Benchmarks continue to trade in red in late morning session

After getting weak start, Indian benchmark indices continued to trade in red in the late morning session on absence of positive triggers which could take the markets higher and profit booking in frontline line blue-chip stocks ahead of the expiry of April derivative contracts today. Sentiments remained down-beat with Fitch ratings’ report that indicate the rapid rise in private-sector debt in emerging markets (EMs), particularly in foreign currency, has increased risks to their economies at a time of heightened global uncertainty. Foreign-currency debt was highest as a share of GDP in Turkey at 41 per cent (including indexed debt) and Russia at 37 per cent. It was lowest in China at 10 per cent of GDP, and India at 17 per cent. However, rise in the crude oil prices, sustained FII buying, good earning results by some frontline companies and progress of monsoon could cap further downside. Investors got some comfort with the report that foreign direct investment (FDI) into the country has increased 37 percent after the launch of 'Make in India' programme till February this year. The overseas inflows grew 29 percent during the period compared to the 15-month period prior to the launch. Meanwhile, shares of real estate companies rallied after report suggests that the BrihanMumbai Municipal Corporation (BMC) has recommended an increase in permissible floor space index (FSI) in Greater Mumbai. Some buying also seen in pharmaceutical stocks after the report that the country's pharmaceutical exports reported a 9.7 per cent jump and nearly 33 per cent growth in US markets in FY16.

On the global front, Asian equities give up their early gains and were trading lower with Japanese shares declining the most after the Bank of Japan at its policy meet today lowered the GDP growth forecast to 1.2% compared to 1.5% higher. The central bank kept its monetary policy steady keeping the negative interest rate unchanged.  However, US stocks ended higher on Wednesday after the US Fed at its two-day meet kept policy rates unchanged while being open to a potential rate hike in June. Back home, selling was seen mostly in FMCG, Auto, IT and Capital Goods counters, while some moderate buying witnessed in Realty, banking, PSU and Metal counters. In scrip specific development, Shares of KPIT Technologies have rallied after the company posted a rise of 75.91% in its consolidated net profit at Rs 88.50 crore for the quarter ended March 31, 2016 as compared to Rs 50.31 crore for the corresponding quarter in the FY15. Furthermore, Religare Enterprises has gained after the company entered into a definitive agreement to divest its stake in Landmark Partners LLC, and certain of its subsidiaries (Landmark).

The market breadth on BSE was positive, out of 2116 stocks traded, 1032 stocks advanced, while 959 stocks declined on the BSE.

The BSE Sensex is currently trading at 26020.72, down by 43.40 points or 0.17% after trading in a range of 26009.37 and 26100.54. There were 12 stocks advancing against 18 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.29%, while Small cap index up by 0.12%.

The top gaining sectoral indices on the BSE were Realty up by 3.01%, Bankex up by 0.37%, PSU up by 0.15%, Metal up by 0.11% and Consumer Durables up by 0.10%, while FMCG down by 0.75%, Auto down by 0.45%, IT down by 0.37%, Capital Goods down by 0.33% and Power down by 0.22% were the top losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 1.61%, ONGC up by 1.42%, TCS up by 1.12%, HDFC Bank up by 0.90% and Tata Steel up by 0.76%. On the flip side, BHEL down by 1.68%, ITC down by 1.52%, Mahindra & Mahindra down by 1.21%, Tata Motors down by 0.92% and Infosys down by 0.92% were the top losers.

Meanwhile, In order to make up for the foreign exchange losses incurred, Iran has asked Indian refiners like Essar Oil and Mangalore Refinery and Petrochemicals (MRPL) to pay interest rate of Libor (London Inter-Bank Offered Rate)-plus 0.75 per cent on the $6.5 billion they owe it in past oil dues.

Iran is insisting on interest being paid after differences cropped up over foreign exchange rate. Iran sold oil to refiners like Essar Oil and MRPL in US dollar per barrel and 45 per cent of the oil bill was paid in rupees in a UCO Bank account, while the rest 55 per cent was to be cleared whenever banking channels open. After the lifting of sanctions, Iran has presented its unpaid bill. But Essar Oil and other refiners want to pay Iran at the exchange rate prevalent at the time of buying crude oil in the last three years. In February 2013 when the 45:55 payment system became operational rupee to a US dollar was under 55 and now rupee to a US dollar is nearing 67 now. Hence Iran is losing a lot of money due to exchange rate variation and now wants to make it up through interest rate.

Further, India is ok paying some interest rate even though the ‘Bilateral Payment Agreement’ entered into in August 2012 does not provide for payment of interest. Iran wants its dollar dues in full without factoring in the exchange rate. Refiners like Essar Oil on the other hand want to pay rupee equivalent of the purchase at current rate. Iranian Central Bank officials will shortly visit India to further discuss the modalities. The demand was made when Oil Minister Dharmendra Pradhan met Iranian Central Bank Governor Valiollah Seif in Tehran earlier this month.

The CNX Nifty is currently trading at 7967.50, down by 12.40 points or 0.16% after trading in a range of 7959.10 and 7992.00. There were 20 stocks advancing against 30 stocks declining on the index.

The top gainers on Nifty were Yes Bank up by 2.80%, Bharti Airtel up by 1.57%, ONGC up by 1.44%, Idea Cellular up by 1.36% and HDFC Bank up by 1.01%. On the flip side, HCL Tech. down by 3.05%, BHEL down by 1.64%, ITC down by 1.57%, Mahindra & Mahindra down by 1.26% and GAIL India down by 1.05% were the top losers.

Asian markets were trading mostly in red, Nikkei 225 was down by 2.57%, Taiwan Weighted down by 1.09%, Shanghai Composite down by 0.68%, KOSPI Index down by 0.77%, FTSE Bursa Malaysia KLCI down by 0.82% and Jakarta Composite was down by 0.17%. On the flip side, Hang Seng was up by 0.22%.