Benchmarks trim early losses; still continue to trade in red

Recovering from day’s low, benchmark equity indices gained a bit of momentum however were still trading below the neutral line as participants indulged in reducing their positions ahead of monthly expiry in the derivatives segment. Sentiment on the street weakened further on report that foreign portfolio investors (FPIs) sold shares worth a net Rs 381.66 crore on July 30, 2014. The cautious approach adopted by investors before the quarterly earnings from Maruti Suzuki and ICICI Bank also weighed on the sentiment. However, losses remained capped as Global rating agency Fitch has retained ‘BBB-’ sovereign ratings of the country with a 'stable' outlook and said rating revision depends on the new government’s willingness to make difficult choices.

Traders were seen piling up positions in Realty, Metal and Capital Goods while selling was witnessed in information technology (IT), FMCG and Bankex sector stocks. In scrip specific development, shares of Torrent Pharmaceuticals were trading higher after reporting a robust 72% year-on-year (yoy) jump in net profit at Rs 256 crore for the quarter ended June 30, 2014, on back of strong operational performance. Furthermore, shares of IRB Infrastructure have surged as much as 7% after reporting 12% year-on-year (yoy) growth in consolidated net profit at Rs 150 crore for the quarter ended June 30 2014 (Q4), driven by strong operational performance.

The market may remain volatile today, as traders roll over positions in the futures & options (F&O) segment from the near month July 2014 series to August 2014 series. On the global front, mixed trading was witnessed in other Asian markets led by overnight cues from the Wall Street on strong US economic growth, even as the Federal Reserve reaffirmed that it is in no hurry to raise the interest rates. Back home, the rupee weakened by nearly 15 paise in early trade as the dollar rallied against a basket of currencies on the back of strong growth in the United States.  Meanwhile, the market breadth on BSE was positive, out of 2146 stocks traded, 1208 stocks advanced, while 863 stocks declined on the BSE.

The BSE Sensex is currently trading at 26085.15 down by 2.27 points or 0.01% after trading in a range of 26115.78 and 26034.55. There were 14 stocks advancing against 16 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.68%, while Small cap index up by 0.56%.

The top gaining sectoral indices on the BSE were Realty up by 1.01%, Metal up by 0.96%, Capital Goods up by 0.83%, Oil & Gas up by 0.43% and Consumer Durables up by 0.23%, while IT down by 0.49%, TECk down by 0.31%, FMCG down by 0.22%, Bankex down by 0.12% and Auto down by 0.04%, were the major losers on the sectoral index.

The top gainers on the Sensex were Tata Steel up by 2.31%, Cipla up by 2.24%, Maruti Suzuki up by 1.10%, SSLT up by 1.06% and Gail India up by 0.97%. On the flip side, Wipro was down by 1.11%, Tata Power was down by 0.90%, Dr Reddys Lab was down by 0.79%, Hero MotoCorp was down by 0.69% and M&M was down by 0.63% were the top losers on the Sensex.

Meanwhile, Global rating agency Fitch has retained 'BBB-' sovereign ratings on India with a stable outlook. The agency stated that though India may have cleared the ground for progress on credit-supportive reforms, rating revision depends on the new government's revenue-strengthening or expenditure-saving measures.

The government during budget 2014-15 has set fiscal deficit target at 4.1 percent of GDP this year and decided to lower it to 3 percent of GDP by 2016-17. The rating agency noted that if this target is achieved, it would be big constructive for Indian economy. Meanwhile, Fitch is the only agency which has a stable outlook on the nation's credit rating, whereas other top global rating agencies such as Standard & Poor's and Moody's have affirmed negative outlook on India.

On GDP growth this fiscal, Fitch expects that Indian real GDP growth to pick up to 5.5 per cent in FY15 and 6.5 per cent in FY16 from 4.7 per cent in FY14. It further added that investment is likely to enhance gradually since election-related uncertainty has disappeared. Regarding the current account deficit, Fitch noted that policy rate hikes, high foreign reserves and measures such as curbing gold imports will contain CAD under target limits. Current account deficit (CAD) narrowed to $32.4 billion (1.7% of GDP) in FY14 as compared to $87.8 billion (4.7% of GDP) in FY13. 

The CNX Nifty is currently trading at 7,780.30 down by 11.10 points or 0.14% after trading in a range of 7,790.65 and 7,768.70. There were 22 stocks advancing against 28 declining on the index.

The top gainers of the Nifty were Cipla up by 2.19%, Tata Steel up by 2.11%, Jindal Steel up by 1.46%, DLF up by 1.22% and Maruti Suzuki up by 1.12%. On the flip side, HCL Tech down by 2.73%, Asian Paint down by 1.20%, NMDC down by 1.16%, Wipro down by 1.04% and Wipro down by 0.95% were the major losers on the index.

Asian markets were trading mixed; Hang Seng slipped by 0.15%, KOSPI Index dropped by 0.39%, FTSE Bursa Malaysia KLCI tumbled by 0.20% and Taiwan Weighted was down by 1.21%. On the flip side, Nikkei 225 spurted by 0.31%, Straits Times was up by 0.81% and Shanghai Composite up by 0.11%.