Benchmarks trade flat with a negative bias in early deals

Indian equity markets made a negative start, snapping 2-day gaining streak and are now trading near neutral line with bit of losses on account of weak global cues. Investors remained on the sidelines and refrained from any buying activity ahead of crucial US jobs data that is likely to give clues regarding the timing of a rate increase by the US Federal Reserve. The sentiments were under pressure after the India Meteorological Department (IMD), stated that the rainfall was below normal by 26 percent over the country during the period from 30 July to 5 August 2015. However losses remained capped on report that foreign portfolio investors (FPIs) bought shares worth a net Rs 108.93 crore August 6, 2015, as per provisional data released by the stock exchanges. Some support also came with Labour Minister Bandaru Dattatreya's statement that pension fund could invest more into equities in the next fiscal year starting April by raising the current limit set at 5 per cent of total investable assets. Traders were seen piling up position in Healthcare, Metal, Oil & Gas, Power and IT, while selling was witnessed in Realty, Bankex, Capital Goods and Auto.

In scrip specific development, Aarti Industries was trading higher by 5.4% extending its previous day’s 7% rally, after the company reported a strong 47% year-on-year (YoY) jump in its net profit to Rs 60.90 crore for first quarter ended June 30, 2015 (Q1), due to fall in RM prices, trailing lower crude prices.

On the global front, the US markets closed lower on Thursday  as weak earnings reports from media companies stirred fears that more viewers are ditching cable TV, dragging the sector to its worst two-day loss since the financial crisis. Asian markets were trading mixed following weakness in the Wall Street as caution reigned ahead of US employment data.

Back home, the NSE Nifty and BSE Sensex were trading above the psychological 8,550 and 28,250 levels respectively. The market breadth on BSE was positive in the ratio of 1168: 738 while 68 scrips remained unchanged.

The BSE Sensex is currently trading at 28294.08, down by 4.05 points or 0.01% after trading in a range of 28240.33 and 28335.67. 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 0.36%, while Small cap index gained 0.40%.

The top gaining sectoral indices on the BSE were Healthcare up by 0.45 %, Metal up by 0.39%, Oil & Gas up by 0.36%, Power up by 0.35% and IT up by 0.19%, while Realty down by 0.32%, Bankex down by 0.15%, Capital Goods down by 0.10% and Auto down by 0.08% were the losing indices on BSE.

The top gainers on the Sensex were Vedanta up by 2.40%, ONGC up by 1.15%, Sun Pharma Inds. up by 0.93%, Reliance Industries up by 0.81% and Hindalco up by 0.60%. On the flip side, Bajaj Auto down by 0.69%, ITC down by 0.64%, GAIL India down by 0.51%, SBI down by 0.40% and Larsen & Toubro down by 0.38% were the top losers.

Meanwhile, Global rating agency, Moody's reacting to the latest government proposal of fund infusion in public sector banks has said that government’s decision to infuse Rs 70,000 crore in PSU banks is a credit positive but “not a game changer” as the amount is relatively small and they will have to access capital from markets to meet their needs.

In its report the rating agency said that front-loading of the capital allocation -- with Rs 50,000 crore of the total Rs 70,000 crore coming in the first two years -- is also credit positive, while the four-year time span offers medium-term visibility regarding the PSU banks' capital positions. The report has said that this represents a key and crucial change compared to the capital allocation policy announced in February of this year. By that policy, only those banks which met specified profitability thresholds would be provided capital.Moody’s however cautioned that the banks still need access to the equity markets to materially improve their capital levels and pointed that in the recent times the PSU banks have not been able to access capital market which is a “key negative driver of their overall credit profile.” It further said that for their capital position to stop being a negative driver of their credit profile, PSU banks will have to demonstrate access to equity capital markets.

Government recently announced that it would infuse Rs 70,000 crore in the PSU banks in next four years, while the remaining Rs 1.10 lakh crore would be raised from market. As per government's capital infusion plan, Rs 25,000 crore would be infused in 2015-16 and 2016-17 and Rs 10,000 crore each in 2017-18 and 2018-19.

The CNX Nifty is currently trading at 8586.30, down by 2.35 points or 0.03% after trading in a range of 8568.90 and 8595.95. There were 20 stocks advancing against 30 stocks declining on the index.

The top gainers on Nifty were Vedanta up by 2.53%, Sun Pharma Inds. up by 1.09%, ONGC up by 0.90%, Cairn India up by 0.79% and Tech Mahindra up by 0.77%. On the flip side, SBI down by 0.78%, Bank Of Baroda down by 0.77%, Bajaj Auto down by 0.71%, Indusind Bank down by 0.69% and Larsen & Toubro down by 0.60% were the top losers.

Asian markets were trading mixed; Straits Times increased 5.27 points or 0.17% to 3,196.6, Nikkei 225 increased 14.53 points or 0.07% to 20,678.97, Shanghai Composite increased 69.49 points or 1.9% to 3,731.03 and Hang Seng increased 224.91 points or 0.92% to 24,600.19.

On the flip side, Jakarta Composite decreased 32.18 points or 0.67% to 4,774.39, Taiwan Weighted decreased 21.25 points or 0.25% to 8,428.31, FTSE Bursa Malaysia KLCI decreased 13.32 points or 0.79% to 1,681.32 and KOSPI Index decreased 4.2 points or 0.21% to 2,009.09.