Benchmarks continue to trade in red; Auto, IT drag

Indian equity markets continued their weak trade in the late afternoon session on account of selling in frontline blue chip counters. The sentiments were under pressure on disappointing earnings and weak global cues. Traders were seen piling position in PSU, Bankex and Consumer Durables stocks while selling was witnessed in Auto, IT and TECK sectors stocks. In scrip specific development, Tech Mahindra was trading weak after the company posted a drop in quarterly profit on lower margins due to wage increases and currency fluctuations. Tata Motors was trading in red after a surprise drop in its bottom-line, hit by weak demand for luxury Jaguars and Range Rovers in China, where automakers are under pressure to cut prices. The markets may remain volatile this week as traders may roll over positions in the Futures & Options (F&O) segment from the near month i.e. May 2015 series to next month i.e. June 2015 series. The near month May 2015 F&O contracts will expire on Thursday i.e. May 28, 2015.

On the global front, the Asian markets were trading mostly in red while the European markets were trading on optimistic note. Back home, the NSE Nifty and BSE Sensex were trading below the psychological 8,350 and 27,500 levels respectively. The market breadth on BSE was negative in the ratio of 1069:1428 while 101 scrips remained unchanged.

The BSE Sensex is currently trading at 27477.86, down by 53.55 points or 0.19% after trading in a range of 27363.72 and 27574.88. There were 16 stocks advancing against 14 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.40%, while Small cap index down by 0.18%.

The gaining sectoral indices on the BSE were PSU up by 0.86%, Bankex up by 0.81%, Consumer Durables up by 0.74%, Oil & Gas up by 0.64% and Capital Goods up by 0.26% while, Auto down by 2.23%, IT down by 2.05%, TECK down by 1.76%, INFRA down by 1.16% and Realty down by 0.79% were the losing indices on BSE.

The top gainers on the Sensex were Coal India up by 1.65%, Axis Bank up by 1.60%, ONGC up by 1.49%, BHEL up by 1.24% and ICICI Bank up by 1.19%.

On the flip side, Tata Motors down by 5.45%, Mahindra & Mahindra down by 2.89%, Infosys down by 2.34%, Sun Pharma down by 1.36% and GAIL India down by 1.31% were the top losers.

Meanwhile, drawing parallel with China, Chief Economic Advisor (CEA) Arvind Subramanian pitched for rate cut by the Reserve Bank of India (RBI) in its upcoming monetary policy on June 2, 2015 to boost growth. Citing China's example, Subramanian said the country has been buying dollars to build reserves and cutting its interest rates aggressively to make its currency more competitive and promote growth.

Subramanian wants RBI to cut interest rates so as to help depreciate the domestic currency to make Indian exports competitive and aid Make in India campaign. The Reserve Bank is slated to announce its second bi-monthly policy on June 2 during which it will take a call on interest rate taking into account inflation and other economic parameter.

Further batting towards this, he pointed that while macro-economy had turned around it was fair to assume that the real economy was recovering. He asserted that another indicator that points towards economic recovery was indirect tax receipts, adding that the buoyancy in tax collections during April was indicative of GDP growth bettering to about 9% in the current fiscal, from 7.4% a year ago.

Pointing to the evidence of improving macro-economic situations, Arvind said the Current Account Deficit (CAD), which more than a year back was a big worry, would be now be less than 1% in the current fiscal and that prices of oil, which form about 79% of the country’s imports, are likely to remain in the comfort zone of $50-80 per barrel without 'wild swings'.

Moreover, CEA is also pinning hopes on adequate food grain stock helping to keep inflation under control in the event of below-normal monsoon as forecasted by Indian Meteorological Department (IMD).

The CNX Nifty is currently trading at 8311.50, down by 27.85 points or 0.33% after trading in a range of 8277.95 and 8341.00. There were 27 stocks advancing against 23 stocks declining on the index.

The top gainers on Nifty were Axis Bank up by 1.93%, Idea Cellular up by 1.66%, ONGC up by 1.60%, PNB up by 1.60% and Coal India up by 1.59%.

On the flip side, Tech Mahindra down by 14.35%, Tata Motors down by 5.54%, Mahindra & Mahindra down by 3.19%, Infosys down by 2.33% and ACC down by 1.85% were the top losers.

The Asian markets were trading mostly in red; Hang Seng decreased 168.65 points or 0.6% to 28,081.21, Jakarta Composite decreased 54.69 points or 1.03% to 5,266.21, KOSPI Index decreased 36 points or 1.68% to 2,107.50, Straits Times decreased 33.95 points or 0.98% to 3,426.03 and FTSE Bursa Malaysia KLCI decreased 7.05 points or 0.4% to 1,757.02.

On the other hand, Taiwan Weighted increased 24.13 points or 0.25% to 9,693.54, Shanghai Composite increased 30.82 points or 0.63% to 4,941.71 and Nikkei 225 increased 35.1 points or 0.17% to 20,472.58.

The European markets were trading mostly in green; France’s CAC increased 16.55 points or 0.33% to 5,100.09, UK’s FTSE 100 increased 33.24 points or 0.48% to 6,982.23 while, Germany’s DAX decreased 7.77 points or 0.07% to 11,617.36.