Benchmarks enlarge losses; Nifty hovers near 7700 mark

Indian equity benchmarks widened losses to continue their weak trade, hovering near the lowest point of the day in the late afternoon session, on account of selling in frontline counters. Investors maintained a cautious approach amid host of important triggers, including the Union Budget for 2014-15 schedule on July 10, 2014 and industrial production data. The week also marks the beginning of the Q1 June quarter corporate earnings season, with Infosys announcing its result on July 11. Finance Minister Arun Jaitley has stated that fiscal deficit needs to be maintained at an acceptable level, adding that a judicious balance should be struck between expenditure and tax collections, but it too failed to lift the sentiment. Traders were seen piling up positions in HealthCare, while selling was witnessed in Power, Realty and Metal sector stocks. In scrip specific development, stocks of companies related to railways fell due to profit-booking after railway minister Sadananda Gowda presented his maiden Railway Budget in the parliament.

On the global front, the Asian markets were trading mostly in green, while the European markets traded on pessimistic note. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 7,750 and 25,900 levels respectively. The market breadth on BSE was negative in the ratio of 917:1955 while 90 scrips remained unchanged.

The BSE Sensex is currently trading at 25,867.84 down by 232.24 points or 0.89% after trading in a range of 26,190.44 and 25,842.19. There were 6 stocks advancing against 24 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 1.53%, while Small cap index was down by 1.82%.

The gaining sectoral index on the BSE was HealthCare up by 0.26%, while Power down by 3.59%, Realty down by 3.53%, Metal down by 2.97%, PSU down by 2.74% and Capital Goods down by 2.54% were the losing indices on BSE.    

The top gainers on the Sensex were HDFC down by 1.92%, Sun Pharma up by 1.62%, Cipla up by 0.87%, Infosys up by 0.76% and ITC up by 0.28%.

On the flip side, BHEL down by 4.93%, SSLT down by 4.34%, NTPC down by 3.78%, ONGC down by 2.91% and Coal India down by 2.77% were the top losers on the BSE.

Meanwhile the government has proposed to hike foreign direct investment (FDI) limit in insurance sector to 49 percent from the current 26 percent. The Department of Financial Services has amended the Insurance Laws Bill, 2008 with a rider that voting right of overseas partner will remain capped at 26 percent.

Further, the department has cleared that the chief executive officer (CEO) of the insurance company will be appointed by Indian shareholders subject to approval of a competent authority and a majority of the company's directors will have to be Indians. The department’s proposal sought increase in foreign investment in both general as well as life insurance segments of the insurance sector. Earlier proposal was that the higher FDI limit would be allowed only for health insurers. The official amendment will incorporate suitable safeguards on foreign equity investment in the insurance sector while enhancing the overall cap to 49 percent.

An increase in FDI limit to 49 percent would bring in around $1 billion (around Rs 6,000 crore) of foreign investment in Indian insurance sector. Insurance in India is mainly of two types namely ‘life insurance’ and ‘general insurance’. At present, there are fifty-two insurance companies operating in India of which twenty-four are in the life insurance business. During 2008-09 and 2013-14, insurance penetration has fallen from 4.6 percent to 3.9 percent, reflecting need to develop the insurance sector. 

The CNX Nifty is currently trading at 7,701.90 down by 85.25 points or 1.09% after trading in a range of 7,808.85 and 7,700.60. There were 10 stocks advancing against 40 declining ones on the index.

The top gainers of the Nifty were HDFC up by 1.94%, Kotak Bank up by 1.56%, Sun Pharma up by 1.22%, Cipla up by 0.86% and Infosys up by 0.73%.

On the flip side, BHEL down by 5.36%, PowerGrid down by 4.69%, DLF down by 4.68%, SSLT down by 4.57% and Jindal Steel down by 4.24% were the major losers on the index.

Most of the Asian equity indices were trading in green; Hang Seng up by 0.46 points, Shanghai Composite up by 0.20%, Jakarta Stock Index up by 0.60% and Taiwan Weighted up by 0.11%. On the flip side, Nikkei down by 0.42%, Straits Times down by 0.20%.

The European markets were trading in red; Germany’s DAX lost 0.29%, UK’s FTSE 100 was down by 0.33% while, France’s CAC 40 dropped 0.15%.