Markets trade near intra-day low level in afternoon session

Indian equity benchmarks extended early losses to continue its weak trade in the afternoon session hovering near the lowest point of the day on account of profit booking in metal, realty and IT stocks after the recent gains. Weaker than expected corporates earning for Q1 FY15 dampened the investors sentiments and most of major sectoral indices were trading in negative territory. Sentiments also got a hit as RBI stated that India continues to face threats on the growth and external sector fronts. Realty was top losing index down by around 1.65% followed by IT and metal indices both down by over 1.50%. However, investors were seen piling up positions in healthcare and FMCG stocks. Selling was broad based as both mid cap and small cap indices were trading down by around 0.69% and 0.69%. Some support to domestic markets came in from International Monetary Fund (IMF) which retained Indian economic growth forecast at 5.4% for Indian economy in 2015 and a stronger 6.4% growth next year.

Biocon has dipped around 5% to Rs 492 after its flagship biopharma business, which contributes close to 75% of the revenues, grew by hardly 1% year-on-year (yoy) at Rs 549 crore for the Q1 FY15 against Rs 543 crore in year ago quarter. Wipro has dipped around 8.2% to Rs 528 after posting earning as revenues declined 4% on a quarter-on-quarter basis to Rs 11,246 crore for Q1 FY15. On the other hand, Bayer Cropscience has soared around 13% to Rs 2,064, also its record high on NSE, after reporting a strong 24% yoy jump in net profit at Rs 109 crore for Q1 FY15 on back of higher sales.

On global front, most Asian equity indices were trading in green with Straits Times up by 0.33% and Hang Seng up by 0.02% to 24,137.76. 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 negating, out of 2,498 stocks traded, 792 stocks advanced, while 1,618 stocks declined on the BSE.

The BSE Sensex is currently trading at 26,162.54 down by 109.31 points or 0.42% after trading in a range of 26,300.17 and 26,130.92. There were 10 stocks advancing against 20 stocks declining on the index. The broader indices were trading in red; the BSE Mid cap index was down by 0.69%, while Small cap index down by 1.22%.

The gaining sectoral indices on the BSE were Healthcare up by 1.12% and FMCG up by 0.44%.  On the flip side, Realty down by 1.65%, IT down by 1.62%, Metal down by 1.55%, Teck down by 1.32% and Power down by 1.31% were the losing indices on the BSE

The top gainers on the Sensex were Sun Pharma up by 2.67%, Hindustan Unilever up by 2.03%, HDFC up by 2.02%, M&M up by 1.29% and Maruti Suzuki up by 1.21%. On the flip side, Wirpo down by 5.53%, BHEL down by 3.70%, Hindalco Inds down by 2.33%, Tata Motors down by 2.22% and SSLT down by 2.16% were the top losers on the BSE. 

Meanwhile, concerned over the cascading impact of doubling of gas rates on power tariff, urea cost and retail price of CNG and piped cooking gas, the government has planned to set up a panel to review natural gas pricing, including the UPA-approved Rangarajan Formula. The panel will be headed by former power minister Suresh Prabhu and submit its report by August 31.

The government doesn’t want to add to already high inflation, which may accelerate due to a below-normal monsoon and a spike in oil prices due to geo-political tensions. If the Rangarajan formula is implemented without changes, power tariff will rise by about Rs 2 per unit and CNG rates will jump by over Rs 12 per kg in national capital Delhi. Earlier, the government had decided to implement Rangarajan formula from April 1 but with general elections being declared it was postponed by three months to July 1. Further, new government had on June 25 deferred implementation of the Rangarajan formula and asked gas producers to keep selling at the old price of $4.2 per unit until the end of September.

In June 2013, the previous government had approved the Rangarajan formula under which domestically produced gas was to be priced at an average of the price prevailing at international gas trading hubs and the actual cost of importing liquid gas (LNG). Under the Rangarajan formula, the gas prices were to double to $8.8 per million British thermal unit from the current price at $4.20 per mbtu that would have put excessive burden on consumers. Gas prices were to be revised on the quarterly basis and price for each quarter, prices were to be calculated based on the 12-month trailing average price with a lag of one quarter. Natural gas pricing formula was planned to be implemented for a period of five years. The prices were to be uniformly implemented to all public and private sector producers such as ONGC and Reliance Industries. Further, the Rangarajan formula was expected to benefit the government by around $2.2 billion incremental revenue by way of higher taxes.

The CNX Nifty is currently trading at 7,795.95 down by 34.65 points or 0.44% after trading in a range of 7,840.95 and 7,786.25. There were 16 stocks advancing against 34 declining on the index.

The top gainers of the Nifty were Sun Pharma up by 2.57%, HDFC up by 2.14%, HUL up by 2.11%, Lupin up by 1.88% and M&M up by 1.40%. On the flip side, Wirpo down by 5.59%, DLF down by 3.69%, BHEL down by 3.64%, Cairn down by 2.96% and Hindalco down by 2.42% were the major losers on the index.

Most of Asian equity indices were trading in green; Straits Times up by 0.33% to 3,342.46, Hang Seng up by 0.02% to 24,137.76, Shanghai Composite up by 0.42% to 2,114.33 and Nikkei 225 up by 1.13% to 15,457.30. While, Jakarta Stock Index down by 0.36% to 5,080.18 and Taiwan Weighted down by 0.93% to 9,439.29