the NDA government's first Rail Budget as it is believed to be the vision of Prime Minister Narendra Modi, who wants use of non-renewable energy in rail sector to ensure lower dependence on fuel.

Importantly, budget is likely to spell out the plan for having a “Diamond Quadrilateral” connecting the metros with high-speed trains as cited by the prime minister. However, the need for funding such projects may force the government to open the doors for private and foreign funds participation in the segment.

Additionally, the budget is expected to bring in fiscal stability in the railways by sticking to the recent hike in fares and fund inflows for modernisation of infrastructure development through public private partnership (PPP) models.

Besides, Gowda, in his maiden budget, might also announce 100% FDI in areas such as high-speed train systems and dedicated freight lines and a more investor-friendly PPP model. However, Union Home Ministry has raised objections against any such proposal, citing that it might affect the security of such a large transportation network.

Previously, in the interim budget, Mallikarjun Kharge, the then railway minister, had set a revenue target of Rs 1.65 lakh crore that included Rs 1.06 lakh crore from goods tariffs and Rs.45,255 crore from passenger fares, and the balance from coaching and other sources.

The CNX Nifty is currently trading at 7,769.00, down by 18.15 points or 0.23% after trading in a range of 7,808.85 and 7,744.95. There were 18 stocks advancing against 32 stocks declining on the index.   

The top gainers of the Nifty were Sun Pharma up by 2.48%, Cipla up by 1.88%, Kotak Bank up by 1.79%, Indusind Bank up by 1.63% and HDFC up by 1.50%. On the flip side, SSLT down by 2.29%, UltraTech Cement down by 2.26%, Power Grid down by 1.95%, Jindal Steel down by 1.62% and DLF down by 1.55% were the major losers on the index.

Asian markets were trading mostly in the red; Nikkei 225 tumbled by 0.36%, Hang Seng dropped 0.15%, KOSPI Index decreased by 0.01%, Straits Times shed by 0.20% and Shanghai Composite was down by 0.10%. On the flip side, Jakarta Composite gained 0.99%, FTSE Bursa Malaysia KLCI improved by 0.01% and Taiwan Weighted was up by 0.09%.