Benchmarks reverse gears; slip into negative territory

Reversing gears, Indian equity markets have now slipped into negative territory in absence of positive triggers which could take the markets higher and profit booking in frontline line blue-chip stocks. Down in red with loss of over 0.55%, both Sensex and Nifty were trading below the psychological 26,700 and 8,100 levels respectively. The session was also negative for broader indices, which succumbing to selling pressure, were trading with losses in the range of 0.04-0.28%. The sentiments were distrustful on report that selling by foreign institutional investors continued and they were net sellers in Indian equities worth Rs 482.11 crore on June 10, 2015. However, losses remained capped with Reserve Bank of India’s report that the government’s current account deficit narrowed to $1.3 billion, or 0.2 per cent of gross domestic product, in the January-March quarter from $8.3 billion, or 1.6 per cent of GDP in the previous quarter.

On global front, Asian shares were mostly higher after signs of progress in Greece's bailout talks sparked a rally on Wall Street. The Japanese market gained on hopes that the European market for Japanese exports will improve as Greece inched closer to reaching cash-for-reform deal with its creditors. Back home, rising for the third straight day, the rupee strengthened by another 8 paise to 63.76 against the dollar in early trade on sustained selling of the US currency by exporters and banks as the current account deficit shrank in the fourth quarter.

Back on street, stocks from Realty, Infrastructure and FMCG counters were supporting the markets’ uptrend, while those from Auto, Banking and IT counters were adding to the underlying cautious undertone. In scrip specific development, shares of BEML have gained after winning orders worth Rs 645 crore from Delhi Metro Rail Corporation (DMRC) for supplying 74 broad gauge coaches. Furthermore, shares of ICICI Bank have gained after the bank decided raising Rs 50,000 crore through private placement of securities including bonds and non-convertible debentures (NCDs).

The market breadth on BSE was negative, out of 2089 stocks traded, 848 stocks advanced, while 1153 stocks declined on the BSE.

The BSE Sensex is currently trading at 26695.66, down by 144.84 points or 0.54% after trading in a range of 26661.09 and 27000.14. There were 7 stocks advancing against 23 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.28%, while Small cap index down by 0.04%.

The gaining sectoral indices on the BSE were Realty up by 0.29%, Infrastructure up by 0.22%, FMCG up by 0.16% and Consumer Durables up by 0.04%, while Auto down by 1.03%, Bankex down by 0.72%, IT down by 0.52%, Power down by 0.50% and TECK down by 0.26% were the losing indices on BSE.

The top gainers on the Sensex were Vedanta up by 1.51%, Hindustan Unilever up by 1.27%, Sun Pharma up by 0.56%, Maruti Suzuki up by 0.36% and Coal India up by 0.30%. On the flip side, Tata Motors down by 2.14%, Tata Steel down by 2.11%, Mahindra & Mahindra down by 1.43%, SBI down by 1.29% and Reliance Industries down by 1.19% were the top losers.

Meanwhile, the latest Global Economic Prospects (GEP) report of World Bank has said that leading the growth chart of major economies, India with an expected growth rate of 7.5 percent this year is set to surpass China. The report stated that in India which is an oil importer, reforms have buoyed confidence and falling oil prices have reduced vulnerabilities, paving the way for the economy to grow by a robust 7.5 percent rate in 2015, while China is projected to grow at 7.1 percent and developing countries are now projected to grow by 4.4 percent this year, with a likely rise to 5.2 percent in 2016, and 5.4 percent in 2017.

The report has though stated that developing countries face a series of tough challenges in 2015, including the looming prospect of higher borrowing costs in a new era of low prices for oil and other key commodities. Portfolio flows to developing countries remained subdued in 2015, but low bond yields, and ample liquidity continued to encourage investor interest in bond issuance, particularly in China and other East Asian countries.

The World Bank downgraded its outlook for global economic growth this year amid a broad-based slowdown in emerging markets and softer output in the U.S. It now expects the world economy to grow by 2.8%, 0.2 percentage point slower than it estimated in January. The World Bank in its report said that sharp contractions in Brazil and Russia, alongside weaker growth in Turkey, Indonesia and scores of other developing economies are offsetting healthier growth in Europe and Japan.

The report has also stated that borrowing costs are expected to rise as the Fed prepares to raise interest rates for the first time in nearly a decade. That prospect has also sparked a strong dollar rally, tightening the squeeze on developing-country governments and corporations that borrowed dollars but whose income is denominated in local currency and Fed’s liftoff and long-term tightening cycle combined with domestic uncertainties could fuel major swings in financial markets, capital outflows and contagion throughout emerging economies.

The CNX Nifty is currently trading at 8079.35, down by 45.10 points or 0.56% after trading in a range of 8063.80 and 8163.05. There were 8 stocks advancing against 42 stocks declining on the index.

The top gainers on Nifty were BPCL up by 1.59%, Hindustan Unilever up by 1.21%, Vedanta up by 0.89%, Sun Pharma up by 0.78% and Zee Entertainment up by 0.37%. On the flip side, Tata Steel down by 2.25%, Tata Motors down by 2.03%, Idea Cellular down by 1.65%, SBI down by 1.48% and Cairn India down by 1.27% were the top losers.

Asian markets were mostly trading in green; KOSPI Index increased 0.17%, Taiwan Weighted increased 0.08%, Straits Times increased 0.58%, Hang Seng increased 0.89% and Nikkei 225 increased 1.29%. On the flip side, Shanghai Composite decreased 0.19%, Jakarta Composite decreased 0.09% and FTSE Bursa Malaysia KLCI decreased 0.05%.