Markets continue to trade in red in late morning session

Recovering from day’s low, benchmark equity indices gained momentum however were still trading below the neutral line in red on persistent profit-booking by funds and retail investors ahead of the key macroeconomic data and quarterly earnings by some more companies, to be released this week. Sentiments remained down-beat with the report that the long-negotiated amendments to the existing Double Tax Avoidance Convention between India and Mauritius is done and it is not looking good for FIIs, as the new pact to levy capital gains tax on investments coming through Mauritius may put foreign portfolio investors in a fix.  Besides, weak trend in Asian stocks coupled with depreciation in rupee value also weighed on the sentiment. Indian rupee depreciated by another 17 paise to 66.84 against the US dollar in early trade on increased demand for the greenback from importers amid appreciation of the American currency overseas. However, Investors got some comfort with the report that India's real agriculture Gross value added (GVA) growth is projected to rise 1.1 per cent in 2015-16, despite below-normal monsoon last year. According to the report, the ongoing diversification in the agriculture sector has reduced volatility in agriculture output and farm incomes.  Meanwhile, telecom stocks rallied after the Supreme Court struck down an order by the country’s top telecom regulatory body mandating mobile service providers to compensate subscribers for call drops, calling it ‘arbitrary, unreasonable and non-transparent’. Some buying also witnessed in tyre stocks after Government has initiated a probe into dumping of certain radial tyres from China that are used in buses, lorries and trucks and may end up imposing duty on them to protect the domestic industry.

On the global front, most of the Asian markets edge lower on Wednesday as investors shrugged off an overnight rally in global stocks and looked to bonds in the absence of signs of a sustainable recovery in China and other emerging markets. Oil prices also turned south, with Brent crude, the international benchmark, down 0.4 per cent at $45.34 a barrel and West Texas Intermediate, the US marker, down half of a percentage point at $44.43. Overnight, US stocks surged to their biggest gain in two months on Tuesday after the Chinese government moved to stimulate the world's second-largest economy.

Back home, on the BSE sectoral space, investors squared off hefty positions from the Oil & Gas index which plunged over half a percent, being the top laggard in the space. The Realty, PSU and Consumer Durables pockets traded with cuts of around half a percent each and restricted the benchmarks’ upside. However, some gains in Power and rate sensitive Bankex counters helped the key indices cut their losses. In scrip specific development, shares of Zee Entertainment Enterprises have rallied 5% after the company reported 13% year on year (YoY) jump in consolidated net profit at Rs 261 crore for the fourth quarter ended March 31, 2016 (Q4FY16). Furthermore, NTPC gained after the company started commercial operation at 200 MW capacity (4X50 MW) of NP Kunta Ultra Mega Solar Power Project Stage-I at Anantapuram with effect from May 09, 2016.

The market breadth on BSE was negative, out of 2094 stocks traded, 968 stocks advanced, while 1028 stocks declined on the BSE. 

The BSE Sensex is currently trading at 25696.78, down by 75.75 points or 0.29% after trading in a range of 25409.24 and 25711.56. There were 11 stocks advancing against 19 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.18%, while Small cap index up by 0.10%.

The top gaining sectoral indices on the BSE were Power up by 0.09%, Bankex up by 0.05% and TECK up by 0.02%, while Oil & Gas down by 0.62%, Realty down by 0.61%, PSU down by 0.46%, Consumer Durables down by 0.34% and IT down by 0.31% were the top losing indices on BSE.

The top gainers on the Sensex were Axis Bank up by 2.02%, NTPC up by 1.32%, Asian Paints up by 1.02%, Maruti Suzuki up by 0.94% and Bharti Airtel up by 0.69%. On the flip side, Dr. Reddys Lab down by 1.58%, Adani Ports &Special down by 1.28%, Coal India down by 1.12%, ONGC down by 0.94% and SBI down by 0.90% were the top losers.

Meanwhile, with an aim to protect the domestic manufacturers, the government has initiated a probe into dumping imports of certain radial tyres from China that are used in buses, lorries and trucks and may end up imposing duty on them. The Directorate General of Anti-Dumping and Allied Duties (DGAD) working on a request of initiation of an anti-dumping investigation and imposition of the duty on the imports by Automotive Tyre Manufacturers' Association (ATMA) has found sufficient prima facie evidence of dumping of these tyres from China.

DGAD in its notification said that it has initiated the investigation on imports of new/unused pneumatic radial tyres with or without tubes and/or flap of rubber (including tubeless tyres) having nominal rim dia code above 16 used in buses and lorries/trucks originating in or exported from China. It further said that it has initiated an investigation into the alleged dumping, and consequent injury to the domestic industry...to determine the existence, degree and effect of any alleged dumping and to recommend the amount of anti-dumping duty which, if levied, would be adequate to remove the injury to the domestic industry. The period of investigation covers July 2014 to June 2015 (12 months). It would also cover the period of 2012-13, 2013-14 and 2014-15.

India has already imposed anti-dumping duty on several products, to tackle cheap imports from some countries, including China. Currently, the import of tyres is subjected to pneumatic tyres and tubes for automotive vehicles (quality control) order, 2009 and BIS standards. The government has already restricted the imports of retreated tyres unless it fulfills the Minimum Import Price (MIP) condition.

The CNX Nifty is currently trading at 7869.90, down by 17.90 points or 0.23% after trading in a range of 7780.90 and 7877.15. There were 21 stocks advancing against 30 stocks declining on the index.

The top gainers on Nifty were Zee Entertainment up by 6.02%, Hindalco up by 2.73%, Idea Cellular up by 2.35%, Axis Bank up by 2.02% and Grasim Industries up by 1.64%. On the flip side, Bharti Infratel down by 1.58%, Dr. Reddys Lab down by 1.30%, Adani Ports &Special down by 1.23%, BPCL down by 1.20% and HDFC Bank down by 1.14% were the top losers.

Asian markets were trading mostly in red, Hang Seng was down by 0.81%, KOSPI Index down by 0.18%, Taiwan Weighted down by 0.22% and FTSE Bursa Malaysia KLCI down by 0.06%. On the flip side, Shanghai Composite was up by 0.62%, Jakarta Composite up by 0.54% and Nikkei 225 up by 0.46%.