Markets continue to trade in red in early noon session

Indian equity benchmarks continued to trade marginally in red in early noon session, on account of selling by investors in the blue-chip counters amid weak Asian markets. Sentiment was under pressure on report that manufacturing activity in the country does not augur well for the economic growth in March and bank credit to domestic export sector has suffered due to fall in external demand. The yearly SBI Composite Index for March has declined below 50 and is at 49.5, compared with last month index of 51.3. However, some support came in with the report that India's current account deficit, the excess of imports over exports, fell further to 1.3% of the gross domestic product due to benefits of lower commodity prices, but the fall in remittances from overseas Indians has restricted the improvement in balance of payments (BoP). Some support also came in with the Finance Minister Arun Jaitley’s statement that the higher public spends and FDI are pushing up growth. Meanwhile, shares of tea companies were trading higher on the BSE on expectations that tea prices are likely to surge.

On the global front, Asian markets were trading mostly in red, as hawkish comments from U.S. Federal Reserve officials clouded the monetary policy outlook less than a week after Fed Chair Janet Yellen had set out a more cautious path to interest rate increases this year. Back home, in scrip specific development, shares of Himachal Futuristic Communications were trading higher as the company is all set to foray into defence equipment manufacturing business. The company has already obtained industrial licences to manufacture a wide range of products for the defence sector.

The BSE Sensex is currently trading at 25259.54, down by 25.83 points or 0.10% after trading in a range of 25177.81 and 25331.01. There were 17 stocks advancing against 13 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.75%, while Small cap index up by 0.49%.

The top gaining sectoral indices on the BSE were Realty up by 2.09%, Consumer Durables up by 1.27%, Power up by 1.24%, Capital Goods up by 1.21% and Auto up by 1.01%, while FMCG down by 0.72%, IT down by 0.55%, TECK down by 0.54% and Bankex down by 0.12% were the losing indices on BSE.

The top gainers on the Sensex were BHEL up by 4.06%, Mahindra & Mahindra up by 2.11%, Maruti Suzuki up by 1.65%, Lupin up by 1.39% and Reliance Industries up by 1.33%. On the flip side, Adani Ports &Special down by 2.19%, Bharti Airtel down by 1.78%, Dr. Reddys Lab down by 1.70%, Hindustan Unilever down by 1.61% and ITC down by 1.24% were the top losers.

Meanwhile, the yearly State Bank of India (SBI) composite index, an indicator for tracking India's manufacturing activity for March 2016 has declined below 50 and is at 49.5 (low decline), compared with last month index of 51.3 (moderate growth). However, it has registered a month-on-month surge to 54.5 in March 2016, from 49.1 in February 2016. The SBI report noted that the manufacturing activity in the country does not augur well for the economic growth in March and bank credit to domestic export sector has suffered due to fall in external demand.

Though the index 'portends' low growth, the good news is that credit off-take has increased to 11.5 percent as on March 4 compared with last year's growth of 9.8 percent on March 6, 2015. However, refinancing constitutes much of the credit growth; hence it would be difficult to say whether credit growth has picked up materially or in a sustained manner. The report further stated that the bank credit to domestic export sector has suffered due to fall in external demand as is visible in major export sectors like textile, gems and jewellery and this in turn has led to contraction in demand of credit. Furthermore, instances of dumping have made revival of certain sectors difficult, depressing the demand of credit.

According to the report, the incremental lending has been mostly to the personal loan segment, especially housing, and also Mudra. The overall credit-deposit ratio is at 77.1 as on 4 March 2016 from 76.4% a year ago and 76.6% in 20 March 2015.

As per the SBI’s composite index, a value of less than 42 means large decline while a value of 42 to 46 means moderate decline, 46 to 50 (low decline), 50 to 52 (low growth), 52 to 55 (moderate growth) and above 55 (high growth. The SBI Composite Index mirrors the credit demand in the country, and other data sets available in public domain.

The CNX Nifty is currently trading at 7695.50, down by 8.75 points or 0.11% after trading in a range of 7669.15 and 7711.10. There were 24 stocks advancing against 26 stocks declining on the index.

The top gainers on Nifty were BHEL up by 4.02%, Tata Power up by 3.80%, Mahindra & Mahindra up by 2.13%, Bosch up by 1.87% and Maruti Suzuki up by 1.73%. On the flip side, Ambuja Cement down by 2.59%, Adani Ports &Special down by 2.11%, Bharti Airtel down by 1.94%, Dr. Reddys Lab down by 1.70% and Hindustan Unilever down by 1.55% were the top losers.

Asian markets were trading mostly in red; Jakarta Composite decreased 31.71 points or 0.65% to 4,853.46, Taiwan Weighted decreased 27.02 points or 0.31% to 8,785.68, Hang Seng decreased 11.5 points or 0.06% to 20,672.65, Shanghai Composite decreased 10.99 points or 0.36% to 3,007.82 and FTSE Bursa Malaysia KLCI decreased 0.4 points or 0.02% to 1,717.96. While, KOSPI Index increased 7.05 points or 0.35% to 1,996.81 and Nikkei 225 increased 286.8 points or 1.71% to 17,011.61