Benchmarks enlarge losses; Nifty slips below 8350 mark

Indian bourses adding losses, continued to trade in red in the late morning session, with the Sensex losing over 150 points and Nifty falling below the 8350 level, weighed down by continues capital outflows by foreign funds on persistent concerns of foreign investors on tax claims despite the government's clarification, coupled with muted earnings and forecast of a below-normal monsoon. Besides, weakness in the rupee which fell to a fresh three-month low against the dollar, also negatively impacted investor sentiments.  The broader markets were also facing the heat of selling pressure; the BSE Midcap & Smallcap slipped 0.95-1.30 percent. sentiments was also weighed down as global rating agency Moody’s has said that a growth rate of more than 7.5 percent may not be “sustainable” for India in the present scenario and the country needs to resolve tax issues that are impacting its investment climate. Meanwhile, some traders remained on the sidelines and refrained from any buying activity ahead of Infosys Q4 number to be released later during the day.

On global front, Asian stock markets were mostly higher in early trade, tracking the gains on Wall Street overnight where the Nasdaq Index set a new record closing high. Optimism that the US Federal Reserve will delay its planned increase in interest rates also buoyed sentiment. Back home, Indian rupee declined by 11 paise at fresh three-month low of 63.43 against the US dollar in early trade on renewed demand for the American currency from banks and importers amid foreign capital outflows in the equity market.

Back on street, Traders were seen piling positions in FMCG stocks, while selling was being witnessed in Realty, Consumer Durables and Capital Goods sector stocks. In scrip specific development, Shares of Cairn India have declined after reporting a consolidated net loss of Rs 241 crore in the quarter ended March 2015 on account of lower crude oil prices and one-time impairment loss in Sri Lanka. On the other hand, shares of credit rating company CRISIL rallied after the company announced share buyback plan.

The market breadth on BSE was negative, out of 2204 stocks traded, 590 stocks advanced, while 1547 stocks declined on the BSE.

The BSE Sensex is currently trading at 27577.00, down by 158.02 points or 0.57% after trading in a range of 27545.55 and 27829.11. 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 0.98%, while Small cap index lost 1.38%.

The only gaining sectoral indices on the BSE was FMCG up by 0.27% ,while Realty down by 2.20%, Consumer Durables down by 2.04%, Capital Goods down by 1.54%, Bankex down by 1.28% and Auto down by 0.88% were the top losing indices on BSE.

The top gainers on the Sensex were ONGC up by 1.41%, ITC up by 1.36%, TCS up by 1.02%, Tata Steel up by 0.87% and Bharti Airtel up by 0.58%. On the flip side, Cipla down by 2.55%, Axis Bank down by 2.41%, Hindalco down by 2.26%, HDFC down by 2.04% and Larsen & Toubro down by 1.88% were the top losers.

Meanwhile, Global rating agency Moody's has cautioned that though emerging economies in Asia Pacific (APAC)  region, including India, have a high degree of immunity to external shocks, but will face challenges when the US Federal Reserve begins raising interest rates. It further added that Commodity exporters in the region will be most adversely affected by China's 'new normal' of slower economic growth.

Moody’s which is having a ‘Baa3’ rating for India, with a positive outlook, said that most APAC sovereigns have a relatively high degree of immunity to external economic shocks but their ratings momentum is diverging as some drive through ambitious reforms, while others struggle with long-standing challenges. Hence, a key risk for credit quality is therefore, whether, governments can deliver on policy pledges.

The US Federal Reserve is widely expected to increase interest rates by June or September, a move that would result in a flight of capital from emerging markets, including India. Moody's said as most sovereigns in Asia Pacific are net oil importers, the recent slump in oil prices will have a largely positive impact on the region. Moody's noted that savings on energy costs will support sovereigns in their efforts to rein in budget deficits or rebuild fiscal buffers.

The rating agency also said that household debt remains elevated in several economies around the region, but that does not pose imminent or significant risk to financial system stability. However, such debt will dampen private consumption growth, which could constrain economic expansion. But it said that since a significant proportion of retail loans charge variable rates, consumers are directly exposed to rising global borrowing costs, which could amplify pressures on household balance sheets.

The CNX Nifty is currently trading at 8337.70, down by 60.60 points or 0.72% after trading in a range of 8331.75 and 8413.30. There were 11 stocks advancing against 39 stocks declining on the index.

The top gainers on Nifty were NMDC up by 3.05%, Lupin up by 1.69%, ONGC up by 1.45%, ITC up by 1.21% and TCS up by 0.85%. On the flip side, Cipla down by 2.65%, Hindalco down by 2.44%, Axis Bank down by 2.44%, Indusind Bank down by 2.43% and Bank of Baroda down by 2.37% were the top losers.

Asian markets were trading mixed; Straits Times increased 0.05%, Jakarta Composite rose 0.02%, FTSE Bursa Malaysia KLCI added 0.67% and Taiwan Weighted was up by 1.09%. On the flip side, Hang Seng decreased 0.64%, Nikkei 225 declined 0.79%, Shanghai Composite dropped 1.68% and KOSPI Index was down by 0.65%.