Benchmarks trade in red in late afternoon session

Indian equity benchmarks continued its weak trade in the late afternoon session on account of selling in frontline blue chip counters fueled by fears about the global economy. The sentiments were under pressure after growth in India’s services firms fell to a four-month low of 53.7 in April from 54.3 in March on the back of new business growing slower than the previous months. Additional selling pressure crept in after World Bank warned that water scarcity, exacerbated by climate change, could impact growth, spur migration and spark conflict across the globe including in India where several regions are facing water deficit. The report highlighted that there is going to be mounting, increasing water deficits or at least increasing demands for water across India. Traders were seen selling in Metal, Auto and Realty sector stocks. In scrip specific development, Dhanlaxmi Bank was trading in red after K. Jayakumar, a retired Indian Administrative Services (IAS) officer, and former chief secretary of Kerala government has resigned from the troubled bank. The IAS officer’s hard hitting letter exposes the lack of proper management at the bank, but also questions the role of banking regulator, Reserve Bank of India.

On the global front, the Asian markets were trading mostly in red while the European markets traded on pessimistic note. Back home, the NSE Nifty and BSE Sensex were trading below the psychological 7,750 and 25,200 levels respectively. The market breadth on BSE was negative in the ratio of 820:1565 while 114 scrips remained unchanged.

The BSE Sensex is currently trading at 25145.54, down by 84.16 points or 0.33% after trading in a range of 25096.19 and 25245.70. There were 13 stocks advancing against 17 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.68%, while Small cap index down by 0.41%.

The losing sectoral indices on the BSE were Metal down by 2.77%, Auto down by 1.71%, Realty down by 1.13%, PSU down by 0.76%, Power down by 0.63%.

The top gainers on the Sensex were HDFC up by 3.00%, NTPC up by 1.65%, GAIL India up by 1.12%, HDFC Bank up by 0.97% and Hero MotoCorp up by 0.81%.

On the flip side, Adani Ports & Special Economic Zone down by 12.04%, Tata Motors down by 5.98%, Tata Steel down by 5.38%, BHEL down by 2.69% and ICICI Bank down by 1.74% were the top losers.

Meanwhile, the government is making effort to move towards a low interest rate regime where money is available at a lower rate to entrepreneurs and investors. Economic Affairs Secretary Shaktikanta Das, while projecting a near-8 percent growth for current fiscal has said that the country is targeting to be a “low-cost economy” by reducing interest rates and transaction cost. He said the Indian economy, continues to be strong and robust given the global economic situation that is prevailing. The economy is estimated to have expanded by 7.6 per cent in 2015-16.

Shaktikanta Das on the sidelines of the ADB Annual meet said that the Indian economy may clock near 8 percent growth in 2016-17 on the back of a good monsoon and added that the main objective of our structural reform policies is two-fold. First is to make India a low-cost economy. Low cost economy not in terms of wages because if you get low wages for your people that's not a very happy thing to happen. He said people should get higher wages so that they could save and spend more. He added that we are targeting to make India a low-cost economy by way of reducing our interest rates, by reducing our tax levels, reducing the cost of logistics and the transaction cost of our economy.

Talking further on reduction of interest rates, he said that the government has been working with RBI, and added that the Finance Ministry and the RBI have entered a monetary policy framework agreement under which the central bank has a particular inflation target and over two years inflation which was earlier in the order of 10 per cent, has been brought down to 5-5.5%.That has enabled the central bank to reduce policy rates, it has also enabled the government to reduce certain government driven savings schemes.

The CNX Nifty is currently trading at 7720.60, down by 26.40 points or 0.34% after trading in a range of 7703.85 and 7749.00. There were 18 stocks advancing against 32 stocks declining on the index.

The top gainers on Nifty were HDFC up by 3.01%, NTPC up by 1.61%, Kotak Mahindra Bank up by 1.31%, HCL Tech up by 1.26% and HDFC Bank up by 0.92%.

On the flip side, Adani Ports & Special Economic Zone down by 11.89%, Tata Motors down by 6.09%, Tata Steel down by 5.50%, Hindalco down by 5.31% and Tata Motors - DVR down by 5.08% were the top losers.

Asian markets were trading mostly in red; Hang Seng decreased 151.11 points or 0.73% to 20,525.83, Taiwan Weighted dropped 108.65 points or 1.31% to 8,185.47, Jakarta Composite shed 9.54 points or 0.20% to 4,802.73, KOSPI Index fell 9.7 points or 0.49% to 1,976.71 and Shanghai Composite was down by 1.37 points or 0.05% to 2,991.27.

On the flip side, FTSE Bursa Malaysia KLCI was up by 6.20 points or 0.38% to 1,657.64. Japanese stock exchange was closed on account of ‘Greenery Day’ holiday.

The European markets were trading in red; UK’s FTSE 100 decreased 27.49 points or 0.44% to 6,158.10, Germany’s DAX decreased 11.67 points or 0.12% to 9,915.10 and France’s CAC decreased 1.00 points or 0.02% to 4,370.98.