Benchmarks end lower on Greek debt crisis, Reserve Bank stress test

Benchmarks ended the first day of new F&O series on weak note on Friday as Greece has again failed to reach an agreement with its creditors and stumbled towards a default. Markets traded in red terrain throughout the session despite making couple of futile attempts to enter into green terrain and ended with a cut of around quarter a percent. Sentiments remained dampened after the central bank’s stress test surprisingly showed private banks are likely to see a significant jump in bad loans.

The RBI also said that the probability of slippage of state electricity boards' exposure to bad loans is very high considering the implementation of new regulatory norms effective April 1, 2015. The ability of India's debt-burdened firms to repay has worsened as leverage has increased, straining a banking sector burdened by bad loans. Meanwhile, RBI’s Governor Raghuram Rajan has asked central banks from across the world to define ‘new rules of the game’ as he warned that the global economy may be slipping into problems similar to the Great Depression of the 1930s.

Global cues too remained somber with European markets trading lower in early deals after Greece failed again to reach an agreement with its creditors and stumbled towards a default. Asian markets ended lower on Friday led by over seven percent fall in Chinese market as investors stampeded out of Chinese stocks amid increasing signs that the country's eight-month-long bull run was running out of fuel.

Back home, losses remained capped as Indian rupee make recovery and was trading at 63.54 per dollar at the time of equity market closing against the Thursday’s close of 63.61 on the Interbank Foreign Exchange. Some support also came on report that foreign portfolio investors (FPIs) bought shares worth a net Rs 280.21 crore on yesterday, as per provisional data by the stock exchanges.

Buying in Software pack too aided the sentiments after global management consulting, technology services and outsourcing giant Accenture raised its full year revenue growth forecast for the third time in a year. Additionally, stocks related to media counter too remained on buyers’ radar on report that the government is discussing a proposal for increasing FDI limit in the media sector from the current 26 per cent to attract foreign investments.

The NSE’s 50-share broadly followed index Nifty declined by around twenty points to end below the psychological 8,400 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex decreased by over eighty points to finish below the psychological 27,850 mark. Broader markets too struggled to get traction and ended the session mixed. The market breadth remained in favor of decliners, as there were 1,185 shares on the gaining side against 1,489 shares on the losing side while 121 shares remain unchanged.

Finally, the BSE Sensex declined by 84.13 points or 0.30% to 27811.84, while the CNX Nifty lost 16.90 points or 0.20% to 8381.10.

The BSE Sensex touched a high and a low 27921.86 and 27675.16, respectively. The BSE Mid cap index was down by 0.03%, while Small cap index up by 0.14%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 1.60%, IT up by 1.36%, Realty up by 0.94%, TECK up by 0.73% and Auto up by 0.42%, while Capital Goods down by 1.11%, Metal down by 0.91%, Oil & Gas down by 0.84%, Infrastructure down by 0.80% and Bankex down by 0.74% were the losing indices on BSE.

The top gainers on the Sensex were TCS up by 1.66%, NTPC up by 1.55%, Infosys up by 1.51%, Bajaj Auto up by 1.35% and Cipla up by 1.34%. On the flip side, GAIL India down by 3.19%, Vedanta down by 2.70%, Bharti Airtel down by 2.32%, BHEL down by 2.15% and HDFC down by 1.57%, were the top losers.

Meanwhile, after the launch of three schemes by Prime Minister Narendra Modi, operational guidelines have been set by the Urban Development Ministry for execution, approval of projects under these three missions (Smart Cities Mission, Atal Mission for Rejuvenation and Urban Transformation (AMRUT) and Housing for All).

For AMRUT scheme, a set of 11 reforms need to be executed in 4 years, which includes promoting e-governance, improving collection of various taxes, fee and user charges, augmenting double entry accounting, constitution and professionalization of municipal cadre, preparation of GIS-based master plans, devolution of funds and functionaries to urban local bodies, review of building by-laws, setting up financial intermediaries for pooling and disbursement of resources, credit rating of urban local bodies, energy and water audit and achieving Swachh Bharat Mission. It also stated that, States need to transfer funds to urban local bodies within 7 working days of transfer by the Centre. Funds will be allocated according to the urban population and number of towns/cities in each State/UT.

Ministry has stated that the central resources for Smart Cities mission will be used only for infrastructure projects that have larger public benefits. Special Purpose Vehicles (SPVs) will be provided for implementation of Smart City plans with 50-50 equity of States and Urban local bodies. According to the guidelines, 500 acres is the minimum area norm for retrofitting; 50 acres for re-development; 250 acres for Greenfield projects. The criteria will be 50 % for North-Eastern and Himalayan States. About 10 per cent of energy needs are to be met from renewable sources, 80 % of building construction to be green and 35 % of housing in green field projects to be for Economically Weaker Section (EWS), in smart cities. The cities which are been selected will be provided Rs 100cr per year.

In the scheme of Housing for all, the ownership of the houses will be in the name of woman or jointly with husband. It also stated that the houses of 30sq. m carpet area to be built for EWS category. If there is non availability, the States can accept their beneficiaries and increase the area while meeting the additional expenses. Rs 1 lakh per house will be provided by the Centre for slum redevelopment project in the State to make them operable. Once the loan is sanctioned to the beneficiary an interest subvention at 6.50% will be paid soon in order to bring down the EMI.

The CNX Nifty touched a high and low 8,408.55 and 8,339.70 respectively.

The top gainers on Nifty were HCL Technology up by 3.33%, Indusind Bank up by 1.83%,  Ultratech Cement up by 1.82%, Bajaj Auto up by 1.63% and TCS up by 1.57%. On the flip side, Cairn India down by 3.17%, GAIL India down by 3.09%, Vedanta down by 2.56%, Bharti Airtel down by 2.14% and BHEL down by 1.91% were the top losers.

European Markets were trading mostly in the red; UK's FTSE was down 0.94%, Germany’s DAX was down by 0.50% and France’s CAC was down by 0.46%.

Asian markets closed mostly in red on Friday with China’s Shanghai Composite index closing with a cut of more than 7 percent amid on margin trading concerns thereby increasing worries that the country’s bull-run is running out of steam. Japan’s national core consumer price index rose 0.1% on year in May for the 24th straight year-on-year increase and above the flat result expected, but still a slowdown from April's 0.3% gain. The data however may be of little comfort for the Bank of Japan as it watches for signs households and businesses expect higher prices that bring it closer to a 2% inflation target around the first half of fiscal 2016. Japanese Household Spending rose to a seasonally adjusted 4.8%, from -1.3% in the preceding month. The percentage of the total work force in Japan that is unemployed and actively seeking employment during the previous month remained unchanged at a seasonally adjusted 3.3%, compared to the preceding month. Singaporean Industrial Production rose to an annual rate of -2.3%, from -8.7% in the preceding month.