Benchmarks continue to trade in red in late morning session

Indian markets continue to show a sluggish trend in late morning session, with not much respite in sight, though the selling has got arrested and the benchmarks have recovered from the day’s low, but the major benchmarks continue to trade lower tracking the steep fall in some regional equity markets. Investors turned jittery after the Fed released the minutes of its latest policy meeting stating that the conditions for a rate hike are approaching. Besides, weakness in the Asian peers amid Chinese economic slowdown dampened the sentiments. Domestic sentiment was also weakened with a private report stating that the country remains a 'long way off' from a complete turnaround in the corporate investment cycle despite various positive economic indicators. However, some support came with Reserve Bank of India governor Raghuram Rajan’s statement that Indian economy is showing signs of improvement and the devaluation of the Chinese yuan was not something to be concerned about at current levels. He also added that the rural demand coming back more strongly and that would be a very tremendous bonus to Indian economy.

On the global front, Asian markets mostly trading in red on concerns of growth slowdown in China, the world's second largest. Energy stocks fell as the price of oil plummeted after the US government data showed inventories rose much more than expected last week. Majors US share indices ended lower after the US Federal Reserve which released the minutes of its meeting held in July cited worries about global growth. Back home, Indian rupee appreciated by 14 paise to 65.13 against the US dollar in early trade on increased selling of the American currency by exporters.

Back on street, barring FMCG, all other BSE sectoral indices were trading in the red. Among them, IT index fell the most, followed by Metal, Teck and Infrastructure. In scrip specific development, shares of Amtek Auto continue to be under pressure, declining by more than 50% in the past two trading sessions after the National Stock Exchange (NSE) announced exclusion of company’s contracts from the F&O segment with effect from October 30, 2015. On the flip sides, Shares of Sun Pharmaceutical surged after the US Food and Drug Administration (USFDA) has approved the company’s supplemental new drug application for XiminoTM (Minocycline HCl) extended-release capsules.

The market breadth on BSE was negative, out of 2348 stocks traded, 931 stocks advanced, while 1326 stocks declined on the BSE. 

The BSE Sensex is currently trading at 27888.32, down by 43.32 points or 0.16% after trading in a range of 27820.50 and 27964.60. There were 11 stocks advancing against 19 stocks declining on the index.

The broader indices were trading mix; the BSE Mid cap index was up by 0.03%, while Small cap index down by 0.45%.

The top losing sectoral indices on the BSE were IT down by 1.46%, Metal down by 1.40%, TECK down by 1.24%, Infrastructure down by 1.05% and Realty down by 1.05%, while FMCG up by 1.49% was the sole gaining index on BSE.

The top gainers on the Sensex were Lupin up by 5.10%, Sun Pharma up by 3.48%, ITC up by 2.45%, Dr. Reddys Lab up by 1.61% and Hindustan Unilever up by 1.55%. On the flip side, Vedanta down by 5.17%, Infosys down by 2.81%, Tata Steel down by 2.50%, GAIL India down by 2.36% and Hindalco down by 2.32% were the top losers.

Meanwhile, Reserve Bank of India (RBI), further widening the reach of banking services and in a effort to push the government’s goal of financial inclusion has given in-principle approval to 11 entities to open payments banks. The new format of the banks will provide basic savings, deposit, payment and remittance services to people without access to the formal banking system.

Aditya Birla Nuvo; Airtel M Commerce Services of Bharti Airtel; Cholamandalam Distribution Services; Department of Posts; FINO PayTech Ltd; National Securities Depository (NSDL); Reliance Industries (RIL); Tech Mahindra; and Vodafone m-pesa, a unit of telco Vodafone India Ltd, were the nine organizational entities given in-principle approval. Apart from this, two individuals - Dilip Shantilal Shanghvi, founder of Sun Pharmaceutical Industries and Vijay Shekhar Sharma, CEO of One97 Communications that runs Paytm, the mobile commerce and mobile payment company, have received the approval. In-principle approval will be valid for 18 months, after which the entities will be given formal licences, provided they fulfil conditions stipulated by RBI.

RBI said that it had chosen “entities with experience in different sectors and with different capabilities so that different models could be tried”. The apex bank elaborating the selection process said that first, a detailed scrutiny was undertaken by an External Advisory Committee (EAC) under the Chairmanship of Dr. Nachiket Mor, then the recommendations of the EAC were an input to an Internal Screening Committee (ISC), this Internal Screening Committee prepared a final list of recommendations for the Committee of the Central Board (CCB). In arriving at the final list, the CCB noted that it would be difficult at this stage to forecast the most successful likely model in the emerging business of payments. The CCB further noted that payments banks cannot undertake lending, and therefore believed that the payments bank would not be subject to the same risks as a full service bank.

RBI has chosen the 11 from among 41 entities that applied for payments bank licences. Some applicants like Kishore Biyani, group chief executive officer at Future Group, who lost out said they accepted RBI’s decision but were clueless as to why their applications had been rejected.

The CNX Nifty is currently trading at 8473.75, down by 21.40 points or 0.25% after trading in a range of 8453.60 and 8501.35. There were 15 stocks advancing against 35 stocks declining on the index.

The top gainers on Nifty were Lupin up by 5.15%, Sun Pharma up by 3.51%, BPCL up by 3.18%, Tech Mahindra up by 2.41% and ITC up by 2.26%. On the flip side, Vedanta down by 5.32%, Cairn India down by 3.99%, Infosys down by 2.85%, GAIL India down by 2.53% and Tata Steel down by 2.48% were the top losers.

Asian markets were trading mostly in red; Hang Seng was down by 1.25%, Jakarta Composite down by 0.63%, Straits Times down by 0.92%, Shanghai Composite down by 0.4%, Nikkei 225 down by 0.55%, KOSPI Index down by 0.64% and FTSE Bursa Malaysia KLCI down by 0.57%. On the flip side, Taiwan Weighted was up by 0.28%.