Benchmarks make weak start ; Nifty trade below 7900 level

After having mild recovery in last session, Indian equity markets have made negative start and are now trading weak with the Sensex losing over 150 points and Nifty falling below the 7900 level, mirroring losses in the US markets as investors remain wary of the Chinese economic growth slowdown. The sentiments were also under pressure on reports that foreign portfolio investors (FPIs) sold shares worth a net Rs 2080.01 crore on August 25, 2015, as per provisional data released by the stock exchanges. The markets are likely to remain volatile in the near future as traders roll over positions in the futures & options (F&O) segment from the near month August 2015 series to September 2015 series. The near month August 2015 derivatives contracts are set to expire tomorrow. 

Losses however remained capped with Reserve Bank of India Governor Raghuram Rajan’s statement that global financial markets may be in turmoil but Indian investors shouldn't worry too much. He said that there is confidence that we are actually quite healthy. Shares of logistics service providers such as Gati, Transport Corporation of India, Snowman Logistics and Patel Integrated Logistics were trading higher on reports that the government is considering reconvening Parliament to make another attempt to pass the Goods and National Sales Tax (GST).

On the global front, US markets ended lower after staging a smart rally as concerns about China's economy outweighed lower valuations that some earlier was seen as bargain. Asian markets were trading mostly in green, with China's Shanghai Composite Index trading higher following China's rate cut.

Back home traders were seen piling up position in Oil & Gas, Power, INFRA, PSU and Consumer Durables while selling was witnessed in Bankex, Realty, IT, FMCG and Auto. The market breadth on BSE was negative in the ratio of 750:863 while 50 scrips remained unchanged. 

The BSE Sensex is currently trading at 25874.18, down by 158.20 points or 0.61% after trading in a range of 25687.69 and 26063.27. There were 10 stocks advancing against 20 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index was down by 0.07%, while Small cap index was up by 0.09%.

The gaining sectoral indices on the BSE were Oil & Gas up by 0.29%, Power up by 0.19%, INFRA up by 0.13%, PSU up by 0.06% and Consumer Durables up by 0.02%, while Bankex down by 0.71%, Realty down by 0.59%, IT down by 0.56%, FMCG down by 0.54% and Auto down by 0.54% were the losing indices on BSE.

The top gainers on the Sensex were Wipro up by 1.60%, Lupin up by 1.40%, ONGC up by 1.26%, Coal India up by 1.09% and Mahindra & Mahindra up by 0.63%. On the flip side, Hero MotoCorp down by 2.21%, Dr. Reddys Lab down by 2.20%, BHEL down by 2.07%, ICICI Bank down by 1.59% and Tata Motors down by 1.40% were the top losers.

Meanwhile, trying to soothe the nerves of the investors after the global rout, the Reserve Bank of India Governor Raghuram Rajan has said that there is confidence that we are actually quite healthy, last time we did not have the confidence that is the big difference this time. We know this will pass and at some point the market will wake up and at that point start differentiating.' He further added that “Based on what I have seen so far there is no strong reason to believe that we are on the verge of another crisis...But we have to be vigilant about some of those fragilities that have built up.'

Talking about the China-led slowdown he said China is a big country and every adverse development has impacts, even as he warned against overburdening central banks to fix struggling economies. He said “There is a lot of uncertainty about what the real numbers are...The numbers have to come out but China is a big country, has become very important to the global economy. Every adverse development across the world affects the rest of the world in some ways.” The devaluation of the Chinese yuan on August 11 sparked a global selloff in equities, commodities and currencies.

RBI governor also acknowledged that his situation was not typical in the current climate because unlike most global economies India still has high inflation at close to 6 percent. Interest rates are also high at 7.25 percent despite having been cut three times this year to try and stimulate growth.

Rajan though said that panic should soon subside, even in the worst environment of the last 50-60 years, during the 2008 crisis, it was a few months after which it turned normal. I have no doubt that we have enough ammunition, reserves, good policies to withstand that.

The CNX Nifty is currently trading at 7865.70, down by 15.00 points or 0.19% after trading in a range of 7785.60 and 7869.60. There were 24 stocks advancing against 26 stocks declining on the index.

The top gainers on Nifty were Tata Power up by 2.22%, Wipro up by 1.79%, Idea Cellular up by 1.79%, Cairn India up by 1.67% and Asian Paints up by 1.63%. On the flip side, Dr. Reddys Lab down by 2.09%, Hero MotoCorp down by 1.80%, ICICI Bank down by 1.45%, BHEL down by 1.41% and Vedanta down by 1.39% were the top losers. Asian markets were trading mostly in green; Taiwan Weighted increased 1.4 points or 0.02% to 7,677.04, FTSE Bursa Malaysia KLCI increased 11.09 points or 0.71% to 1,575.03, Shanghai Composite increased 23.79 points or 0.8% to 2,988.76, KOSPI Index increased 27.22 points or 1.47% to 1,873.85, Nikkei 225 increased 218.43 points or 1.23% to 18,025.13

On the flip side, Jakarta Composite decreased 42.02 points or 0.99% to 4,186.48, Straits Times decreased 15.11 points or 0.52% to 2,871.18 and Hang Seng decreased 3.99 points or 0.02% to 21,400.97.