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 concerns over Greece and some upbeat data that fuelled expectations that a US rate hike could come sooner rather than later. Besides, caution ahead of tomorrow’s May expiry in the derivatives segment and the rupee breaching the 64 mark against the dollar too weighed on the sentiment. However, investors got some support with Chief Economic Advisor (CEA) Arvind Subramanian pinning hopes on adequate food grain stock helping to keep inflation under control even with below-normal monsoon  and pitching for rate cut by the Reserve Bank in its upcoming policy review to boost growth. Some support also came in from reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 114.81 crore on May 26, 2015.

On global front, Asian stock markets are ruffled by Greece’s impending cash crunch and expectations the Federal Reserve will raise interest rates this year for the first time in almost a decade. Further, the Japanese market is marginally lower, following the negative cues overnight from Wall Street and as investors resorted to profit taking after eight straight days of gains. Back home, continuing its weakness for the third straight day, Indian rupee dropped below the 64 mark to trade at 64.15, down 17 paise, in early trade as the American currency firmed up overseas on strong economic data.

Back on street, stocks from Consumer Durables, Banking and PSU counters were supporting the markets’ uptrend, while those from IT, Auto and TECK counters were adding to the underlying cautious undertone. In scrip specific development, Shares of IDBI Bank have rallied 6% after the bank reported an improvement in its asset quality for the January-March quarter (Q4) on a sequential basis. On the flip side, shares of Tech Mahindra have tanked after the company reported a nearly 500 basis points (bps) decline in EBITDA margins at 15.2% for the fourth quarter ended March 31, 2015 against 20.2% in the December 2014 quarter.

The market breadth on BSE was negative, out of 2063 stocks traded, 903 stocks advanced, while 1067 stocks declined on the BSE.

The BSE Sensex is currently trading at 27522.18, down by 9.23 points or 0.03% after trading in a range of 27363.72 and 27549.03. There were 19 stocks advancing against 11 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.04%, while Small cap index down by 0.10%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 0.88%, Bankex up by 0.75%, PSU up by 0.71%, Oil & Gas up by 0.54% and Capital Goods up by 0.40% while, IT down by 1.70%, Auto down by 1.47%, TECK down by 1.24%, Infrastructure down by 0.29% and Realty down by 0.09% were the top losing indices on BSE.

The top gainers on the Sensex were Axis Bank up by 1.79%, BHEL up by 1.62%, Bharti Airtel up by 1.57%, Cipla up by 1.39% and Hero MotoCorp up by 1.11%. On the flip side, Tata Motors down by 5.35%, Infosys down by 2.25%, Wipro down by 1.30%, Hindalco down by 1.23% and Mahindra & Mahindra down by 0.75% were the top losers.

Meanwhile, domestic rating agency ICRA has said that the Indian economy will grow in the range of 7.6-7.8 percent in the current fiscal, despite the headwinds posed by muted global growth and an unfavourable monsoon outlook. The rating agency has further said that the improvement in macroeconomic fundamentals reflects the policy actions taken by the government and the central bank, which have been supplemented by tailwinds such as benign commodity prices.

ICRA has further pointed that higher government spending on infrastructure, simplification of clearances, easing of norms for foreign direct investment, continued reform momentum and further monetary easing of 0.5 percent are expected to support a revival in investment activity in the current fiscal, led by sectors such as roads, urban infrastructure and freight corridors.

It further said that two years post the currency crisis of 2013 and one year into the tenure of Prime Minister Narendra Modi’s government, moderation in inflation, external account vulnerability and the central government's fiscal deficit have bolstered the Indian economy's ability to withstand bouts of global volatility and fluctuation in investor sentiment.

The rating agency has however said that the growth of gross value added (GVA) at basic prices is estimated to decline to 7 percent in Q4 FY15 from 7.5 percent in Q3 FY15, on account of factors such as crop damage caused by unseasonal rainfall, decline in growth of electricity, contraction in non-POL merchandise exports and moderation in the pace of expansion of central government spending. It also said that the pace of fresh investment in some sectors such as thermal power and steel is likely to remain sluggish on account of continuing constraints posed by the lingering sector-specific issues.

The CNX Nifty is currently trading at 8320.10, down by 19.25 points or 0.23% after trading in a range of 8277.95 and 8334.85. There were 31 stocks advancing against 19 stocks declining on the index.

The top gainers on Nifty were Axis Bank up by 1.80%, BPCL up by 1.73%, Bharti Airtel up by 1.66%, PNB up by 1.56% and Cipla up by 1.47%. On the flip side, Tech Mahindra down by 12.38%, Tata Motors down by 5.25%, Infosys down by 2.43%, Hindalco down by 1.34% and Ultratech Cement down by 1.18% were the top losers.

Asian markets were trading mostly in the red; Hang Seng decreased 0.57%, Straits Times declined 1.04%, KOSPI Index dropped 1.77%, Jakarta Composite shed 0.77% and FTSE Bursa Malaysia KLCI was down by 0.7%. On the flip side, Shanghai Composite increased 0.16%, Taiwan Weighted rose 0.36% and Nikkei 225 was up by 0.28%.