Markets give up all the early gains, Sensex slips into red

Indian markets have pared all their early gains, garnered on IT counter surge after India's second largest software firm Infosys posted a 1.3% fall in quarterly profit, but reported robust revenue growth beating estimates, driven mainly by strong spending from top clients, and maintained its annual revenue guidance of 10-12%. In rupee terms, net profit of the company stood at Rs 3030 crore, up by 5% compared to Rs 2886 crore for the same quarter in the previous year. Back on street, there is not much other cue that could support the markets and the traders also looked cautious, preferring to remain on sidelines ahead of the start of the monsoon session of Parliament, which is likely to be stormy, as the government will be taking up the long-awaited 122nd Constitution Amendment Bill that aims to pave the way for the goods and services tax, GST. Meanwhile, a Parliamentary Committee, which scrutinised the crucial GST Bill, has prepared a draft report wherein the government has agreed to provide compensation to states for any revenue loss for five years. The rupee depreciation against the dollar, due to rise in greenback against other currencies overseas, too was weighing down the sentiments and dragging the markets lower. The broader markets too have lost the momentum, while on sectoral front IT, tech, and consumer durables were supporting the markets too some extent from falling further.

In scrip specific movement, while, the Infosys surged by around 10 percent on better than expected numbers, shares of pharmaceutical company Sun Pharmaceutical Industries tanked nearly 13 percent, after the company warned that the measures undertaken to integrate Ranbaxy have a bearing on its revenues and profits in the current financial year. For the full year ending 2014-15, Sun Pharma had reported consolidated net sales of Rs 27,286 crore on total net profit of Rs 4,541 crore.

The BSE Sensex is currently trading at 28410.65, down by 9.47 points or 0.03% after trading in a range of 28354.81 and 28518.06. There were 10 stocks advancing against 20 stocks declining on the index.

The broader indices too have given up their gains and were in red; the BSE Mid cap index was lost 0.11%, while Small cap index down by 0.03%.

The gaining sectoral indices on the BSE were IT up by 4.63%, TECK up by 4.08%, Consumer Durables up by 0.50%, Auto up by 0.02%, while FMCG down by 1.20%, Metal down by 0.96%, INFRA down by 0.65%, Oil & Gas down by 0.65%, Power down by 0.56% were the losing indices on BSE.

The top gainers on the Sensex were Infosys up by 9.79%, Bharti Airtel up by 4.55%, Wipro up by 2.72%, Hero MotoCorp up by 0.95% and Bajaj Auto up by 0.59%. On the flip side, Sun Pharma Inds. down by 12.85%, Vedanta down by 3.56%, Lupin down by 3.01%, Tata Steel down by 2.82% and Hindustan Unilever down by 2.56% were the top losers.

Meanwhile, showing a sharp slump in manufacturing activities, the yearly SBI Composite Index, an indicator for manufacturing activity in the country, declined sharply to 49.7 in July from 53.2 in June 2015, its lowest level since October 2014. As per SBI research, the Monthly Index also declined to 46.7 this month from 47.0 in June.  An index value of 42 to 46 means (moderate decline), 46 to 50 (low decline), 50 to 52 (low growth), 52 to 55 (moderate growth) and above 55 high growth.

The SBI research stated that the declining momentum in credit growth is likely to have started impacting and this will lead to decreasing momentum in IIP growth. The report noted that IIP numbers for June may continue to be even weaker as the yearly SBI composite index for June 2015 had witnessed a decline. However, the July SBI index may signal that the deceleration in manufacturing momentum may be bottoming out.

The contraction in the SBI Composite Index has come in the backdrop of weak credit growth and weak mining activity in the past few months. The credit growth of all Scheduled Commercial Banks on a year on year basis continued to decline and reached 9.8 per cent (till June 26, 2015), compared to last year’s growth of 12.8 per cent.

Further, the report mentioned that the government push on infra, defence and renewable power seems to be the three pillar of future growth in the banking sector. Sector-wise, the road sector has drawn renewed interest in the wake of policy thrust by the government and outlook for sectors like textile, wood and wood product and auto components looks positive.

The CNX Nifty is currently trading at 8606.85, up by 3.40 points or 0.04% after trading in a range of 8588.25 and 8646.75. There were 18 stocks advancing against 32 stocks declining on the index.

The top gainers on Nifty were Infosys up by 9.76%, Bharti Airtel up by 4.55%, HCL Tech. up by 4.05%, Wipro up by 2.44% and Zee Entertainment up by 2.03%. On the flip side, Sun Pharma Inds. down by 13.43%, Vedanta down by 3.60%, Lupin down by 2.91%, Tata Steel down by 2.68% and Ultratech Cement down by 2.62% were the top losers.

Asian markets were trading in green, Straits Times was up by 1.64 points or 0.05% to 3,375.12,
FTSE Bursa Malaysia KLCI added 2.25 points or 0.13% to 1,726.38, KOSPI Index gained 10.31 points or 0.5% to 2,083.62, Taiwan Weighted was higher by 30.96 points or 0.34% to 9,005.96, Shanghai Composite increased by 42.56 points or 1.07% to 4,034.67, Nikkei 225 surged by 196.72 points or 0.95% to 20,847.64 and Hang Seng was up by 201.54 points or 0.79% to 25,606.35.