Benchmarks trade in red; Power, PSU drag

Indian equity markets broke their narrow range of trade hovering around neutral line and are now trading in red in late afternoon session on account of selling in frontline blue chip counters and in absence of any upside positive triggers. Investors were cautious after 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.  Traders were seen piling position in Oil & Gas, Auto and IT stocks, while selling was witnessed in Power, PSU and Bankex sector stocks. In scrip specific development, BHEL was trading weak after reporting disappointing result with its first quarter profit falling 82.5 percent to Rs 33.9 crore compared to Rs 194 crore in the year-ago period, impacted by lower revenue.

On the global front, the Asian markets traded mixed, while the European markets were trading on pessimistic note. Back home, the NSE Nifty and BSE Sensex were trading below the psychological 8,600 and 28,300 levels respectively. The market breadth on BSE was negative in the ratio of 1359:1441 while 113 scrips remained unchanged.

The BSE Sensex is currently trading at 28243.74, down by 54.39 points or 0.19% after trading in a range of 28204.62 and 28335.67. There were 12 stocks advancing against 18 stocks declining on the index.

The broader indices were trading in green and red; the BSE Mid cap index was down by 0.07%, while Small cap index up by 0.01%.

The gaining sectoral indices on the BSE were Oil & Gas up by 0.69%, Auto up by 0.33%, IT up by 0.14% and Consumer Durables up by 0.06%, while Power down by 1.47%, PSU down by 0.74%, Bankex down by 0.71%, Metal down by 0.67% and Capital Goods down by 0.55% were the losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 2.44%, ONGC up by 1.98%, Vedanta up by 1.65%, Mahindra & Mahindra up by 0.80% and Reliance Industries up by 0.77%.

On the flip side, BHEL down by 7.64%, Coal India down by 2.11%, SBI down by 1.82%, Bajaj Auto down by 1.01% and Lupin down by 0.79% were the top losers.

Meanwhile, in order to offload surplus stock and clear the cane arrears to farmers totaling Rs 14,000 crore, the government is planning to allow sugar producers to export 4 million tonnes of the sweetener under the barter system with countries from where India imports agricultural commodities like pulses and edible oils. This push for exports could lead to further losses at mills but eventually create a balance between demand and supply. Union Food Minister Ram Vilas Paswan said, “We want to allow export of 4 million tonnes of sugar to those countries where there is demand for the sweetener”. The government may also step in to help mills pay dues by using funds raised from the tax. A final call on export mechanisms will be taken after another meeting and with the assent of the PM.

The sugar industry is lacking behind to make payments as it facing a severe liquidity crunch on account of surplus production that has resulted in low prices of sugar in the domestic market. Currently the Ex-mill sugar prices are below Rs 20 per kg, while the production cost is over Rs 30 per kg which has affected mills paying capacity. The government is expected to have more than 10 million tonnes of surplus sugar from the current year, which will in future put pressure on the market price.

Government is also examining on the feasibility of making it mandatory for mills to export some quantity of sugar from its total annual production only when output is higher than the local demand. The mandatory export rule, which could be introduced from the start of the next crop year on October 1.

The CNX Nifty is currently trading at 8567.60, down by 21.05 points or 0.25% after trading in a range of 8555.40 and 8595.95. There were 14 stocks advancing against 36 stocks declining on the index.

The top gainers on Nifty were Tata Motors up by 2.40%, ONGC up by 1.73%, Vedanta up by 1.70%, Tech Mahindra up by 1.15% and Reliance Industries up by 0.85%.

On the flip side, BHEL down by 8.20%, Bank of Baroda down by 2.61%, Coal India down by 2.23%, SBI down by 2.16% and PNB down by 1.82% were the top losers.

The Asian markets traded on mixed note, Straits Times increased 5.27 points or 0.17% to 3,196.66, Nikkei 225 increased 60.12 points or 0.29% to 20,724.56, Shanghai Composite increased 82.67 points or 2.26% to 3,744.21 and Hang Seng increased 177.19 points or 0.73% to 24,552.47.

On the other hand, Jakarta Composite decreased 39.27 points or 0.82% to 4,767.29, FTSE Bursa Malaysia KLCI decreased 11.85 points or 0.7% to 1,682.79, Taiwan Weighted decreased 7.27 points or 0.09% to 8,442.29 and KOSPI Index decreased 3.06 points or 0.15% to 2,010.23.

The European markets were trading in red; Germany’s DAX decreased 53.87 points or 0.46% to 11,531.23, France’s CAC decreased 21.07 points or 0.41% to 5,171.04 and UK’s FTSE 100 decreased 15.02 points or 0.22% to 6,732.07.