Benchmarks continue to trade lower in noon deals; off day’s low

Indian equity benchmarks continue to trade lower in afternoon deals with a cut of around a percentage point. Sentiments remained down-beat as Reserve Bank of India (RBI) has taken a cautious stance on the economic recovery even as it cut the policy rates by 25 basis points. Sentiments were also weighed down on reports that the monsoon, which accounts for nearly 70% of India’s rainfall, has been delayed yet again. It is now expected to make landfall in Kerala only on 5 June. Contraction in the output of eight core industries by 0.4 per cent in April on poor performance of electricity, cement, refinery products and fertiliser sector too dampened the sentiments. However, some amount of recovery was seen in frontline indices as investors opted to buy beaten down but fundamental strong stocks at lower levels.

Positive opening in European counters too helped domestic gauges to trim some of their losses as CAC, DAX and FTSE all were trading higher in initial trade. Asian markets were trading mostly in the red at this point of time as investors remained cautious, as upbeat economic data from the US reinforced the view that the US Federal Reserve is on track to hike interest rates later in the year.

Back home, selling was both brutal and wide-based as none of sectoral indices on BSE were spared. Counters, which featured in the list of worst performers, include oil and gas, banking and fast moving consumer goods. The broader indices too were reeling under pressure, while the market breadth on the BSE was negative; there were 868 shares on the gaining side against 1,455 shares on the losing side while 85 shares remain unchanged.

The BSE Sensex is currently trading at 27588.86, down by 260.13 points or 0.93% after trading in a range of 27404.16 and 27902.53. There were 3 stocks advancing against 27 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.61%, while Small cap index lost 0.64%.

The lone gaining sectoral index on the BSE was Oil & Gas up by 0.64%, while Bankex down by 1.45%, FMCG down by 1.23%, Realty down by 1.11%, Metal down by 0.70%, IT down by 0.69% were the losing indices on BSE.

The top gainers on the Sensex were Reliance Industries up by 1.67%, Bharti Airtel up by 0.86% and ONGC up by 0.80%. On the flip side, Hero MotoCorp down by 3.04%, HDFC down by 2.64%, ITC down by 2.17%, Axis Bank down by 1.82% and SBI down by 1.62% were the top losers.

Meanwhile, government in order to boost defence manufacturing and encourage foreign players in the sector has further simplified the defence rules and has withdrawn the excise and Customs duty exemptions enjoyed by the Ordinance Factory Board and defence PSUs. This move will provide a level-playing field by taking away the strategic advantage with PSUs for quoting lower rates in open bids. With this initiative, the government has also fulfilled demand of foreign Original Equipment Manufacturers (OEMs) such as Boeing, Airbus, Lockheed Martin, BAE Systems etc which are actively exploring the scope of future investments in India.

A statement from Ministry of Commerce and Industry said that the move will also send a definitive message to foreign OEMs that India is open to business for defence manufacturing. Almost 60 per cent items required for industrial licence have now been de-reserved. The Indian aerospace and defence market is among the most attractive globally as the country is the highest importer of defence items in the world.

Defence manufacturing is one of the key sectors among the 25 sectors identified under the Make-in-India campaign. The ministry statement added that a series of consultations have been held across ministries and departments to enable simplification of rules and procedures to promote private participation in defence manufacturing and exports. The government has already opened up the sector for private investment by increasing FDI cap in defence of up to 49 per cent and rationalising certain conditions.

The CNX Nifty is currently trading at 8351.10, down by 82.30 points or 0.98% after trading in a range of 8296.60 and 8445.35. There were 9 stocks advancing against 41 stocks declining on the index.

The top gainers on Nifty were Lupin up by 1.70%, Zee Entertainment up by 1.64%, Reliance Industries up by 1.37%, Cairn India up by 1.18% and Bharti Airtel up by 0.78%. On the flip side, Hero MotoCorp down by 3.16%, HDFC down by 2.80%, Indusind Bank down by 2.44%, ITC down by 2.18% and Bank Of Baroda down by 1.94% were the top losers.

Asian markets were trading mostly in the red; Hang Seng decreased 134.84 points or 0.49% to 27,462.32, Straits Times declined 39.83 points or 1.17% to 3,352.28, Nikkei 225 slipped 26.68 points or 0.13% to 20,543.19, KOSPI Index tumbled 23.73 points or 1.13% to 2,078.64, Taiwan Weighted shed 11.43 points or 0.12% to 9,614.26 and Jakarta Composite was down by 2.56 points or 0.05% to 5,213.82.

On the flip side, FTSE Bursa Malaysia KLCI rose 0.89 points or 0.05% to 1,744.30 and Shanghai Composite was up by 66.15 points or 1.37% to 4,894.88.

European Markets were trading in the green; Germany's DAX rose 0.18%, UK's FTSE gained 0.13% and France's CAC was up by 0.34%.