Markets trade flat in afternoon session

Indian equity benchmarks failed to extend their initial gains and were trading flat in afternoon session, dragged down by profit booking in rate sensitive stocks such as oil and gas, realty and banking stocks after the previous session gains. Weak Asian cues also weighed on the investors sentiments. However, sharp buying witnessed in consumer durables, metal and power stocks capped the markets' losses. Sentiments got some support amid report that heavy showers have narrowed the monsoon deficit to 36 percent. Further, there were also some positive statements as FIEO stated that exports is likely to surge in the coming months on the back of improving demand in overseas countries and measures announced in the Union Budget 2014-15. Consumer durables was the top gaining index on BSE up by around 1.37%, whereas oil and gas was top losing index trading down by around 0.90%. The broader markets were outperforming the benchmarks with large margin as both mid cap and small cap indices were trading up by over 0.90%.

Ahluwalia Contracts, extending its 10% rally in past two trading sessions has surged nearly 10% to Rs 126 after securing construction orders worth of Rs 615 crore. Further, Financial Technologies India (FTIL) is trading around 4% higher at Rs 279, extending its over 20% rally in past two trading sessions, after offloaded stake in Multi Commodity Exchange (MCX) for about Rs 154 crore in the open market. On the other hand, CMC has dipped 5% to Rs 1,880 after reporting a lower-than-expected 10% yoy rise in consolidated net profit at Rs 58 crore for Q1 FY15.

On global front, Asian equity indices were trading in red with Hang Seng down by 0.23% and Jakarta Stock Index down by 0.32%. Back home, the NSE Nifty and BSE Sensex were trading above their psychological 7,600 and 25,500 levels respectively. The market breadth on BSE was negative, out of 2,530 stocks traded, 1,485 stocks advanced, while 943 stocks declined on the BSE.

The BSE Sensex is currently trading at 25,546.40 down by 3.32 points or 0.01% after trading in a range of 25,610.47 and 25,503.26. 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 0.94%, while Small cap index up by 0.89%.

The gaining sectoral indices on the BSE were Consumer Durables up by 1.37%, Metal up by 1.16%, Power up by 1.16%, Capital Goods up by 1.02% and IT up by 1.00%. On the flip side, Oil and Gas down by 0.90%, Realty down by 0.42%, Bankex down by 0.26%, Auto down by 0.17% and FMCG down by 0.05% were the losing indices on BSE.    

The top gainers on the Sensex were Coal India up by 1.77%, Cipla up by 1.68%, Infosys up by 1.38%, Hindalco Inds up by 1.29% and Wipro up by 1.18%. On the flip side, M&M down by 2.60%, ONGC down by 2.19%, Maruti Suzuki down by 1.17%, SBI down by 1.02% and ICICI Bank down by 0.82% were the top losers on the BSE.

Meanwhile, The government will formulate credit guarantee fund to support its over Rs 40,000-crore new Financial Inclusion Mission. About 60 percent of the population in India does not have bank accounts and the Financial Inclusion Mission envisages making two bank accounts per family mandatory. The mission envisages giving a Rs 5,000 overdraft facility to around 8 crore new account holders and credit guarantee fund will provide a cushion to banks and cover defaults in overdraft accounts.

The government is likely to set up leverage ratio for such a fund in the range of 1:10 or 1:20. Over a period of 4-5 years, credit guarantee fund will have an estimated corpus of Rs 6,000 crore. Further, banks will put an initial limit of Rs 1,000 under the overdraft scheme, which will then be increased if the borrower does not default on payments.

Further, the government scheme could also be extended to over 15 crore present account holders, which may put a burden of over Rs 75,000 crore on the banking system.  Prime Minister Narendra Modi is slated to launch the mission on Independence Day.

Financial Inclusion Mission particularly is aimed to empower the weaker sections of the society, including women, small and marginal farmers and labourers. Under the scheme, every new customer will get a RuPay debit card with an in-built accident insurance cover of Rs 1 lakh. However, the banking industry is of the view that the scheme would enhance the non-performing assets (NPAs) of banks.

The CNX Nifty is currently trading at 7,630.80 up by 6.40 points or 0.08% after trading in a range of 7,643.60 and 7,612.70. There were 30 stocks advancing against 20 declining on the index.

The top gainers of the Nifty were Jindal Steel up by 3.23%, Grasim up by 2.66%, Kotak Bank up by 2.37%, ACC up by 2.12% and Ultratech Cement up by 1.90%. On the flip side, M&M down by 2.30%, ONGC down by 2.20%, IDFC down by 1.47%, BPCL down by 1.20% and DLF down by 1.09% were the major losers on the index.

Asian equity indices were trading in red; Hang Seng down by 0.23% to 23,469.18, Jakarta Stock Index down by 0.32% to 5,097.33, Straits Times down by 0.03% to 3,303.45, Nikkei 225 down by 0.06% to 15,371.08, Taiwan Weighted down by 0.81% to 9,408.24 and Shanghai Composite down by 0.99% to 2,046.91