Benchmarks extend losses; trades at lowest point of the day

Indian equity benchmarks adding losses, continued to trade in red in the late morning session, with the Sensex losing over 100 points and Nifty falling below the 7700 level, on account of profit booking at higher levels, while the terror attack at an airport in Brussels also dampened sentiment. Also, the global rating agency Standard and Poor's report that the Indian banking sector might continue to face tough times over next 12 months as their asset quality and capitalisation remain under pressure, kept weighing the sentiments. According to Standard and Poor's, the asset quality is likely to remain under pressure due to tepid domestic industrial activity, and subdued profitability and high leverage in some corporate sectors. Besides, weak trend in Asian stocks coupled with depreciation in rupee value too weighed. Extending its slide for the third straight day, Indian rupee shed another 8 paise to 66.79 against the dollar in early trade on appreciation of the American currency against others overseas. Investors also remained cautious ahead of the extended weekend, as markets will remain closed on Thursday and Friday on account of Holi and Good Friday.

On the global front, most of the Asian stock markets were trading lower on Wednesday, with airlines taking the biggest hit in the aftermath of the deadly Brussels bombings. However, losses remained capped as the main US and European markets recovered from early losses to finish little-changed on Tuesday. Back home, stocks from Metal, Capital Goods and Realty counters were supporting the markets’ uptrend, while those from Oil & Gas, Consumer Durables and Banking counters were adding to the underlying cautious undertone. In scrip specific development, shares of Transcorp International have surged after the company received the in-principle authorisation from the Reserve Bank of India (RBI) for running ‘semi closed pre-paid payment instruments (PPI)’ service. Furthermore, Kalpataru Power Transmission has rallied after the company secured orders worth Rs 1,320 crore from Power Grid Corporation.

The market breadth on BSE was negative, out of 2232 stocks traded, 1015 stocks advanced, while 1081 stocks declined on the BSE.

The BSE Sensex is currently trading at 25205.03, down by 125.46 points or 0.50% after trading in a range of 25204.45 and 25322.10. There were 9 stocks advancing against 21 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index was down by 0.01%, while Small cap index was up by 0.28%.

The top gaining sectoral indices on the BSE were Metal up by 0.89%, Capital Goods up by 0.34%, Realty up by 0.30%, Auto up by 0.16% and TECK up by 0.11%, while Oil & Gas down by 0.94%, Consumer Durables down by 0.65%, Bankex down by 0.58%, FMCG down by 0.54%, PSU down by 0.33% were the top losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 2.43%, Hero MotoCorp up by 1.35%, Adani Ports &Special up by 1.00%, Tata Steel up by 0.92% and Larsen & Toubro up by 0.48%. On the flip side, Reliance Industries down by 1.76%, HDFC down by 1.41%, Lupin down by 1.06%, NTPC down by 1.01% and GAIL India down by 0.95% were the top losers.

Meanwhile, with an aim to get state-run companies, including unlisted ones, to leverage their balance sheets better and raise more loans from the market, the government has begun a mega exercise to get public sector companies (PSUs) to buy back their shares and take a slice of the estimated Rs 2.6 lakh crore lying idle with them. The companies which have high cash and low debt are the focus area. 

This move will be especially helpful in case of companies which are currently unlisted and may go for a listing later. Further it will help the government raise resources; it will also help the PSUs improve the earning per share as the number of shares will come down.

Earlier, the exercise was being driven by the department of disinvestment to meet the shortfall from lower disinvestment during the current financial year, which has now been taken under with the public asset management along with the department of public enterprises. It has now got bigger and is part of a larger government strategy. Under the exercise, the list of companies is being prepared based on their capital expenditure plans. For a buyback, companies with surplus cash would dip into their reserves, repurchase the shares and transfer the money to the shareholders, led by the government.

The CNX Nifty is currently trading at 7689.00, down by 25.90 points or 0.34% after trading in a range of 7686.15 and 7718.25. There were 22 stocks advancing against 28 stocks declining on the index.

The top gainers on Nifty were Hindalco up by 3.33%, Bharti Airtel up by 2.59%, Idea Cellular up by 2.30%, Tata Power up by 1.54% and Hero MotoCorp up by 1.52%. On the flip side, Bank of Baroda down by 1.84%, Cairn India down by 1.83%, Reliance Industries down by 1.71%, HDFC down by 1.55% and PNB down by 1.51% were the top losers.

Asian markets were trading mostly in red, Hang Seng was down by 0.26%, Taiwan Weighted lost 0.37%, Jakarta Composite was down by 0.53%, Shanghai Composite declined by 0.31%, KOSPI Index decreased 0.21% and Nikkei 225 was tad lower by 0.02%. On the other hand, FTSE Bursa Malaysia KLCI was up by 0.11%.