Benchmarks continue weak trade in late afternoon session

Indian equity markets extended gains and continued to trade in red in the late afternoon session on account of selling in frontline blue chip counters taking cues from global counterparts. The sentiments were under pressure as the risk of China’s economy entering deflation is growing, data suggested, also signs emerged that some foreign central banks are increasingly worried about the impact of falling Chinese prices and a weaker yuan which could have on their economies. Foreign Portfolio Investors (FPIs) sold shares worth net Rs 452.13 crore yesterday, as per provisional data released by the stock exchanges, further added some selling pressure on the street. Traders were seen selling in Consumer Durables, Realty and IT sector stocks. In scrip specific development, Vedanta shares were trading in red on reports that rating agency Standard & Poor’s stated that the completion of the proposed merger of Cairn India with Vedanta appears uncertain.

On the global front, the Asian markets traded mostly in red, while the European markets were trading on pessimistic note. Back home, the NSE Nifty and BSE Sensex were trading below the psychological 7,750 and 25,500 levels respectively. The market breadth on BSE was negative in the ratio of 807:1609 while 87 scrips remained unchanged.

The BSE Sensex is currently trading at 25417.93, down by 301.65 points or 1.17% after trading in a range of 25287.50 and 25593.59. There were 4 stocks advancing against 26 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.12%, while Small cap index down by 0.87%.

The losing sectoral indices on the BSE were Consumer Durables down by 2.04%, Realty down by 1.74%, IT down by 1.71%, TECK down by 1.63% and Metal down by 1.46%.

The top gainers on the Sensex were Tata Motors up by 1.75%, BHEL up by 1.01%, Bajaj Auto up by 0.70% and ITC up by 0.16%.

On the flip side, Hindalco down by 3.56%, HDFC down by 2.86%, SBI down by 2.35%, ONGC down by 2.32% and Infosys down by 2.25% were the top losers.

Meanwhile, with global oil prices halving, Oil Minister Dharmendra Pradhan has said that India should aggressively look for acquisition of oil and gas assets overseas, build strategic reserves and step up domestic exploration and also tie up supplies on favorable terms from producers in Middle-East, Africa and Latin America.

Pradhan further stated that falling of oil prices globally presents opportunity for India to aggressively buy oil and gas fields abroad, as this fall has not only brought down assets valuation, but has  also led to distress in some others that had borrowed huge funds when oil rates were high. Meanwhile, low oil prices have also led to slump in cost of associated services like drilling rigs, where India should take advantage for increasing domestic exploration and production (E&P) activities. Besides, he added that more wells should be drilled to find new reserves. Pradhan stated that India should use the low oil prices to stockpile oil at near complete underground strategic storages at Visakhapatnam in Andhra Pradesh and Mangalore and Padur in Karnataka. Furthermore, capacity should be raised from 5.33 million tons to guard against crude price shocks and supply disruption.

India, being 80% dependent on imports to meet its oil needs, has a direct beneficiary of oil prices slumping from $115 per barrel to under $50 in last one year. Besides cutting its oil import bill, lower oil prices have also helped cool inflation and cut government's subsidy bill. Last year Prime Minister has set up a target of cutting country’s oil import dependence by 10 per cent to 67 per cent by 2022.

The CNX Nifty is currently trading at 7723.35, down by 95.25 points or 1.22% after trading in a range of 7678.50 and 7775.35. There were 8 stocks advancing against 42 stocks declining on the index.

The top gainers on Nifty were BPCL up by 1.82%, Tata Motors up by 1.68%, Zee Entertainment up by 1.47%, Tata Power up by 0.59% and BHEL up by 0.54%.

On the flip side, Hindalco down by 3.69%, HCL Tech down by 3.22%, NMDC down by 3.17%, HDFC down by 3.13% and Power Grid down by 2.94% were the top losers.

The Asian markets were trading mostly in red; Hang Seng decreased 568.81 points or 2.57% to 21,562.50, Nikkei 225 decreased 470.89 points or 2.51% to 18,299.62, Shanghai Composite decreased 45.2 points or 1.39% to 3,197.89, Straits Times decreased 39.08 points or 1.33% to 2,889.10, Taiwan Weighted decreased 18.24 points or 0.22% to 8,268.68 and Jakarta Composite decreased 11.88 points or 0.27% to 4,335.40.

On the other hand, FTSE Bursa Malaysia KLCI increased 2.26 points or 0.14% to 1,605.62 and KOSPI Index increased 27.91 points or 1.44% to 1,962.11.

The European markets were trading in red; UK’s FTSE 100 decreased 59.35 points or 0.95% to 6,169.66, Germany’s DAX decreased 53.66 points or 0.52% to 10,249.46 and France’s CAC decreased 39.59 points or 0.85% to 4,625.00.