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 subdued cues from the global front. The sentiments remained dampened as India's services sector activity contracted for the first time in 13 months in May, largely due to decline in new order flows amid competitive pressure and natural disasters. Further, RBI governor Raghuram Rajan lowered projections of the economic growth as measured by GVA (gross value added) to 7.6% from 7.8% estimated in April due to global factors and likely impact of below normal monsoon, also weighed on sentiment. Down in red with loss of over 0.55%, both Sensex and Nifty were trading below the psychological 27,050 and 8,200 levels respectively. The broader indices too dipped as BSE 100 recorded a loss of 0.80 percent and mid-cap and small-cap stocks lost over 1.10 percent each.

On global front, Asian stock markets were mostly lower Wednesday as Greece's bailout woes and a stagnant Wall Street performance dampened investor sentiment. Besides Concerns about Greece's ability to meet debt payments to its bailout creditors have weighed on markets.  Back home, Indian rupee recovered marginally by five paise at 63.77 against the US dollar in early trade as the greenback weakened overseas owing to concerns about the lack of progress in Greece’s talks with its creditors on overhauling its bailout terms.

Back on street, barring IT, all other BSE sectoral indices were trading in the red. Among them, Consumer Durables index fell the most by 2.55 percent, followed by FMCG down by 2.45 percent, Realty down by 2.23 percent and Auto down by 1.83 percent, while IT index was up by 0.15 percent. In scrip specific development, shares of Nestle have dropped after the Delhi government summoned officials of Nestle India claiming that the samples of Maggi noodles fail to meet food safety norms and are unsafe. On the other hand, shares of Emami have gained after the company plans to acquire the hair and scalp care brand Kesh King from SBS Biotech, a Himachal Pradesh company, worth Rs 1,651 crore.

The market breadth on BSE was negative, out of 2098 stocks traded, 540 stocks advanced, while 1488 stocks declined on the BSE.

The BSE Sensex is currently trading at 27028.49, down by 159.89 points or 0.59% after trading in a range of 26975.79 and 27276.22. 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 1.20%, while Small cap index down by 1.19%.

The only gaining sectoral indices on the BSE were IT up by 0.15%, while Consumer Durables down by 2.55%, FMCG down by 2.45%, Realty down by 2.23%, Auto down by 1.83%, Infrastructure down by 1.81% were the top losing indices on BSE.

The top gainers on the Sensex were Coal India up by 1.82%, Wipro up by 1.57%, BHEL up by 1.14%, Reliance Industries up by 0.90% and NTPC up by 0.76%. On the flip side, Tata Motors down by 4.32%, ITC down by 2.85%, Vedanta down by 1.87%, Hindustan Unilever down by 1.86% and Axis Bank down by 1.78% were the top losers.

Meanwhile, Reserve Bank of India Governor Raghuram Rajan, after delivering much in line with the expectation in Second Bi-monthly Monetary Policy Statement, 2015-16 by announcing policy rate cut by 0.25 basis points and hinting a pause in further rate cuts until the monsoon condition improves, has stated that there was a mis-impression that the Reserve Bank wanted to keep rates high to look “strong and firm”. “There is no point in looking strong and firm if you will be killing the economy in the process”.

Rajan said that RBI will not be reckless in its policymaking and all its moves are driven by data points and added that “We are trying to use whatever room we have to undertake the actions that revive the economy. We are under no illusion that the economy, especially investment, is up and running. It is not, it needs support.”

The governor said that the move to cut rates is not conservative and that the RBI has chosen to 'err' to give a boost to investment activity. “We have to wait for more data points to give us more room if that happens going forward.” He also said that all the entities, including the RBI, the government and also industrialists, have to do their best in ensuring that they come out of this situation.

For last some time, not only the India Inc, but top government functionaries including Finance Minister Arun Jaitley, Minister of State for Finance Jayant Sinha and Chief Economic Advisor Arvind Subramanian were expressing hopes that RBI would go for further easing, as the inflation continuously remained lower than RBI’s estimated levels.

The CNX Nifty is currently trading at 8186.50, down by 49.95 points or 0.61% after trading in a range of 8166.00 and 8236.70. There were 12 stocks advancing against 38 stocks declining on the index.

The top gainers on Nifty were Coal India up by 2.14%, Wipro up by 1.51%, BHEL up by 1.00%, Reliance Industries up by 0.87% and NTPC up by 0.80%. On the flip side, Tata Motors down by 4.38%, ITC down by 2.97%, Ambuja Cement down by 2.08%, Hindustan Unilever down by 1.95% and Vedanta down by 1.77% were the top losers.

Asian markets were trading mostly in the red; Nikkei 225 decreased 0.39%, KOSPI Index decreased 0.69%, Jakarta Composite decreased 1.35%, Shanghai Composite decreased 0.69% and Taiwan Weighted decreased 0.49%. On the flip side, Hang Seng increased 0.65% and FTSE Bursa Malaysia KLCI increased 0.32%.