Benchmarks continue to trade in red in late morning session

Indian benchmark indices continued to trade in red in the late morning session as funds and retail investors indulged in booking profits at prevailing level. Sentiments remained down-beat with report that higher food and fuel prices probably nudged India's annual inflation up to 5.0 percent in April from 4.83 percent in March, making it harder for the central bank to follow up last month's interest rate cut too swiftly. Further, market participants remained cautious and refrained from any buying activity ahead of the key macroeconomic data and quarterly earnings by some more companies, to be released this week. Depreciation in rupee value also weighed on the sentiment. Indian rupee was trading lower by 12 paise at a fresh two-week low of 66.70 against the US dollar in early trade on increased demand for the American currency from importers. However, investors got some confidents with the report that the Centre's indirect tax mop-up rose 41 per cent in April led by high excise collections, signaling a pick-up in economic activity. Further, India's foodgrain production increased marginally to 252.23 million tonnes in the 2015-16 crop year, despite setback due to deficient rainfall and shortage of water in reservoirs. Some support also came in from reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 224.40 crore on May 09, 2016. Meanwhile, shares of sugar companies have extended gains and rallied on expectation of strong earnings for quarter ended March 31, 2016 (Q4FY16). On the other hand, Metal stocks including Hindalco Industries, NMDC, NALCO, Vedanta and JSW Steel came under pressure after the report that Iron ore traffic, including pellets, at major ports saw a sharp fall of 28 per cent in financial year 2015-16 as imports declined because of weak demand.

On the global front, most of the Asian markets trading higher on Tuesday as investors turned optimistic after a fresh promise of stimulus from Beijing, which helped to counter pessimism over weak trade data from China for April. Further, Japanese equities climbed as the yen weakened, but investors remained careful before major companies release full-year earnings and forecasts. Meanwhile, US stocks struggled to gain a firm foothold in positive territory on Monday as uncertainties in the oil market dragged prices lower, weighing on energy and materials shares. Back home, stocks from FMCG, Realty and Consumer Durables counters were supporting the markets, while those from Auto, Oil & Gas and PSU counters were adding to the underlying cautious undertone. In scrip specific development, shares of Hindustan Unilever have surged after the company posted a rise of 7.02% in its net profit at Rs 1089.59 crore for the quarter ended March 31, 2016 as compared to Rs 1018.08 crore for the same quarter in the previous year. Furthermore, Tata Steel has gained after Tata Steel Europe has received seven expressions of interest for Tata Steel’s UK business which have been immediately taken forward to the next stage of the sale process.

The market breadth on BSE was positive, out of 2136 stocks traded, 1034 stocks advanced, while 978 stocks declined on the BSE. 

The BSE Sensex is currently trading at 25646.03, down by 42.83 points or 0.17% after trading in a range of 25618.53 and 25710.69. There were 9 stocks advancing against 21 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 up by 0.12%.

The gaining sectoral indices on the BSE were FMCG up by 0.50%, Realty up by 0.39%, Consumer Durables up by 0.33%, Capital Goods up by 0.14% while, Auto down by 1.16%, Oil & Gas down by 0.67%, PSU down by 0.55%, Metal down by 0.53%, TECK down by 0.28% were the losing indices on BSE.

The top gainers on the Sensex were Hindustan Unilever up by 2.04%, Dr. Reddys Lab up by 1.79%, BHEL up by 1.06%, Tata Steel up by 0.96% and Lupin up by 0.52%. On the flip side, Tata Motors down by 2.91%, GAIL India down by 1.23%, Mahindra & Mahindra down by 1.07%, Bajaj Auto down by 1.02% and ONGC down by 0.92% were the top losers.

Meanwhile, the Society of Indian Automobile Manufacturers (SIAM), the apex national body representing Indian Automobile Industry and other bodies including the government, has reported that the auto sector begun the new financial year on a positive note, as the industry produced a total 2,118,240 vehicles including passenger vehicles, commercial vehicles, three wheelers, two wheelers and quadricycle in April 2016, as against 1,909,842 in April 2015, registering a growth of 10.91 percent over the same month last year.

Sales too witnessed double digit growth and the sales of Passenger Vehicles grew by 11.04 percent in April 2016 over the same month last year. The overall Commercial Vehicles segment registered a growth of 17.36 percent in April 2016 as compared to the same month last year. Medium & Heavy Commercial Vehicles (M&HCVs) registered a growth at 21.98 percent and Light Commercial Vehicles grew by 14.01 percent during April 2016 over the same month last year. Three Wheelers sales grew by 36.68 percent in April 2016 over the same month last year. Passenger and Goods Carrier sales grew by 44.69 percent and 7.64 percent respectively in April 2016 over April 2015. Two Wheelers sales registered a growth at 21.23 percent during April 2016 over April 2015.

However, in April 2016, overall automobile exports declined by 15.87 percent. Though, Passenger Vehicles registered a growth of 6.61 percent, Commercial Vehicles, Three Wheelers and Two Wheelers declined by 2.68 percent, 61.86 percent and 10.80 percent respectively in April 2016 over April 2015.

Meanwhile, SIAM also warned that if the government ends up imposing a 30% environment cess on purchase of diesel cars and SUVs as per the recent Supreme Court order, investment in India's auto sector will dry up. It said, no one will invest in India and the country's image as an investment destination will be completely thrown out of gear. SIAM Director General Vishnu Mathur also said that most multinational companies whether they are Japanese, American or Korean, have invested in diesel technology in India, 'Everyone has got diesel portfolio and everyone is watching very closely how India decides to go ahead with its policy”. “If you have a policy and you do not abide by it that means that we are not a destination that can be trusted. Why should anybody invest here? Most investments from companies are frozen right now.”

The CNX Nifty is currently trading at 7846.95, down by 19.10 points or 0.24% after trading in a range of 7838.85 and 7874.00. There were 12 stocks advancing against 39 stocks declining on the index.

The top gainers on Nifty were Hindustan Unilever up by 2.19%, Dr. Reddys Lab up by 1.83%, BHEL up by 1.14%, Tata Steel up by 1.00% and Axis Bank up by 0.51%. On the flip side, Tata Motors down by 2.93%, Tata Motors - DVR down by 2.59%, Tata Power down by 1.63%, Hindalco down by 1.53% and Eicher Motors down by 1.38% were the top losers.

Asian markets were trading mostly in green, FTSE Bursa Malaysia KLCI was up by 0.11%, Taiwan Weighted up by 0.3%, Shanghai Composite up by 0.07%, KOSPI Index up by 0.57% and Nikkei 225 up by 2.26%. On the flip side, Hang Seng was down by 0.13% and Jakarta Composite down by 0.05%.