Benchmarks end volatile trade slightly in the red

Extending their southward journey for second day in a row, Indian equity benchmarks ended the volatile day of trade slightly in the red on Tuesday. After a jubilant start, domestic bourses lost momentum in noon deals and entered into the red terrain as sentiments took U-turn on worries that cooling demand in China will weigh on the trade-reliant region. In final hour of trade markets made couple of attempts to regain their green trajectory, but continuous profit taking in some blue-chips and PSU stocks led the markets lower for the day. Sentiments remained dampened after rating agency Moody's Investors Service on Tuesday scaled down its projections for India's economic growth for 2015-16 to 7% from an earlier estimate of 7.5% on deficient monsoon. The rating agency, however, maintained its growth projections of 7.5% for the next financial year. Meanwhile, the India Meteorological Department (IMD) on August 17 stated that, for the country as a whole, cumulative rainfall during this year’s monsoon season was 10 per cent below the Long Period Average (LPA) until August 17.

However, losses remained capped after the Confederation of All India Traders (CAIT) called upon the Prime Minister to convene a special session of Parliament soon to pass the deadlocked GST Bill and has asked parties not to play a “political innings” on the issue. Some support also came with report that India and the United Arab Emirates (UAE) agreeing that the investment institutions of UAE will be strive to raise their investments in India by setting up UAE-India Infrastructure Investment Fund. The infrastructure fund aims to finance infrastructure development in India and will target a corpus of $75 billion.

On the global front, European counters, after a positive start, were trading in red as traders ignored German Chancellor Angela Merkel statement that she’s confident the International Monetary Fund will join Greece’s third bailout and signaled willingness to consider debt relief to help make it happen. Asian markets ended mostly in red as Chinese shares slumped again. China’s currency weakened even though the People’s Bank of China kept its reference rate for the yuan relatively stable.

Back home, foreign portfolio investors (FPIs) bought shares worth a net Rs 142.34 crore on August 17, 2015, as per provisional data released by the stock exchanges. Coffee stocks kept buzzing on a report that the government is weighing foreign direct investment in plantation sector. A proposal to this effect is under consultation of the commerce and industry ministry. The move will bring in foreign players with efficient technology, and ramp up coffee production in the country, thereby boosting India's coffee exports. On the flip side, power companies edged lower on a report of CAG that there is scope for bringing down electricity tariffs in the national capital. The observation was made by the CAG in a report in which it stated that power discoms in Delhi had inflated their dues to be recovered from consumers by almost Rs 8,000 crore.

The NSE’s 50-share broadly followed index Nifty declined by over ten points to end below the psychological 8,500 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex declined by around fifty points to end below its crucial 27,850 mark. Broader markets, however, outperformed benchmarks and ended the session with a gain of over half a percent. The market breadth remained in favor of advances, as there were 1,631 shares on the gaining side against 1,239 shares on the losing side while 114 shares remain unchanged.

Finally, the BSE Sensex lost 46.73 points or 0.17% to 27831.54, while the CNX Nifty declined  by 10.75 points or 0.13% to 8466.55.

The BSE Sensex touched a high and a low 28040.73 and 27747.40, respectively. The BSE Mid cap index was up by 0.47%, while Small cap index was up by 0.85%.

The top gaining sectoral indices on the BSE were IT up by 1.61%, Consumer Durables up by 1.15%, TECK up by 0.96%, Capital Goods up by 0.88% and Auto up by 0.60%, while Metal down by 1.92%, Healthcare down by 0.57%, Infrastructure down by 0.47%, PSU down by 0.47% and Realty down by 0.32% were the losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 2.07%, Maruti Suzuki up by 2.03%, Infosys up by 1.92%, TCS up by 1.86% and SBI up by 1.76%. On the flip side, GAIL India down by 4.43%, Coal India down by 4.20%, Cipla down by 2.87%, Vedanta down by 2.28% and Lupin down by 2.13% were the top losers.

Meanwhile, the Finance Ministry has advanced the time for Budget preparation by over two months. For the 2016-17 Budget and the process will begin this month instead of October. In a statement, Finance Ministry said that “In consonance with the objective of the Government of India to have wider consultations with various stakeholders as well as to provide more time for planners, it has been decided to start the Budget exercise by middle of August, 2015 for the forthcoming financial year 2016-17.”

The ministry added that the Budget circular, which marks the beginning of Budget formulation exercise, is being issued by the Budget Division. This is for the first time that the government is beginning Budget preparations process seven months ahead of presentation. The Union Budget is traditionally unveiled on the last working day of February.

It also announced the issuance of Budget Circular, which marks the beginning of the Budget formulation exercise. Last year, this circular was issued on October 10. Such a circular fixes the time line for various Ministries to furnish information to the Finance Ministry. It talks about methods to be followed for revenue and expenditure estimates.

The budget exercise, which normally starts during later part of October, involves consultations with several interest groups like industry, traders bodies and trade unions.  In addition, various government departments make expenditure proposals to the Finance Ministry. The budget for the next fiscal will be crucial and the finance ministry is apprehensive about the recommendations of the Seventh Pay Commission, which is likely to significantly increase the revenue expenditure of the government in the next fiscal, leaving it less money to spend on building capital assets.The CNX Nifty touched a high and low 8525.75 and 8433.60 respectively.

The top gainers on Nifty were BPCL up by 3.85%, Tata Steel up by 2.29%, TCS up by 2.28%, Maruti Suzuki up by 2.16% and Tech Mahindra up by 2.09%. On the flip side, GAIL India down by 4.56%, Coal India down by 4.28%, NMDC down by 3.74%, Cairn India down by 2.76% and Cipla down by 2.58% were the top losers.

European Markets were trading in the red; France’s CAC was down by 0.19%, Germany’s DAX was down by 0.02% and UK's FTSE was down by 0.57%.

The Asian markets closed mostly in red on Tuesday, with Shanghai Composite dropping more than 6% as investors appeared to show a delayed reaction to news that China’s market regulator would allow market forces to play a greater role in determining stock prices. Chinese home prices rose in July for a third consecutive month, fuelled by improved sales and market sentiment, suggesting the property market is slowly recovering in a rare counterpoint to a growing list of grim economic indicators. Average new home prices rose 0.3 percent in July versus June slightly slower than June’s 0.4 percent rise. Even a mild recovery in one of the country’s key sectors would provide a valuable boost for an economy heading towards its weakest growth in 25 years. Property sales bottomed out during the first half of 2015 after declining for more than a year, propped up by a barrage of government support measures since last September, including a series of interest rate cuts and lower down payment requirements. Indonesia posted a surprisingly large trade surplus in July at $1.33 billion from a revised $528 million in June. Exports in July were $11.41 billion, down 19.23 percent from a year earlier, while imports were $10.08 billion, down 28.44 percent.