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 indulged in booking profits ahead of September month F&O expiry this week. Sentiment on the street weakened after International credit rating agency Moody's on its report estimated that state run banks in India will need to raise funds in the range of $26- $ 37 billion over the next 4-5 years to meet Basel III compliance norms, which is required to fully implemented by 2019. Besides, a mixed trend on the other Asian markets following overnight losses on the US bourses also influenced the sentiment. However, losses remained capped as Fitch has affirmed India's long-term foreign and local currency issuer default rating (IDR) at 'BBB-' with stable outlook, indicating low default risk.

Meanwhile, shares of real estate stocks were under pressure as property prices in Delhi are set to rise.  The Delhi government hiked circle rates by up to 20 percent with an aim to check black money component in sale and purchase transactions. On the other hand, Pharma stocks gained after the National Pharmaceutical Pricing Authority withdrew guidelines for price control of 108 formulations, which was issued under para 19 of the Drug Prices Control Order (DPCO). In scrip specific development, shares of Pidilite Industries surged after the company has completed the acquisition of the adhesive business of Blue Coat. Besides, IFCI rose after the company’s statement that it will partially disinvest its shareholding in Tourism Finance Corporation of India in fiscal year 2014-15.

On global front, Asian shares were trading mixed even after encouraging manufacturing data from China. Activity in China’s manufacturing sector unexpectedly picked up in September even as factory employment slumped to a five-and-a-half-year low, a survey showed, a potential source of worry for Communist leaders who prize social stability above all else. Meanwhile, US indices ended sharply lower after weaker-than-expected housing data that raised worries over growth in the economy. Back home, Indian rupee fell by 11 paise to 60.93 against the US dollar in early trade due to increased demand for the US currency from importers.

The market breadth on BSE was positive, out of 2335 stocks traded, 1178 stocks advanced, while 1063 stocks declined on the BSE.

The BSE Sensex is currently trading at 27150.02 down by 56.72 points or 0.21% after trading in a range of 27256.87 and 27146.90. There were 11 stocks advancing against 19 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.01%, while Small cap index was up by 0.30%.

The gaining sectoral indices on the BSE were IT up by 0.83%, TECK up by 0.46%, Power up by 0.36%, Consumer Durables up by 0.12% and Auto up by 0.07%, while Realty down by 1.17%, Metal down by 0.93%, Oil & Gas down by 0.74%, Capital Goods down by 0.54% and PSU down by 0.52% were the losing indices on BSE.

The top gainers on the Sensex were Bajaj Auto up by 1.45%, Wipro up by 1.26%, Maruti Suzuki up by 1.11%, TCS up by 0.88% and NTPC up by 0.70%. On the flip side, Hindalco down by 1.88%, Tata Steel down by 1.32%, Bharti Airtel down by 1.23%, Mahindra & Mahindra down by 1.08% and ONGC down by 1.07% were the top losers.

Meanwhile, Model Revenue Sharing Contract (MRSC), which will replace the current practice of companies getting blocks by bidding maximum work programme and then recovering all of their investment before sharing profits with the Government, has been delayed further with the Petroleum Ministry once again extending the deadline for seeking comments on a simpler revenue sharing contract, which it wants to replace the present Production Sharing Contracts (PSC) with. The Ministry order has stated that timeline for receiving comments on the draft MRSC has been extended up to September 30, 2014.

The government had floated an MRSC after a Committee headed by C Rangarajan suggested moving to a revenue sharing regime where companies bid upfront the quantity of oil and gas they will share with the Government for winning an exploration acreage. Presently the companies get blocks by bidding maximum work programme and then recovering all of their investment before sharing profits with the Government.

The present model was criticised by CAG, which said it encouraged companies to keep raising cost so as to postpone higher share of profits to the Government, hence government accepting C Rangarajan’s committee suggestions floated a MRSC. Under the new regime, the companies will have to indicate the quantity of oil and gas they will share with the Government at different stages of production as well as at different rates.

The CNX Nifty is currently trading at 8,127.40 down by 18.90 points or 0.23% after trading in a range of 8,159.75 and 8,125.95. There were 12 stocks advancing against 38 declining on the index.

The top gainers on Nifty were Bajaj Auto up by 1.50%, HCL Tech up by 1.48%, Tech Mahindra up by 1.26%, Wipro up by 1.23% and TCS up by 0.93%. On the flip side, DLF down by 2.82%, Hindalco down by 2.00%, Jindal Steel & Power down by 1.91%, Bharti Airtel down by 1.51% and Tata Steel down by 1.49% were the top losers.

Asian markets were trading mostly in the red; KOSPI Index slipped by 0.48%, Jakarta Composite contracted by 0.58%, FTSE Bursa Malaysia KLCI declined 0.25% and Taiwan Weighted was down by 0.36%. On the flip side, Hang Seng increased 0.02%, Straits Times surged by 0.21% and Shanghai Composite was up by 0.74%. The Japanese market remained shut for the trade today in observance of Autumn Equinox Day.