Benchmarks continue lackadaisical trade in late afternoon session

Indian equity benchmarks continued their lackadaisical trade in the late afternoon session in absence of any upside triggers and taking cues from weak global counterparts. The sentiments however got some respite on reports that India’s monsoon has covered the entire country. The revival of monsoon rains in the grain bowl of northwest and central regions should help speed up sowing of main summer crops such as rice, corn, soybean and cotton. Rains are vital to India’s farm sector, which accounts for about 14% of the country's nearly $2 trillion economy. Two-thirds of its 1.2 billion population live in rural areas. Traders were seen piling up positions in Consumer Durables, Metals and Power while selling was witnessed in Oil & Gas, Realty and Auto sector stocks. In scrip specific development, Crompton Greaves was trading firm after the company announced that it is planning to demerge its consumer products business unit into a separate listed company. TTK Prestige was trading in green after foreign brokerage firm maintained an outperform rating on the stock with an increased target stating that Q1 FY15 was a turning point and it is poised for a strong recovery in the second half.

On the global front, the Asian markets were trading mostly in red, while the European markets too traded on pessimistic note. 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 positive in the ratio of 1638:1116 while 108 scrips remained unchanged.

The BSE Sensex is currently trading at 25527.74, down by 21.98 points or 0.09% after trading in a range of 25613.03 and 25494.46. There were 18 stocks advancing against 12 stocks declining on the index. The broader indices were trading in green; the BSE Mid cap index was up by 1.17%, while Small cap index up by 1.10%.

The gaining sectoral indices on the BSE were Consumer Durables up by 1.98%, Metal up by 1.69%, Power up by 1.65%, Capital Goods up by 0.87% and HealthCare up by 0.54% while, Oil & Gas down by 0.73%, Realty down by 0.72%, Auto down by 0.46% and Bankex down by 0.34% were the only losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 2.63%, Hindalco Industries up by 2.53%, Coal India up by 2.41%, Tata Power up by 1.62% and NTPC up by 1.57%. On the flip side, Mahindra & Mahindra down by 3.00%, Bajaj Auto down by 2.88%, ONGC down by 1.60%, Maruti Suzuki down by 0.94% and Gail India down by 0.81% were the top losers.

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 7633.45, up by 9.05 points or 0.12% after trading in a range of 7655.65 and 7612.70. There were 31 stocks advancing against 19 stocks declining on the index.

The top gainers on Nifty were Grasim Industries up by 3.58%, Jindal Steel & Power up by 3.08%, UltraTech Cement up by 2.78%, Kotak Mahindra Bank up by 2.60% and Tata Steel up by 2.55%. On the flip side, Mahindra & Mahindra down by 2.97%, Bajaj Auto down by 2.77%, IDFC down by 1.81%, ONGC down by 1.68%  and DLF down by 1.26% were the top losers.

Asian markets were trading mostly into negative territory; Taiwan Weighted slid by 0.81%; Hang Seng inched lower by 0.01%; Jakarta Composite shed 1.25%; Shanghai Composite declined by 0.57%; Nikkei 225 inched lower by 0.06%; Straits Times lost 0.11% and FTSE Bursa Malaysia KLCI also was trading lower by 0.33%. On the flip side, KOSPI Index rose by 0.37%.

The European markets were trading in red; Germany’s DAX was down by 0.28%, France’s CAC 40 lost 0.32% while, UK’s FTSE 100 dropped 0.31%.