Markets pare some early losses amid gains in IT, teck stocks

Indian bourses continued to trade in red in the afternoon session as selling momentum in the equities persisted, however the losses were capped and marginal recovery from day's low levels was seen on the back of heavy buying witnessed in defensive sector stocks such as IT and teck. Though, most of the sectoral indices were trading in negative territory with realty as the top losing indices on BSE down by over 1.20%. Sentiments remained dampened due to rising geo-political tensions as a Malaysian Airline plane was shot down by terrorists in Ukraine. Power stocks were under pressure after the Central Electricity Authority (CEA) has stated that nearly half of the thermal power plants in the country are reeling under coal shortage with stocks to last less than a week. Stocks of Capital goods, which firmed up in the previous session, were under pressure due to the profit booking. However, sentiments got some support as foreign direct investment (FDI) in India increased to 8-month high at $3.6 billion in the month of May 2014 as compared to $1.63 billion in the same month of previous year. Positive announcement like the revival in monsoon rains over the last five-six days reducing rainfall deficit by 8 percentage points to 35% supported the sentiments. Meanwhile, technology stocks were witnessing fresh buying on the back of strong results posted by IT major TCS.

Advani Hotels and Resorts (India) has moved higher by 10% to Rs 87.80 on media reports that ITC Ltd's hotel division ITC Hotels is close to acquiring its property in Goa. Further, Rallis India was trading higher by 3% at Rs 224 after reporting a strong 35% y-o-y growth in consolidated net profit at Rs 42 crore for Q1 FY15. Muhtoot Finance has rallied around 8% to Rs 193 on back of heavy volumes after the company said it would apply for a small bank license.

On global front, Asian equity indices were trading in red with Nikkei 225 down by 1.06% and Taiwan Weighted down by 0.08% as global investors remained wary over the news of a downed Malaysian airlines jet at the Ukraine-Russia border. 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 2,446 stocks traded, 1,112 stocks advanced, while 1,251 stocks declined on the BSE.

The BSE Sensex is currently trading at 25,538.69 down by 22.47 points or 0.09% after trading in a range of 25,570.85 and 25,441.24. There were 11 stocks advancing against 19 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index was down by 0.15%, while Small cap index up by 0.24%.

The gaining sectoral indices on the BSE were IT up by 2.12% and Teck up by 1.53%. On the flip side, Realty down by 1.20%, Power down by 1.16%, Infrastructure down by 1.02%, Metal down by 0.67% and Oil and Gas down by 0.66% were the losing indices on BSE.    

The top gainers on the Sensex were TCS up by 3.67%, Wipro up by 3.04%, Cipla up by 0.88%, Tata Steel up by 0.83% and Hero Motocorp up by 0.69%. On the flip side, BHEL down by 2.08%, Hindalco Inds down by 1.88%, Tata Power down by 1.75%, NTPC down by 1.60% and Coal India down by 1.60% were the top losers on the BSE.

Meanwhile, the revival in monsoon rains over the last five-six days has reduced the rainfall deficit by 8 percentage points to 35% and accelerated planting of crops which was at half of last year's level. Rainfall is expected to continue for the next 10 days which would help farmers plant more rice, oilseeds, pulses, cotton and coarse grains.

However, the late sowing may mean lower returns, particularly if rainfall is uneven in the weeks ahead. The southwest monsoon covered the entire country two days after its normal date July 15.

In current year, monsoon had been very weak till the first half of July and rain deficit had grown to 43%. However, with good rains forecast for the rest of July, the Indian Meteorological Department (IMD) expects the deficit to progressively narrow in the coming days.

Monsoon rain is crucial for India as 55% of the arable land depends entirely on rain for irrigation. Timely and normal monsoon is also vital for rabi season (winter crops) also as it raises the water table and moisture content in the soil. Though, agriculture sector accounts for only about 15% of the economy, monsoon has a wider impact because it affects millions of people in villages who depend upon agriculture. Further, a poor monsoon can impact India’s exports, stoke inflation particularly food inflation and lead to lower demand for products ranging from cars to consumer goods. In 2009, India had faced worst drought in nearly four decades that forced the country to import large amount of food commodities.

The CNX Nifty is currently trading at 7,636.65 down by 3.80 points or 0.05% after trading in a range of 7,640.95 and 7,595.50. There were 15 stocks advancing against 35 declining on the index.

The top gainers of the Nifty were TCS up by 3.59%, Wipro up by 3.24%, HCL Tech up by 2.53%, Kotak Bank up by 2.02% and Tech Mahindra up by 1.51%. On the flip side, Hindalco down by 2.07%, BHEL down by 1.97%, Ambuja Cement down by 1.91%, Coal India down by 1.78% and Tata Power down by 1.75% were the major losers on the index.

Asian equity indices were trading in red; Hang Seng down by 0.34% to 23,439.81, Straits Times down by 0.20% to 3,300.12, Nikkei 225 down by 1.06% to 15,207.08, Taiwan Weighted down by 0.08% to 9,400.97 and Shanghai Composite down by 0.01% to 2,055.80. While, Jakarta Stock Index up by 0.37% to 5,089.89