Benchmarks continue to trade in red in late morning session

After getting a cautious start, Indian equity benchmarks continued to trade in red in late morning session as funds and retail investors engaged in reducing positions, on feeble global cues and disappointing economic data. Economic growth slowed to 7 percent in the April-June quarter, from 7.5 percent in the previous quarter, amid deceleration in farm, services and manufacturing sectors. Also, India's annual infrastructure output growth slowed to a three-month low of 1.1 percent in July, dragged down by a contraction in steel production and a slowdown in output of coal and refinery products. Down in red with loss of over 0.80%, both Sensex and Nifty were trading below the psychological 26,100 and 7,900 levels respectively. Selling activity also witnessed in the broader markets with the BSE mid-cap index declining 0.71% and small-cap dropping by 0.41%. Besides, Concerns over China slowdown and uncertainties over US Federal Reserve rate hike this month have led to turmoil in global markets with benchmark indices in different countries logging their biggest monthly losses in August in many years.

On the global front, Asian markets were trading mostly in red, as losses on Wall Street overnight and new manufacturing data out of the world's second-largest economy curbed risk appetite. China's official Purchasing Managers' Index (PMI) fell to 49.7 in August from the previous month's reading of 50.0, the weakest showing in three year. Overnight, U.S. equity markets ended in the red to chalk up their worst month since 2012 after comments from senior Federal Reserve official heightened fears among investors of a potential US interest hike in September. Back home, Indian rupee recovered by 10 paise to 66.38 against the US dollar in early trade on increased selling of the American currency by exporters.

Back on street, stocks from IT and Teck counters were supporting the markets’ uptrend, while those from Banking, Capital Goods and Consumer Durables counters was adding to the underlying cautious undertone. In scrip specific development, shares of Novartis India gained after receiving approval from Foreign Investment Promotion Board (FIPB) to sell its OTC division to GlaxoSmithKline Consumer (GSK CPL). Furthermore, Dishman Pharmaceuticals & Chemicals has rallied after reported a strong 59% year-on-year growth in consolidated net profit at Rs 37.76 crore for the quarter ended June 30, 2015, on account of lower raw material cost.

The market breadth on BSE was negative, out of 2146 stocks traded, 654 stocks advanced, while 1431 stocks declined on the BSE. 

The BSE Sensex is currently trading at 26058.74, down by 224.35 points or 0.85% after trading in a range of 25984.28 and 26141.07. There were 5 stocks advancing against 25 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.71%, while Small cap index down by 0.46%.

The few gaining sectoral indices on the BSE were IT up by 0.64% and TECK up by 0.35%, while Bankex down by 1.62%, Capital Goods down by 1.43%, Consumer Durables down by 1.20%, Auto down by 0.90% and Metal down by 0.89% were the top losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 1.57%, Infosys up by 1.11%, TCS up by 0.96%, ONGC up by 0.54% and NTPC up by 0.33%. On the flip side, HDFC down by 2.39%, Hindalco down by 2.19%, Larsen & Toubro down by 2.00%, Bharti Airtel down by 1.99% and Axis Bank down by 1.87% were the top losers.

Meanwhile, Outgoing Finance Secretary Rajiv Mehrishi has said that the government is planning to amend the Reserve Bank India (RBI) act before the end of current financial year, which ends March 31, 2016, accordingly it can set up a new committee to direct the country's monetary policy. Mehrishi has stated that an effort will be made to bring in amendment by December and further conformed that if it cannot be done by December then would be done by February.

The committee will comprise of appointees from the government, the Reserve Bank of India, and independent members appointed by the government, but any changes have to be approved by the parliament. Recently, the RBI Governor Raghuram Rajan too had said the central bank and government have reached a “broad consensus” on the composition of a rate panel, without disclosing details.

The central bank and finance ministry have been trying to resolve differences over the panel's composition - chiefly over the balance of representation between government and RBI appointees. Last month, the finance ministry had signalled a willingness to retreat from a blueprint that will have ensured its effective control over a seven-member committee.

Additionally, Mehrishi has said that the government is also planning to set up an independent public debt management agency (PDMA), mainly under the government’s control in the current fiscal year. It is a FEMA (Foreign Exchange Management Act) requirement so RBI has to consult the government. 

The CNX Nifty is currently trading at 7898.75, down by 72.55 points or 0.91% after trading in a range of 7886.15 and 7929.10. There were 8 stocks advancing against 42 stocks declining on the index.

The top gainers on Nifty were Cairn India up by 1.64%, Sun Pharma up by 1.42%, Infosys up by 1.24%, TCS up by 1.03% and ONGC up by 0.77%. On the flip side, PNB down by 3.11%, Yes Bank down by 2.71%, Idea Cellular down by 2.53%, Hindalco down by 2.50% and Asian Paints down by 2.48% were the top losers.

Asian markets were trading mostly in red; Nikkei 225 was down by 2.12%, Taiwan Weighted down by 1.58%, Hang Seng down by 0.43%, Jakarta Composite down by 1.32%, Shanghai Composite down by 0.92%, KOSPI Index down by 1.12% and Straits Times down by 0.35%. On the flip side, FTSE Bursa Malaysia KLCI was up by 0.62%.