Benchmarks continue to trade in red in late morning session

Indian bourses continued to trade in red in late morning session on absence of positive triggers which could take the markets higher and profit booking in frontline line blue-chip stocks ahead of monthly expiry of derivative contract on July 31, 2014. However, gains in Consumer Durables, Auto and Capital Goods stocks have restrained the market to extend losses. Some support also came in from International Monetary Fund’s (IMF) statement that growth appears to have bottomed out in India and activity is projected to pick up gradually after the post-election recovery in business sentiment, neutralising the effect of weak monsoon on agriculture. In scrip specific development, Gujarat Pipavav Port has surged as much as  5%, extending its Friday’s 9% rally, after reporting a better-than-expected 128% year-on-year (yoy) jump in net profit at Rs 80.50 crore for the quarter ended June 30, 2014. Furthermore, JK Lakshmi Cement has rallied for about 8% after reporting a nearly three-fold rise in first quarter net profit at Rs 40.46 crore on higher sales and better margins.

Trading remains highly volatile in near future as investors were keeping an eye on the progress of monsoon, earnings numbers of companies, foreign portfolio flows, oil prices and movement of rupee against the dollar this week. With the RBI’s next monetary policy meeting scheduled for August 5, interest rates and inflation will also be in focus.

On the global front, Asian stocks shrugged off a drop in Wall Street and hovered near 3-year highs, with China taking the lead after data showed a robust jump in profits earned by industrial firms in the world's second largest economy. Back home, the rupee weakened by 2 paise to 60.12 against dollar in early trade on Monday at the Interbank Foreign Exchange on increased demand for the American currency from importers. Meanwhile, the market breadth on BSE was negative, out of 2117 stocks traded, 998 stocks advanced, while 1040 stocks declined on the BSE.

The BSE Sensex is currently trading at 26076.15 down by 50.60 points or 0.19% after trading in a range of 26181.83 and 26055.65. There were 13 stocks advancing against 17 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.02%, while Small cap index down by 0.19%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 0.58%, Auto up by 0.46%, Capital Goods up by 0.30%, Bankex up by 0.18% and Power up by 0.08%, while Realty down by 1.47%, Metal down by 0.84%, Oil & Gas down by 0.46%, Healthcare down by 0.24% and FMCG down by 0.21%, were the major losers on the sectoral index.

The top gainers on the Sensex were Axis Bank up by 2.08%, Tata Motors up by 0.81%, Mahindra & Mahindra up by 0.70%, SBI up by 0.63% and BHEL up by 0.62%. On the flip side, Coal India was down by 2.17%, HDFC was down by 1.17%, TCS was down by 1.13%, RIL was down by 0.98% and Tata Steel was down by 0.85% were the top losers on the Sensex.

Meanwhile, Confident over the recently announced budget proposals to bring down the fiscal deficit and to boost economic growth, the Finance Ministry is all geared-up to pitch for a ratings upgrade at a series of meetings with the global rating agencies during the next few months. Representatives from Standard & Poor's (S&P), Fitch, Moody and the Japan Credit Rating Agency (JCRA) are scheduled to meet finance ministry officials in next 2-3 months.

The government has decided to contain fiscal deficit at 4.1 percent this year and lower it to 3 percent by 2016-17. Furthermore, in order to promote growth and investment, Finance Minister Arun Jaitley during the budget 2014-15, announced measures such as increasing spending on infrastructure, introducing tax incentives for savings and investment and allowing greater foreign direct investment in insurance and defence.

S&P currently rates India as 'BBB-', the lowest in the investment grade, with a negative outlook and any further downgrade will push India's rating to the junk status, making it difficult and costlier for Indian entities to borrow funds overseas. Fitch has affirmed India's long-term foreign and local currency issuer default rating (IDR) at 'BBB-' with stable outlook, indicating low default risk. Moody's assigns a 'Baa3' rating on India, with a stable outlook.

The CNX Nifty is currently trading at 7,773.80 down by 16.65 points or 0.21% after trading in a range of 7,799.90 and 7,768.65. There were 20 stocks advancing against 30 declining on the index.

The top gainers of the Nifty were Cairn up by 2.41%, PNB up by 1.96%, HCL Tech up by 1.56%, IndusInd Bank up by 1.09% and Tata Motors up by 0.97%. On the flip side, Coal India down by 2.44%, DLF down by 1.76%, HDFC down by 1.40%, Kotak Bank down by 1.34% and Ambuja Cements down by 1.84% were the major losers on the index. 

Asian markets were trading mostly in the green; Nikkei 225 soared 0.41%, Hang Seng increased by 0.91%, KOSPI Index strengthened by 0.85% and Shanghai Composite was up by 2.45%. On the flip side, Taiwan Weighted was down by 0.15%.

Malaysia, Singapore and Indonesia markets remained shut for the trade today for Eid-il-Fitri Holiday.