Benchmarks pare some early losses; still continue to trade in red

Recovering from day’s low, benchmark equity indices have gained momentum however were still trading below the neutral line, weighed down by the weak cues from Asia and continuing uncertainty over Fed rate hike. Sentiments remained down-beat with the Prime Minister Narendra Modi’s statement that the land ordinance will not be reissued. The ordinance first issued in December and repromulgated thrice, lapses today. The sentiments weakened further after the India Meteorological Department (IMD) said in a daily report that for the country as a whole, cumulative rainfall during this year's monsoon season was 12% below the Long Period Average (LPA) until 30 August 2015. Furthermore, overseas investors have pulled out Rs 17,555 crore (USD 2.65 billion) from the Indian capital markets in the month due to sharp global sell-off triggered by a rout in Chinese equities. However, losses remained capped with RBI Governor Raghuram Rajan’s hint of an imminent rate cut, after he said that inflation has come down to the comfort zone quicker than expected and he is keeping a watch on data to see how much room is there for further easing of the monetary policy. The market participants are also cautious ahead of the April-June gross domestic product (GDP) data which is due to be announced post market hours.

On the global front, Asian markets were trading mostly in red after top Federal Reserve officials kept the door open for an interest rate hike in September and Chinese stock markets took a fresh tumble. Furthermore, global investors are waiting for Chinese data on Tuesday which is expected to show the world's second-largest economy is continuing to lose momentum. Back home, extending weakness for the second straight day, Indian rupee declined by 16 paise to 66.30 against the US dollar in early trade on sustained month-end demand for the American currency overseas.

Back on street, stocks from Oil & Gas, Banking and PSU counters were supporting the markets’ uptrend, while those from Metal, Auto and FMCG counters was adding to the underlying cautious undertone. In scrip specific development, shares of Gillette India have surged after the company reported nearly two-fold jump in operating profit at Rs 52.72 crore for the fourth quarter ended June 30, 2015. Furthermore, Astec Lifesciences has rallied after Godrej Agrovet made an open offer to public shareholders to acquire an additional 26.05% stake at a price of Rs 246.60 per share.

The market breadth on BSE was positive, out of 2105 stocks traded, 1027 stocks advanced, while 1007 stocks declined on the BSE. 

The BSE Sensex is currently trading at 26348.79, down by 43.59 points or 0.17% after trading in a range of 26225.71 and 26469.42. There were 10 stocks advancing against 20 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.70%, while Small cap index up by 0.23%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 0.73%, Bankex up by 0.48%, PSU up by 0.42%, Realty up by 0.19% and Consumer Durables up by 0.10%, while Metal down by 1.09%, Auto down by 0.43%, FMCG down by 0.16%, Capital Goods down by 0.15% and IT down by 0.15% were the top losing indices on BSE.

The top gainers on the Sensex were Cipla up by 1.99%, Lupin up by 1.84%, Sun Pharma up by 1.58%, GAIL India up by 1.33% and ONGC up by 1.21%. On the flip side, Vedanta down by 2.13%, Bharti Airtel down by 2.11%, BHEL down by 2.11%, Tata Steel down by 1.23% and Tata Motors down by 1.20% were the top losers.

Meanwhile, in a major setback to the economic reform agenda, Prime Minister Narendra Modi has announced that the government will not re-promulgate the controversial ordinance on land acquisition which expires on August 31, 2015.  The government had issued the ordinance three times so far, as the land bill could not be passed in Parliament due to stiff resistance by most of the opposition parties as well as some of its allies. The bill, which seeks to amend the act of 2013, is currently being scrutinised by a joint committee of Parliament, to which it was referred by Rajya Sabha during Budget session in the wake of strong opposition by several parties.

Modi stated that he has decided that ordinance on land acquisition bill should be allowed to expire. He further stated that it means restoration of the situation that prevailed before his government took over, however he declared readiness to incorporate any suggestion in the bill on it which is pending in Rajya Sabha to benefit the farmers and said that “I have always said that, in the dispute related to the land acquisition law, the government is open minded.”

He said that lot of doubts have been created over the land bill and fear instilled among farmers even though states had suggested amendments to the act of 2013 for the benefit of villages and villagers. Insisting that the voice of farmers matters the most to him, the Prime Minister said, “the government has an open mind on Land Acquisition Bill, about which there is a lot of controversy. I have said it again and again that I am ready to accept any suggestion for the benefit of farmers.” Though, the bill on land acquisition is still alive in Rajya Sabha and the government is awaiting the report of the joint committee of Parliament on it and some are still hopeful, not giving up on making it easier to acquire land needed to kick-start hundreds of billions of dollars in stalled projects.

The CNX Nifty is currently trading at 7996.05, down by 5.90 points or 0.07% after trading in a range of 7954.30 and 8009.25. There were 23 stocks advancing against 27 stocks declining on the index.

The top gainers on Nifty were PNB up by 2.23%, Bank of Baroda up by 2.08%, Cipla up by 1.93%, HCL Tech. up by 1.87% and Yes Bank up by 1.84%. On the flip side, Vedanta down by 2.23%, BHEL down by 2.17%, Bharti Airtel down by 2.03%, Tata Steel down by 1.44% and Ultratech Cement down by 1.25% were the top losers.

Asian markets were trading mostly in red; Nikkei 225 was down by 1.55%, Hang Seng down by 0.77%, Shanghai Composite down by 2.61%, Straits Times down by 0.68% and KOSPI Index down by 0.3%. On the flip side, Taiwan Weighted was up by 0.29% and Jakarta Composite was up by 0.76%.