Markets continue to trade weak amid edgy global environment

Indian equity benchmarks continued to trade weak in afternoon session hovering near intra-day low level on account of selling witnessed in front line blue chip stocks amid weak global cues. Sentiments were dampened after US President Barack Obama authorised air strikes in Iraq and also on deepening Ukraine- Russia crisis. Further, capital outflow by FIIs and continual profit booking by funds and retail investors also dragged the major indices down. Domestic rating agency India Ratings statement that the government will not be able to meet its ambitious fiscal deficit target of 4.1 percent also added to the pessimistic sentiment. Most of the sectoral indices were trading in red with power as the top losing index down by around 2.41%. Selling was broad based with both mid cap and small cap indices were trading down by over 1.50%. However, the IT stocks were trading in green due to value buying after recent losses.

Vardhman Textiles has slipped around 10% to Rs 438 after reporting 27% yoy drop in its standalone net profit at Rs 106 crore for Q1FY15 due to higher raw material cost. On the other hand, Bharti Airtel has moved higher by 1.4% to Rs 371 after the company said its board will consider the declaration of interim dividend, for the financial year 2014-15 in their meeting scheduled on August 13, 2014. Aurobindo Pharma was trading higher by 2% at Rs 727 after reporting a robust consolidated net profit of Rs 415 crore for Q1 FY15 on back of strong operational performance.

On global front, most of the Asian equity indices were trading in red with Jakarta Stock Price Index down by 0.19% and Straits Times Index down by 0.74%. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 7,500 and 25,500 levels respectively. The market breadth on BSE was negative, out of 2,431 stocks traded, 628 stocks advanced, while 1,719 stocks declined on the BSE.

The BSE Sensex is currently trading at 25,343.06 down by 245.95 points or 0.96% after trading in a range of 25,406.87 and 25,290.64. There were 5 stocks advancing against 25 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 1.51%, while Small cap index down by 1.71%.

The gaining sectoral indices on the BSE were Healthcare up by 0.15% and IT up by 0.08%. On the flip side, Power down by 2.41%, Realty down by 2.16%, Metal down by 2.14%, Capital Goods down by 1.72% and Infrastructure down by 1.62% were the losing indices on the BSE.

The top gainers on the Sensex were TCS up by 1.23%, Dr Reddy’s up by 0.71%, Bharti Airtel up by 0.63%, ITC up by 0.42% and Sun Pharma up by 0.24%. On the flip side, Hindalco Inds down by 2.83%, M&M down by 2.57%, SSLT down by 2.49%, BHEL down by 2.48% and NTPC down by 2.38% were the top losers on the BSE. 

Meanwhile, With an aim to revive investment in the steel sector, the Ministry of Steel has proposed to set up special purpose vehicles (SPVs) in the mineral-rich states such as Karnataka, Chhattisgarh, Odisha and Jharkhand. Secretary of Ministry of Steel G Mohan Kumar has asserted that role of the SPVs will be to acquire land and obtain all necessary environment and forest clearances. By adding further he said that after completing all preparatory work for setting up new steel plants through SPV, the Ministry can invite steel makers and hand over the project to them in a transparent manner.

The move to create SPVs comes as greenfield capacity for steel manufacturing is not picking up. Greenfield projects of world’s largest steel maker ArcelorMittal and South Korean steel maker Posco have not taken off even after 10 years since the companies had set plans to build steel plants in India. However, in spite of these efforts, Steel Ministry expects a slow offtake in greenfield projects in future and stated that brownfield expansion will be the major area of growth in steel manufacturing capacity addition in the next 8-10 years.

Further, Steel Ministry also proposed to set up Special Mining Zones, where regions with mineral resources will be identified as strategic resources. There will be only one nodal authority which will arrange necessary green clearances for mining projects in such areas.

India is the fourth largest steel maker in the world with 81 million tonnes of production in FY14. The performance of steel industry is highly correlated to overall economic growth as steel demand is derived from construction and automobile sectors. The steel industry contributes about 2 percent of the country's GDP and employs over six lakh people.

The CNX Nifty is currently trading at 7,571 down by 78.25 points or 1.02% after trading in a range of 7,592.45 and 7,560.05. There were 7 stocks advancing against 43 declining on the index.

The top gainers of the Nifty were TCS up by 1.46%, HCL Tech up by 1.00%, Dr Reddy’s Lab up by 0.72%, Bharti Airtel up by 0.53% and Sun Pharma up by 0.34%. On the flip side, BPCL down by 3.75%, Hindalco down by 2.96%, BHEL down by 2.88%, M&M down by 2.79% and Ultra-tech down by 2.74% were the major losers on the index.

Most of the Asian equity indices were trading in red; Jakarta Stock Price Index down by 0.19% to 5,057.70, Straits Times Index down by 0.74% to 3,289.65, Taiwan Weighted down by 0.50% to 9,085.96 and Nikkei 225 down by 2.90% to 14,790.49. While, Hang Seng up by 0.09% to 24,410.22 and Shanghai Composite up by 0.17% to 2,191.49