Markets trade marginally in red in early deals

After falling over one and half percent in last session, Indian equity benchmarks once again made a weak start and are trading with marginal losses in early deals on the start of the new F&O series amid weak global cues.  Sentiments were under pressure on report that the country's current account deficit is likely to widen modestly to $25 billion in the current fiscal from $20 billion last year on account rising demand for gold and sluggishness in exports. Further, there was some cautiousness too with government’s statement that implementation of new pay scales recommended by the 7th Pay Commission is estimated to put an additional burden of Rs 1.02 lakh crore, or 0.7 percent of GDP, on the exchequer in 2016-17. The burden on pay head would increase by Rs 39,100 crore to about Rs 2.83 lakh crore in the current fiscal. However, the session was productive for broader indices, which outperforming larger counterparts were trading with gains in the range of 0.10-0.20%. The sentiments were supported by Indian rupee, which appreciated by 7 paise to 66.45 against the US dollar in early trade on account of fresh selling of the American currency by exporters amid sustained foreign fund inflows.

On the global front, US markets ended lower on Thursday as the Bank of Japan's shocking call to cap monetary stimulus continued to rattle investors. Asian markets were trading lower following losses in US markets while concerns about the global outlook were reinforced after data showed the US economy grew at its slowest pace for two years in the first quarter. Japanese market is closed on account of Showa Day. 

Back home, on the BSE sectoral front, Metal, Oil & Gas, PSU, Realty and Power counters were trading in green, while TECK, IT, Bankex, FMCG and Auto counters were reeling under pressure. The market breadth on BSE was positive in the ratio of 958: 511, while 76 scrips remained unchanged.

The BSE Sensex is currently trading at 25591.34, down by 11.76 points or 0.05% after trading in a range of 25529.59 and 25618.87. There were 18 stocks advancing against 12 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.09%, while Small cap index gained 0.19%.

The top gaining sectoral indices on the BSE were Metal up by 0.85%, Oil & Gas up by 0.47%, PSU up by 0.36%, Realty up by 0.26% and Power up by 0.13%, while TECK down by 0.46%, IT down by 0.32%, Bankex down by 0.19%, FMCG down by 0.17% and Auto down by 0.04% were the losing indices on BSE.

The top gainers on the Sensex were Lupin up by 1.61%, Maruti Suzuki up by 1.53%, ONGC up by 1.50%, Axis Bank up by 1.40% and Cipla up by 1.32%. On the flip side, Bharti Airtel down by 1.13%, ICICI Bank down by 1.08%, Mahindra & Mahindra down by 0.71%, ITC down by 0.36% and Bajaj Auto down by 0.29% were the top losers.

Meanwhile, in order to regulate the nascent and unregulated peer-to-peer (P2P) lending business, the Reserve Bank of India (RBI) has came up with a Consultation Paper on P2P Lending, for seeking comments/views from all interested parties and general public. P2P lending is a form of crowd-funding which can be defined as the use of an online platform that matches lenders with borrowers in order to provide unsecured loans. The borrower can either be an individual or a business requiring a loan. The lender can also be a natural or a legal person. Fee is paid to the platform by both the lender as well as the borrower.

The Consultation paper outlines the pros and cons of regulating the sector and proposes a suitable framework for regulating this activity, which includes minimum capital, permitted activity, governance requirements, fair practices code for customer dealing and data security. Online P2P lending companies work as marketplaces that bring individual borrowers and lenders together for loan transactions without the intervention of traditional financial institutions such as banks and NBFCs.

The central bank has proposed registering P2P lending platforms as non-banking financial companies (NBFCs). RBI said it would be “prudent” to regulate the business because of “the impact it can have on traditional banking channels” and NBFCs and its “potential to disrupt the financial sector and throw up surprises”.

There are many variants of Peer to Peer lending platforms in terms of the nature and extent of services provided by them and global regulatory practices also vary. At present, there is no clear regulatory framework in India governing the functioning of the Peer to Peer lending platforms. RBI has said that based on the feedback of the consultation paper the contours of regulating Peer to Peer Lending will be decided in consultation with the Securities and Exchange Board of India (SEBI). 

The CNX Nifty is currently trading at 7868.55, up by 21.30 points or 0.27% after trading in a range of 7821.80 and 7868.70. There were 36 stocks advancing against 14 stocks declining on the index.

The top gainers on Nifty were Lupin up by 1.95%, Ambuja Cement up by 1.91%, Tata Power up by 1.81%, Tata Steel up by 1.70% and Maruti Suzuki up by 1.60%. On the flip side, HCL Tech. down by 4.02%, Idea Cellular down by 3.16%, Bharti Airtel down by 1.15%, ICICI Bank down by 1.12% and Bosch down by 0.80% were the top losers.

Asian markets were trading in red, Hang Seng decreased 299.18 points or 1.4% to 21,088.85, Taiwan Weighted decreased 102.5 points or 1.21% to 8,371.37, Jakarta Composite decreased 15.46 points or 0.32% to 4,832.93, KOSPI Index decreased 10.04 points or 0.5% to 1,990.89, Shanghai Composite decreased 9.06 points or 0.31% to 2,936.53 and FTSE Bursa Malaysia KLCI decreased 7.15 points or 0.43% to 1,667.61.