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 ahead of the US job data due later today. Besides adding to investor concerns, Greece delayed a debt payment to the International Monetary Fund (IMF) due June 5, 2015, and German Chancellor Angela Merkel said talks on a cash-for-reforms deal were still far from an agreement. Sentiments weakened further on report that FDI in India declined by sharp 40 per cent year-on-year to $2.11 billion in March 2015, compared to $3.53 billion in March 2014. However, investors got some support with Finance Minister Arun Jaitley statement that drawing any conclusions on the basis of monsoon predictions on inflation or some kind of distress situation is far-fetched. Jaitley expressed confidence that foodgrain production will not be impacted significantly by the prediction of below-normal rainfall in north-western region as the area is well-irrigated while monsoon will be normal in all other parts of the country, adding that advance predictions are somewhat better than last year.

On global front, Asian stocks traded lower as investor sentiment was dented by an impasse between Greece and its creditors. Apart from the closely-watched US nonfarm payrolls report due later in the day, investors are also awaiting the meeting of the Organization of the Petroleum Exporting Countries (OPEC) taking place in Vienna. Back home, after sliding for three straight days, the Indian rupee recovered 10 paise to 63.90 against the US dollar in early trade on selling of the American currency by exporters and banks.

Back on street, stocks from Metal, PSU and Capital Goods counters were supporting the markets’ uptrend, while those from Realty, Auto and IT counters were adding to the underlying cautious undertone. In scrip specific development, shares of Coal India have rallied after production of the company in May rose by about 13% as against the corresponding period previous year. On the other hand, shares of NMDC have declined after the company reported 16% fall in iron ore production, while the company’s sales of iron ore dropped 21% in the first two months of the current fiscal.

The market breadth on BSE was positive, out of 2082 stocks traded, 1054 stocks advanced, while 936 stocks declined on the BSE. 

The BSE Sensex is currently trading at 26773.81, down by 39.61 points or 0.15% after trading in a range of 26718.44 and 26834.19. There were 14 stocks advancing against 16 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.19%, while Small cap index up by 0.22%.

The gaining sectoral indices on the BSE were Metal up by 1.33%, PSU up by 0.80%, Capital Goods up by 0.65%, Infrastructure up by 0.41% and Oil & Gas up by 0.19% while, Realty down by 1.11%, Auto down by 0.96%, IT down by 0.60%, TECK down by 0.36% and FMCG down by 0.29% were the losing indices on BSE.

The top gainers on the Sensex were Coal India up by 4.36%, Sun Pharma up by 2.73%, GAIL India up by 1.89%, Dr. Reddys Lab up by 1.03% and Wipro up by 0.96%. On the flip side, Tata Motors down by 2.39%, ITC down by 1.13%, TCS down by 1.12%, HDFC Bank down by 1.09% and Hindalco down by 0.99% were the top losers.

Meanwhile, Finance Minister Arun Jaitley allaying fears over predictions of deficient monsoon after IMD downgraded its forecast of average monsoon rainfall to 88% from 93%, triggering a sharp selloff in stocks amid growth concerns, has said that conclusions on that basis either on inflation or some kind of distress situation are “far-fetched”. He said the timing and spread of the June-September rainy season suggested the effect won't be as dire as the plummeting stock markets seemed to indicate. In the wake of predictions about the monsoon by the IMD, Jaitley called a meeting of senior meteorological scientists and had a detailed analysis of the prediction and estimates with them.

Jaitley expressing confidence that foodgrain production will not be impacted significantly by the prediction of below-normal rainfall in north-western region as the area is well-irrigated while monsoon will be normal in all other parts of the country, adding that advance predictions are somewhat better than last year. The region is home to the country's key farm production areas. In 2014, the country received 88% of the average, the same as what's now forecast for the current year. In the northwest, including the key states of Haryana and Punjab, rainfall last year was 79% of the long-term average.

The Finance Minister further said that there is abundance of foodgrain available and therefore the kind of food management that we saw last year prevented any form of inflationary trends in the food management,' indicating the government was ready to act by stepping up releases in the market. At the beginning of May, Food Corporation of India had more than 51 million tonnes of rice and wheat in the central pool.

The CNX Nifty is currently trading at 8117.95, down by 12.70 points or 0.16% after trading in a range of 8100.15 and 8137.60. There were 22 stocks advancing against 28 stocks declining on the index.

The top gainers on Nifty were Coal India up by 4.27%, Sun Pharma up by 2.77%, Idea Cellular up by 2.07%, GAIL India up by 1.96% and NMDC up by 1.28%. On the flip side, Ambuja Cement down by 2.21%, Tata Motors down by 2.18%, ACC down by 1.70%, Bosch down by 1.67% and ITC down by 1.23% were the top losers.

Asian markets were trading mostly in the red; Nikkei 225 slipped by 0.43%, Hang Seng contracted by 0.64%, Shanghai Composite down by 0.18%, Jakarta Composite declined by 0.24%, FTSE Bursa Malaysia KLCI decreased by 0.07%, Taiwan Weighted crumbled by 0.25%, KOSPI Index dipped by 0.23% and Straits Times was down by 0.27%.