Benchmarks pare some early losses; still continue to trade in red

Recovering from day’s low, Indian benchmark indices gained momentum however were still trading in red on across-the-board selling by investors, tracking heavy losses in Japan as a surging yen hit exporters. Sentiments remained down-beat with a report that exports of 17 sectors, over half of the 30 sectors including petroleum products, textiles, man-made yarn and fabrics, engineering and leather, closely monitored by the Commerce Ministry were in the negative zone in March due to a fall in global commodity prices amid tepid demand. Besides, depreciation in rupee value against the dollar also weighed on the sentiment. Indian rupee weakened by 8 paise to 66.41 against the dollar in early trade on increased demand for the American currency from importers and banks. However, losses remained capped with the report that growth in India's manufacturing sector slowly sharply in April as demand weakened, reinforcing views that the central bank will have to cut interest rates again in coming months. The Nikkei/Markit Manufacturing Purchasing Managers' Index fell to a four-month low of 50.5 in April from March's 52.4, nearing the 50 mark that separates growth from contraction and the lowest reading of the year. Some support also came with President Pranab Mukherjee’s statement that the Indian economy has the potential to grow at 8-10 percent per year over the next couple of decades. Mukherjee said that the world today saw the Indian economy as a bright spot in an otherwise gloom and bleak economic environment all over the world.

On the global front, Asian markets declined on Monday, uninspired after a downbeat day on Wall Street and led by a plunge in Japan’s Nikkei after the dollar notched a fresh 18-month low against the yen.  Sentiments remained subdued with a survey that showed that activity in China’s manufacturing sector expanded for the second month in a row in April but only marginally, raising doubts about the sustainability of a recent pick-up in the economy. Besides, drop in oil prices also weighed on the sentiment. Oil prices dipped in early Asian trade as rising production in West Asia outweighed falling US output and the recent slide in the dollar, which has been supporting crude.

Back home, majority of the sector indices were trading in negative zone, Banking, information technology (IT), Realty and FMCG stocks witnessing selling pressure while Consumer Durables, Metal and Oil & Gas companies showing some strength. In scrip specific development, shares of Navin Fluorine International zoomed after the company reported robust earnings for the fourth quarter ended March 31, 2016. Net profit on a standalone basis for the quarter ended March 2016 increased 90 percent to Rs 31.5 crore compared with Rs 16.6 crore in the same quarter last fiscal. On the other hand, shares of Federal Bank have slipped on posting a 96% decline in net profit to Rs 10 crore for the fourth quarter ended March 31, owing to higher provisioning.

The market breadth on BSE was negative, out of 2117 stocks traded, 995 stocks advanced, while 1029 stocks declined on the BSE.

The BSE Sensex is currently trading at 25432.25, down by 174.37 points or 0.68% after trading in a range of 25381.50 and 25565.44. 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 0.86%, while Small cap index up by 0.11%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 0.94%, Metal up by 0.66%, Oil & Gas up by 0.30% while, Bankex down by 0.85%, IT down by 0.76%, TECK down by 0.66%, Realty down by 0.59%, FMCG down by 0.41% were the top losing indices on BSE.

The top gainers on the Sensex were Cipla up by 1.25%, Lupin up by 1.17%, Reliance Industries up by 0.87%, Axis Bank up by 0.58% and Coal India up by 0.45%. On the flip side, ICICI Bank down by 4.14%, NTPC down by 2.09%, Dr. Reddys Lab down by 1.58%, Adani Ports &Special down by 1.32% and ITC down by 1.28% were the top losers.

Meanwhile, days after chief economic adviser Arvind Subramanian termed India's trade policy as ambivalent, Commerce Minister Nirmala Sitharaman has said that India has a clear picture in its way to move ahead on the trade front and is certainly not aimless when it comes to trade negotiations.

The minister further said that India is not an obstructionist in the 16 country Regional Comprehensive Economic Partnership (RCEP), but will not yield on the offers it has made for opening up goods and services in the agreement and will keep pursuing them. In fact, in RCEP, India's offer on Mode 3 services that allow foreign commercial presence is more liberal than other nations' as it has apprehensions only on opening up financial, insurance and legal services.

Referring to change in the order of trade across the world, Sitharaman said that tariff is not a very powerful tool any longer and one must understand trade from a non-tariff route. She also spoke about how G-20 countries are getting more defensive about their exports and imports and how India has become defensive on steel import duty.

The CNX Nifty is currently trading at 7806.45, down by 43.35 points or 0.55% after trading in a range of 7786.85 and 7823.00. There were 18 stocks advancing against 32 stocks declining on the index.

The top gainers on Nifty were Hindalco up by 2.49%, Aurobindo Pharma up by 1.49%, Cipla up by 1.30%, Lupin up by 1.17% and Reliance Industries up by 0.88%. On the flip side, ICICI Bank down by 4.35%, NTPC down by 2.48%, Tata Motors - DVR down by 1.90%, Tech Mahindra down by 1.74% and Dr. Reddys Lab down by 1.43% were the top losers.

Asian markets were trading in red, Nikkei 225 was down by 3.2%, Jakarta Composite down by 0.72% and KOSPI Index was down by 0.77%.