Benchmarks continue to trade in red in late morning session

Indian bourses 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 amid weak cues from Asian markets ahead of the US employment data. Investors were concerned over the slower pace of expansion last month in China's services sector, compared with March, which added to worries over China's disappointing manufacturing data and downgrades on growth and inflation forecast by the European Commission. On domestic front, sentiments remained subdued on report that foreign portfolio investors (FPIs) sold shares worth a net Rs 388.51 crore on May 05, 2016. Besides, depreciation in rupee value against the dollar also weighed on the sentiment. Indian rupee weakened by 7 paise to 66.62 against the dollar in early trade on increased demand for the American currency from importers and banks. Further, market participants also remained cautious with the report that external advisers of Reserve Bank of India governor Raghuram Rajan are worried about the monetary policy implications of slowing remittances by overseas Indians for the first time since 2009 even though India does not rely significantly on such funds to meet foreign exchange requirements. Weak corporate sector and slowing remittances are concerns that monetary policy needs to take into account. However, losses remained capped with Finance Minister Arun Jaitley’s statement that India’s economic situation is by far the best in the world and the country has the potential to do even better. The minister enlightened that India is doing much better than other economics and has maintained 7.65% growth in FY16 Vs 7.2% in FY15 despite international headwinds.

On the global front, Asian markets edge lower on Friday as investors awaited direction from U.S. payrolls data, while concerns over global economic growth persisted in the wake of weak data from China. The US Labor Department report is expected to show an increase of about 200,000 jobs in April, while the unemployment rate is expected to edge down to 4.9%. Meanwhile, Shanghai shares slid the most in two weeks, while Japan’s retreated as trading resumed after a three-day break.

Back home, barring Consumer Durables index which gained 0.19%, all the other indices were in the negative, with IT, Capital Goods and Realty indices being significant losers. In scrip specific development, shares of Hindustan Composites have surged after the company reported 135% growth in net profit at Rs 18.9 crore for the quarter ended March 2016 compared with Rs 8 crore in the same quarter last fiscal. Furthermore, Talwalkars Better Value Fitness has rallied after the company reported 13% year on year (YoY) growth in consolidated net profit at Rs 20 crore for the quarter ended March 31, 2016.

The market breadth on BSE was negative, out of 2202 stocks traded, 919 stocks advanced, while 1156 stocks declined on the BSE. 

The BSE Sensex is currently trading at 25138.96, down by 123.25 points or 0.49% after trading in a range of 25057.93 and 25228.31. 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 0.32%, while Small cap index up by 0.02%.

The only gaining sectoral index on the BSE was Consumer Durables up by 0.19%, while IT down by 0.86%, TECK down by 0.66%, Capital Goods down by 0.41%, Realty down by 0.40% and Auto down by 0.26% were the top losing indices on BSE.

The top gainers on the Sensex were SBI up by 1.50%, Bharti Airtel up by 0.56%, ICICI Bank up by 0.56%, Asian Paints up by 0.29% and GAIL India up by 0.23%. On the flip side, Adani Ports &Special down by 2.19%, Dr. Reddys Lab down by 1.33%, Wipro down by 1.19%, TCS down by 1.09% and Hero MotoCorp down by 1.09% were the top losers.

Meanwhile, in its latest move aimed at facilitating ease of doing business, the government has relaxed the norms for claiming duty benefits under the Merchandise Exports from India scheme (MEIS), by exempting merchandise exporters from mandatory submission of landing bills with immediate effect.

In the MEIS scheme, which was introduced in April, 2015 under the Foreign Trade Policy-incentivising merchandise exports, exporters earned duty credits at fixed rates of 2 per cent, 3 per cent and 5 per cent depending upon the product and country. Earlier, the benefit of MEIS was available where the exporter presents proof of landing the goods at the destination country. Such proof was not necessary where MEIS was available for export to all countries but was mandatory for the 2787 tariff lines, incentives for which were available only to limited countries.

Now Directorate General of Foreign Trade (DGFT) in a notification has said that MEIS Scheme which covers 5,012 lines (or products). 2787 lines required submission of proof of landing as reward was not available for all markets. Henceforth, landing certificate shall not be required under MEIS along the remaining 2787 tariff lines.

The government has taken various other measures tackling the difficulties exporters have had with the MEIS and the annual resource allocation under MEIS was enhanced from Rs18,000 crore to Rs 21,000 crore in October 2015. The government had also raised the duty drawback rates by two per cent for many sectors including engineering, marine and textiles.

The CNX Nifty is currently trading at 7706.45, down by 29.05 points or 0.38% after trading in a range of 7678.35 and 7717.65. There were 18 stocks advancing against 32 stocks declining on the index.

The top gainers on Nifty were Bank of Baroda up by 2.29%, SBI up by 1.64%, ACC up by 1.44%, Hindalco up by 1.22% and Tata Power up by 1.07%. On the flip side, Adani Ports & Special down by 1.46%, Power Grid down by 1.40%, Dr. Reddys Lab down by 1.29%, Wipro down by 1.29% and Kotak Mahindra Bank down by 1.28% were the top losers.

Asian markets were trading in red, Hang Seng was down by 1.25%, Nikkei 225 down by 0.55%, Shanghai Composite down by 1.8%, Taiwan Weighted down by 0.2% and FTSE Bursa Malaysia KLCI down by 0.04%.