Markets trade slightly in red in afternoon session

Indian bourses were trading marginally in red in the afternoon session due to profit-booking by funds and retail investors amid positive global cues. However the losses were capped and marginal recovery from day's low levels was seen on the back of sharp buying witnessed in metal, realty and infrastructure stocks. Sentiments got some support as World Bank Group committed a $15-18 billion loan to India over the next three years to boost India’s economic growth. Domestic sentiment was also buoyed as India’s rainfall deficit reduced by 11 percentage points to 25% from 36% a week ago due to steady momentum in monsoon rains over the last seven days. Metal stocks were on buyer's radar as Chinese manufacturing gauge rose to an 18-month high in July. Insurance sector stocks were trading higher as Union Cabinet approved raising the foreign direct investment (FDI) cap in the insurance sector to 49% from the existing 26%. The broader markets were outperforming the benchmarks with quiet a margin as mid cap and small cap indices were trading up by around 0.24% and 0.51%.

In stock specific movement, TVS Motor Company (TVSL) has moved higher by around 6% to Rs 179, also its record high on NSE, ahead of its April-June quarter (Q1) earnings today. Further, Panacea Biotech has surged 15% to Rs 186 after the company announced fund raising plans of upto Rs 250 crore. On the other hand, Ipca Laboratories has dipped around 6% to Rs 788 after drug maker said it received certain inspection observations from the US Food and Drug Administration (FDA) over manufacturing at its Ratlam plant in Madhya Pradesh.

On global front, Asian equity indices were trading in green Straits Times up by 0.31% and Jakarta Stock Index up by 0.19% after a better than expected macro economic data from China. Back home, the NSE Nifty and BSE Sensex were trading above their psychological 7,700 and 26,000 levels respectively. The market breadth on BSE was positive, out of 2,553 stocks traded, 1,327 stocks advanced, while 1,134 stocks declined on the BSE.

The BSE Sensex is currently trading at 26,140.16 down by 7.17 points or 0.03% after trading in a range of 26,190.81 and 26,077.70. There were 15 stocks advancing against 15 stocks declining on the index. The broader indices were trading in green; the BSE Mid cap index was up by 0.24%, while Small cap index up by 0.51%.

The gaining sectoral indices on the BSE were Metal up by 1.60%, Realty up by 1.32%, Infrastructure up by 0.41%, Bankex up by 0.30%, Power up by 0.25% and FMCG up by 0.23%. On the flip side, Oil and Gas down by 0.63%, Healthcare down by 0.52%, Consumer Durables down by 0.48%, Auto down by 0.24% and Teck down by 0.07% were the losing indices on the BSE

The top gainers on the Sensex were Tata Steel up by 2.76%, Hindalco Inds up by 2.56%, SSLT up by 1.29%, BHEL up by 1.22% and M&M up by 1.09%. On the flip side, Gail India down by 1.69%, Dr Reddy’s Lab down by 1.42%, HDFC down by 0.72%, TCS down by 0.66% and RIL down by 0.63% were the top losers on the BSE. 

Meanwhile, with the steady momentum in monsoon rains over the last seven days, India’s rainfall deficit reduced by 11 percentage points to 25% from 36% a week ago. The revival in monsoon rains has accelerated the planting of rice, oilseeds, pulses, cotton and coarse grains.

Over the last seven days, 40% of the country has received normal rainfall up from 20% a week ago because of the heavy rain in most regions except northern and northwestern parts. However, monsoon rainfall needs to remain strong for at least another month to minimise rural distress created by six weeks of largely dry weather across the country. The southwest monsoon covered the entire country two days after its normal date July 15.Indian Meteorological Department (IMD) has forecasted heavy rainfall in many parts of country, particularly central and western India in the next three days.

The Central Water Commission has stated that water reservoir position in the country has improved over the previous week amid heavy rainfall in northern and central India regions. In previous week, the situation in water reservoirs was worrisome as they were filled up to only 26% capacity, down sharply from 42% last year, and the 10-year average of 30%. In India, water reservoirs normally fill up rapidly in July and create a water reserve for irrigation, drinking and power generation until the following year's monsoon.

Poor monsoon can impact Indian economic growth as the agriculture sector, which comprises around 15% of the GDP, is mainly depended upon the monsoon rains. Around 55% arable land in the country depends entirely on rain for irrigation. Timely and normal monsoon is essential for rabi season (winter crops) and it also raises the water table and moisture content in the soil. 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 7,791.15 down by 4.60 points or 0.06% after trading in a range of 7,802.45 and 7,771.65. There were 21 stocks advancing against 29 declining on the index.

The top gainers of the Nifty were Tata Steel up by 2.88%, Bank of Baroda up by 2.41%, IDFC up by 2.09%, HCL Tech up by 2.01% and Hindalco up by 1.91%. On the flip side, Cairn down by 5.37%, Gail down by 1.73%, Dr Reddy’s Lab down by 1.48%, Lupin down by 1.08% and Hero Motocorp down by 0.86% were the major losers on the index.

Asian equity indices were trading in green; Straits Times up by 0.31% to 3,531.89, Jakarta Stock Index up by 0.19% to 5,102.99, Taiwan Weighted up by 0.30% to 9,527.23, Hang Seng up by 0.49% to 24,088.30 and Shanghai Composite up by 1.35% to 2,106.53. While, Nikkei 225 down by 0.29% to 15,284.30