Benchmarks continue to trade in red in late morning session

Indian bourses continued to trade in red in the late morning session as funds and retail investors engaged in reducing positions amid a weak trend in global markets owing to tensions related to Russia and Argentina defaulting on its debt for the second time in 12 years. Besides, there will be some cautiousness with the report that India’s fiscal deficit in the fiscal first quarter of the current financial year crossed the halfway mark at 56.1% of the full-year target of Rs.5.3 trillion. Moreover, overseas investors sold shares worth Rs 1654 crore ($273.2 million) on Thursday, their biggest single-day selling since July 2, which also dampened the sentiment. However, gains in Infrastructure, FMCG and Auto stocks have restrained the market to extend losses. Some support also came in from economic front, the Core sector output rose at its fastest pace in nine months by 7.3% in June from a year ago.

Telecom stocks such as Bharti Airtel, Idea Cellular and Reliance Communications (RCom) were trading higher on reports that mobile tariffs could rise between 8-9% going ahead. In scrip specific development, shares of Pantaloons Fashion & Retail have declined as much as 8% after the company reported 35% fall in its standalone net profit for the quarter ended June 2014. Furthermore, shares of Greaves Cotton were trading lower after reporting 9.51% decline in net profit at Rs 28.74 crore for the quarter ended June 30, 2014 compared with Rs 31.76 crore in the corresponding quarter previous year.

Meanwhile, a correction was overdue in Indian stock markets and Nifty could fall up to 7300 levels or even lower as expectations from the new government and corporate results are very high but it will take time for improvement at the ground level. On the global front, Asian shares pared some losses as data showing a surprisingly strong pick-up in Chinese manufacturing helped partly offset the slump on Wall Street. Back home, the rupee lost 22 paise to over three-month low of 60.77 against the US dollar in early trade on increased capital outflows amidst demand for the American currency from importers. Meanwhile, the market breadth on BSE was negative, out of 2171 stocks traded, 911 stocks advanced, while 1166 stocks declined on the BSE.

The BSE Sensex is currently trading at 25736.34 down by 158.63 points or 0.61% after trading in a range of 25773.28 and 25679.46. There were 9 stocks advancing against 21 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.29%, while Small cap index down by 0.22%.

The few gaining sectoral indices on the BSE were India Infrastructure Index up by 0.45%, FMCG up by 0.42%, Auto up by 0.13% and Consumer Durables up by 0.04%, while Capital Goods down by 1.22%, Oil & Gas down by 1%, Power down by 0.96%, Realty down by 0.86% and PSU down was by 0.76%, were the major losers on the sectoral index.

The top gainers on the Sensex were Maruti Suzuki up by 3.03%, Bharti Airtel up by 2.80%, Hindustan Unilever up by 2.15%, Hindalco up by 0.78% and Tata Motors up by 0.53%. On the flip side, HDFC was down by 2.45%, NTPC was down by 2.41%, Gail India was down by 2.17%, SSLT was down by 1.93% and Dr Reddys Lab was down by 1.76% were the top losers on the Sensex.

Meanwhile, Indicating signs of economic revival, core sector output in the month of June has surged to nine-month high at 7.3% mainly driven by healthy production growth in coal, crude oil, cement and electricity. The output of eight core industries grew by 2.3% in May and 1.2% in the same month of previous year. The eight industries - crude oil, petroleum refinery products, natural gas, fertilisers, coal, electricity, cement and finished steel - have a weight of 37.9% in the overall Index of Industrial Production (IIP).

Among core sectors, Electricity generation having 10.32% weight in index registered a growth of 15.7% in June, 2014 over the same month of corresponding period. During April to June 2014-15, it recorded a growth of 10.9% over the corresponding period of previous year. Coal production with weightage of 4.38% in index increased by 8.1% in June, 2014 over the same period of corresponding period. On cumulative basis, coal production growth during April-June, 2014-15 increased by 5.6% compared to April-June 2013-14.

Steel and Cement sectors having weightage of 6.68% and 2.41% respectively in IIP index, registered a growth of 4.2% and 13.6% respectively, in the month under review over June 2013. In cumulative terms, Steel and Cement production was recorded at 1.6 % and 9.5%  during April-June 2014-15. Crude oil, with weightage of 5.22% in index increased by 0.1% in June, 2014 over June, 2013, while its cumulative index during April- June 2014-15 declined by 0.1% over corresponding period of previous year. Further, Petroleum refinery production, representing 5.94% weight in IIP index rose by 1.2% in June, 2014 over June 2013. However, cumulative growth of Petroleum refinery production during April-June, 2014-15 declined by 1.1% over the corresponding period of previous year.

On the flip side, Natural Gas production having weightage 1.71% in IIP index declined by 1.7% in June 2014 as compared to the month in June, 2013. The cumulative index for Natural Gas production during April-June 2014-15 declined by 3.9% over corresponding period of previous year. Fertilizer production with weightage of 1.25% in IIP index declined 1.0% in June, 2014 over June, 2013. The cumulative index of Fertilizer production during April-June 2014-15 grew at 8.6% on YoY basis.

The CNX Nifty is currently trading at 7,669.15 down by 52.15 points or 0.68% after trading in a range of 7,679.60 and 7,649.75. There were 14 stocks advancing against 36 declining on the index.

The top gainers of the Nifty were Maruti Suzuki up by 2.89%, Bharti Airtel up by 2.68%, HUL up by 1.92%, BPCL up by 1.31% and Hindalco up by 0.65%. On the flip side, Tech Mahindra down by 3.61%, HDFC down by 2.63%, NTPC down by 2.45%, GAIL down by 2.24% and SSLT down by 1.93% were the major losers on the index.

Asian markets were trading mostly in the red; Nikkei 225 tumbled by 0.31%, Hang Seng slipped by 0.52%, KOSPI Index declined by 0.18%, Straits Times dipped 0.94%, FTSE Bursa Malaysia KLCI dropped 0.40% and Taiwan Weighted was down by 0.53%. On the flip side, Shanghai Composite was up by 0.10%.