Benchmarks make negative opening of F&O expiry session

Amid weak global cues, Indian equity markets have made a negative start and are now trading with a cut of around half a percent, as investors opted to book some profit after previous session’s gains. The sentiments were weighed down by Indian rupee depreciating 21 paise against the US dollar to 66.19 in early trade, on account of sustained month-end demand for the American currency overseas amid foreign fund outflows. Investors failed to get any sense of relief with chief economic adviser Arvind Subramanian’s statement that India does not need further fiscal stimulus to revive the economy, despite record low inflation and growth seen at the lower end of an 8.1-8.5 percent target this financial year. The markets are likely to remain volatile ahead of the expiry of the derivative contracts for the September series due later today. Traders were seen piling up position in Consumer Durables, Healthcare, IT, TECK and Realty, while selling was witnessed in Metal, Capital Goods, Power, PSU and Oil & Gas.

In scrip specific development, GMR Infrastructure was trading lower after credit ratings agency CARE downgraded ratings for long-term loans to GMR Hyderabad-Vijayawada Expressways to default grade 'D' due to delays in servicing debt and cash losses.

On the global front, the US markets ended lower for a second day in a row on Wednesday, shedding early morning gains, after a rebound in crude oil prices fizzled out. The Asian markets were trading mostly in red with investors treading cautiously amid continued uncertainty about the outlook for U.S. monetary policy following last week's Federal Reserve decision, even as soft manufacturing activity data from the U.S. and China on Wednesday added to concerns about the global economy.

Closer home, the NSE Nifty and BSE Sensex were trading below the psychological 7,850 and 25,750 levels respectively. The market breadth on BSE was positive in the ratio of 845: 637 while 63scrips remained unchanged. 

The BSE Sensex is currently trading at 25711.26, down by 111.73 points or 0.43% after trading in a range of 25670.96 and 25811.85. There were 7 stocks advancing against 23 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.05%, while Small cap index gained 0.33%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 0.93%, Healthcare up by 0.93%, IT up by 0.64%, TECK up by 0.49% and Realty up by 0.38%, while Metal down by 1.04%, Capital Goods down by 0.89%, Power down by 0.66%, PSU down by 0.60% and Oil & Gas down by 0.54% were the losing indices on BSE.

The top gainers on the Sensex were Lupin up by 3.47%, Dr. Reddys Lab up by 0.92%, Maruti Suzuki up by 0.87%, Infosys up by 0.74% and Cipla up by 0.61%. On the flip side, ONGC down by 1.99%, Vedanta down by 1.58%, Reliance Industries down by 1.52%, Larsen & Toubro down by 1.43% and BHEL down by 1.33% were the top losers.

Meanwhile, the Reserve Bank of India (RBI), in order to encourage overseas funding has proposed the draft framework on External Commercial Borrowings (ECBs) and placed it on its website for comments/feedback till October 1. ECB has implications for monetary stability as it adds to the country’s overall external debt and future repayment liability. RBI has stated that the basic objective of the extant External Commercial Borrowings (ECB) policy is to supplement domestic capital for creation of capital assets in the country, limited by considerations for capital account management. With this objective in view, the ECB regime has been progressively liberalised over the years, allowing different entities to raise ECB.

Elaborating further, it has said that within the overarching stance of calibrated approach to the capital account liberalisation, an attempt has now been made to replace the ECB policy with a more rational and liberal framework, keeping in view the evolving domestic as well as global macro-economic and financial conditions, challenges faced in external sector management and the experience gained so far in administering the ECB policy.

The draft framework on External Commercial Borrowings (ECBs) has proposed to lower the all-in cost borrowing by 0.50 per cent to ensure that the funds are borrowed from abroad at a reasonable interest rate. According to the draft guidelines, there will only be a small negative list which include stock market operations, real estate activity and purchase of land. They will not be allowed to raise resources through ECBs and rupee denominated borrowing.

RBI has also proposed to expand the list of recognised ECB lenders by including overseas regulated financial entities, pension funds, insurance funds, sovereign wealth funds and similar other long-term investors. It also allowed Indian banks to act as ECB lenders subject to norms and proposed to cap the minimum maturity of ECB up to $50 million at 3 years and 5 years for amount exceeding $50 million. The minimum average maturity for long term ECB should be 10 years. The guidelines also proposed part pre-payment by existing borrower by raising fresh ECBs.

The CNX Nifty is currently trading at 7809.55, down by 36.40 points or 0.46% after trading in a range of 7804.10 and 7848.45. There were 12 stocks advancing against 38 stocks declining on the index.

The top gainers on Nifty were Lupin up by 3.47%, BPCL up by 1.33%, HCL Tech. up by 1.18%, Dr. Reddys Lab up by 1.05% and Maruti Suzuki up by 0.95%. On the flip side, ONGC down by 2.18%, NMDC down by 1.93%, Vedanta down by 1.74%, Ultratech Cement down by 1.51% and Cairn India down by 1.39% were the top losers.

Asian markets were trading mostly in red Nikkei 225 decreased 418.51 points or 2.32% to 17,651.70, Hang Seng decreased 215.25 points or 1.01% to 21,087.66 and Taiwan Weighted decreased 62.23 points or 0.76% to 8,131.19.

On the flip side, KOSPI Index increased 1.94 points or 0.1% to 1,946.58 and Shanghai Composite increased 8.28 points or 0.27% to 3,124.17.