Benchmarks trade lower on sluggish global cues

Indian equity benchmarks are treading in the red in morning deals on Friday sluggish global cues and the geopolitical worries. The US markets despite a good start ended sharply lower in last session with geopolitical concerns generating considerable selling pressure, on news that a Malaysia Airlines passenger plane crashed in eastern Ukraine. The Asian markets were trading mostly in the red at this point of time, led by over a percent fall in the Japanese market.

Back home, sentiments remained dampened as the Indian Agriculture Research Institute officials have stated that if monsoon remains weak in key States in the next week, then kharif production is likely to be lower by an estimated 10 per cent. However, losses remained capped on reports that the foreign direct investment (FDI) flows into the country more than doubled to $3.60 billion in May, the highest in the last eight months.

On the sectoral front, software and technology witnessed the maximum gains in trade, while realty, public sector undertaking and metal remained the top losers on the BSE sectoral space. The broader indices too were reeling under pressure, while the market breadth on the BSE was negative; there were 644 shares on the gaining side against 1,063 shares on the losing side while 49 shares remain unchanged.

The BSE Sensex opened at 25558.48; around 3 point lower compared to its previous closing of 25561.16, and has touched a high and a low of 25570.85 and 25441.24 respectively. The index is currently trading at 25490.02, down by 71.14 points or 0.28%. There were 7 stocks advancing against 23 declines on the index.

The overall market breadth has made a weak start with 36.67% stocks advancing against 60.54% declines. The broader indices were trading in the green; the BSE Mid cap and Small cap indices down by 0.64% and 0.63% respectively. 

The only gaining sectoral indices on the BSE were, IT up by 1.98% and TECk up by 1.37%, while Realty down by 1.81%, PSU down by 1.62%, Metal down by 1.60%, Power down by 1.44% and Infrastructure was down by 1.41% were the top losers on the sectoral index.

The top gainers on the Sensex were TCS up by 3.83%, Wipro up by 2.67%, Cipla up by 1.03%, HDFC up by 0.67% and Infosys up by 0.55%. On the flip side, Coal India was down by 2.33%, Hindalco was down by 2.28%, Tata Power was down by 2.16%, BHEL was down by 2.08% and NTPC was down by 1.83% were the top losers on the Sensex.

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 opened at 7,630.25; about 10 points lower as compared to its previous closing of 7,640.45, and has touched a high and a low of 7,634.60 and 7,595.50 respectively. The index is currently trading at 7,609.30, down by 31.15 points or 0.41%. There were 10 stocks advancing against 40 declines on the index.

The top gainers of the Nifty were TCS up by 3.73%, Wipro up by 2.78%, HCL Tech up by 1.45%, Cipla up by 0.95% and Tech Mahindra up by 0.83%. On the flip side, Tata Power down by 2.67%, Coal India down by 2.57%, Hindalco down by 2.33%, Jindal Steel down by 2.30% and BHEL down by 2.28% were the major losers on the index.

Asian markets were trading mostly in the red; Nikkei 225 tumbled by 176.87 points or 1.15% to 15,193.39, Hang Seng slipped 104.88 points or 0.45% to 23,415.99, KOSPI Index declined by 5.63 points or 0.28% to 2,015.27, Straits Times dropped 6.48 points or 0.20% to 3,300.41, FTSE Bursa Malaysia KLCI decreased by 7.23 points or 0.38% to 1,875.91 and Taiwan Weighted was down by 15.71 points or 0.17% to 9,392.53.

On the flip side, Jakarta Composite soared 7.33 points or 0.14% to 5,078.53 and Shanghai Composite was up by 8.17 points or 0.40% to 2,063.76.