Benchmarks continue to trade in red in late morning session

Indian benchmarks were trading on a weak note in the late morning session as uncertainty in global markets marked by weak US markets close Friday and sluggish trade in Asian indices in early trade prompted investors back home to offload stocks across most of the risky sectors.  In addition to last month's record net outflow of over Rs 17,000 crore from domestic equities, foreign institutional investors (FFIS) offloaded shares worth Rs 4,385 crore last week, indicating more pain for the markets in the near term.  However, losses remained capped with the IMF statement that India is among the few bright spots in the global economy, at the meeting of G20 Finance Minister and Central Bank Governors where they also discussed monetary policy uncertainties. Some support also came with government stating that it wants an extended Monsoon session so that the Constitutional amendment GST bill can be approved and has also appealed to Congress to support the key reform to accelerate the country's growth. Meanwhile, the domestic frontline gauges did not deviate much from the neutral line but traded in a tight range with moderate losses, below the psychological 7,650 (Nifty) and 25,200 (Sensex) levels. The broader markets underperformed major benchmark indices as BSE Mid-cap index ended lower by over 1.10% and BSE Small-cap index tumbled over 0.60%.

On the global front, Asian stocks were subdued in early trade, lacking clear direction as Shanghai shares see-sawed in and out of the red after the Chinese markets resumed trading following a four-day long weekend. Moreover, U.S. stock indexes dropped more than 1 percent on Friday after a mixed August jobs report did little to quell investor uncertainty about whether the Federal Reserve will hold off from hiking interest rates this month. Back home, Indian rupee depreciated by another 17 paise to 66.63 against the dollar in early trade as the US currency strengthened in overseas markets.

Back on street, stocks from Realty counters were supporting the markets’ uptrend, while those from Metal, Capital Goods and Teck counters were adding to the underlying cautious undertone. In scrip specific development, shares of Natco Pharma gained after the Reserve Bank of India (RBI) approved hike in investment limit by overseas investors. On the flip side, shares of Dr. Reddys Laboratories have declined after the report that the company’s US subsidiary is recalling over 55,000 bottles of Amlodipine besylate and Atorvastatin calcium tablets in a variety of strengths including 2.5mg/10mg, 2.5 mg/20 mg and 10mg /80 in 30 and 90 count bottles, used to treat high blood pressure and cholesterol related diseases, in the US market.

The market breadth on BSE was negative, out of 2208 stocks traded, 789 stocks advanced, while 1347 stocks declined on the BSE. 

The BSE Sensex is currently trading at 25161.50, down by 40.40 points or 0.16% after trading in a range of 25056.80 and 25387.32. There were 10 stocks advancing against 20 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 1.11%, while Small cap index down by 0.63%.

The only gaining sectoral index on the BSE was Realty up by 0.18%, while Metal down by 0.79%, TECK down by 0.73%, Capital Goods down by 0.69%, IT down by 0.62% and  PSU down by 0.59% were the top losing indices on BSE.

The top gainers on the Sensex were HDFC up by 2.01%, Tata Motors up by 1.55%, Cipla up by 1.40%, Maruti Suzuki up by 1.09% and Tata Steel up by 0.82%. On the flip side, GAIL India down by 2.31%, Coal India down by 1.99%, Lupin down by 1.90%, Bharti Airtel down by 1.69% and Axis Bank down by 1.49% were the top losers.

Meanwhile, With an aim to provide equal opportunity to exporters across the countries, Union Commerce Secretary Rita Teaotia has said that the government is working on forming a Regional Comprehensive Economic Partnership (RCEP) covering Asean nations, Japan and South Korea. At present, India has 11 Free Trade Agreements (FTAs) with other countries, which has a huge potential for realising the benefits but only around 28 per cent of it has been utilized.

Teaotia further stated that India needs more and more share for the facilities available under these FTAs to country exporters so that they take the maximum benefit. Besides, she said that 'The idea is that if you are out of multi-lateral agreements, you are at disadvantage in creating a level playing field for the exporters'. The Ministry was working on signing bilateral Free Trade Agreements with Canada, Australia and New Zealand.

Additionally, in order to ‘reassess’ the special economic zone (SEZ) amid several special economic zone developers surrendering projects or seeking more time, Teaotia has said that the Union Commerce Ministry will be holding a meeting with the concerned parties including state governments on special economic zone (SEZ), which emerged as a major export hub in the country, on September 10, 2015. SEZs started losing their sheen after imposition of minimum alternate tax (MAT) and dividend distribution tax (DDT). Exports from these zones increased from Rs 22,840 crore in 2005-06 to Rs 4.94 lakh crore in 2013-14. Increase in exports from these zones will help the country in enhancing overseas shipments. The Commerce Ministry is struggling to increase exports as the country's shipments in the last four fiscals have been hovering around $300 billion.

The CNX Nifty is currently trading at 7632.50, down by 22.55 points or 0.29% after trading in a range of 7606.85 and 7705.05. There were 16 stocks advancing against 34 stocks declining on the index.

The top gainers on Nifty were HDFC up by 1.91%, Tata Motors up by 1.47%, Cipla up by 1.22%, Maruti Suzuki up by 1.03% and Cairn India up by 0.95%. On the flip side, Idea Cellular down by 2.75%, GAIL India down by 2.51%, Coal India down by 2.37%, Lupin down by 2.22% and Bharti Airtel down by 1.66% were the top losers.

Asian markets were trading mostly in the red; Jakarta Composite was down by 2.16%, Hang Seng down by 0.15%, KOSPI Index down by 0.22%, FTSE Bursa Malaysia KLCI down by 0.56%, Straits Times down by 0.5% and Taiwan Weighted down by 0.12%. On the flip side, Nikkei 225 was up by 0.42% and Shanghai Composite was up by 0.58%.