Benchmarks continue to trade in red in late morning session

Indian equity benchmarks were trading without any fervor in the Monday late morning trades as cautious investors remained on the sidelines, lacking any significant upside triggers to take the markets higher. The aimless indices appear exhausted as they are gradually crawling only sideways in a tight band around the psychological 7,800 (Nifty) and 25,450 (Sensex) levels. Sentiments remained subdued with a industry body FICCI’s survey that growth of India's manufacturing sector may decelerate during June quarter due to factors like bleak export outlook, poor demand and high cost of borrowing. Furthermore, the onset of the southwest monsoon over Kerala is likely to be delayed from the normal date of June 1, the first negative signal since it forecast above-normal rainfall this season after two years of drought, also weighed on the sentiment. However, investors got some comfort with Economic think-tank NCAER projecting India's economic growth rate to improve marginally to 7.7 percent in 2016-17 against the backdrop of IMD's forecast of better monsoon rains this year. Some support also came in from reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 1,494 crore on May 13, 2016.

On the global front, most of the Asian markets were enjoying a solid start to the week, with Japanese shares putting in a good performance as the yen went into retreat. Japanese data will remain a key focal point for investors this week, with March quarter GDP numbers due on Wednesday. However, some market participants remained cautious with the report that China's investment, factory output and retail sales all grew more slowly than expected in April, adding to doubts about whether the world's second-largest economy is stabilizing. Meanwhile, US stocks ended lower on Friday amid sluggish earnings from retail majors raising concerns about consumer spends. Companies that make clothing, food and household goods dropped on more bad news from retailers, and energy companies fell with the price of oil.

Back home, investors squared off hefty positions from the PSU index which plunged over a percent, being the top laggard in the space. The Bankex, Oil & Gas and FMCG pockets traded with cuts of around half a percent each and restricted the benchmarks’ upside. However, some gains in IT, Consumer Durables and Realty counters helped the key indices cut their losses. In scrip specific development, Shares of Nilkamal have surged after the company reported 50% year on year (Y-o-Y) growth in standalone net profit at Rs 33 crore for the quarter ended March 31, 2016 (Q4FY16).

The market breadth on BSE was negative, out of 2267 stocks traded, 1014 stocks advanced, while 1131 stocks declined on the BSE. 

The BSE Sensex is currently trading at 25425.61, down by 63.96 points or 0.25% after trading in a range of 25421.06 and 25606.92. There were 13 stocks advancing against 17 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.14%, while Small cap index up by 0.05%.

The top gaining sectoral indices on the BSE were IT up by 0.37%, Consumer Durables up by 0.29%, Realty up by 0.19%, TECK up by 0.14% and Metal up by 0.08%, while PSU down by 1.04%, Bankex down by 1.00%, Oil & Gas down by 0.62%, FMCG down by 0.34% and Capital Goods down by 0.18% were the top losing indices on BSE.

The top gainers on the Sensex were Dr. Reddys Lab up by 3.22%, Asian Paints up by 1.16%, Lupin up by 0.90%, Tata Motors up by 0.64% and Infosys up by 0.52%. On the flip side, SBI down by 3.05%, Bharti Airtel down by 2.38%, ICICI Bank down by 2.01%, GAIL India down by 1.83% and ONGC down by 1.57% were the top losers.

Meanwhile, posting a seventeenth consecutive month of fall, Indian merchandise exports fell by 6.74 percent in the month of April to $ 20568.85 million. The significant fall in exports was due to sharp fall in shipments of petroleum and engineering products amid tepid global demand. However, the imports too fell by 23 per cent, narrowing the trade deficit by 20 per cent, a five year low to $ 4844.87 million in April from $ 10992.30 million reported during the corresponding month of 2015, led by a sharp fall in gold imports due to a nationwide strike by jewellers protesting against the proposed 1 percent excise duty and a decrease in inbound oil shipments.

According to the data released by the Commerce Ministry, Indian exports in dollar terms during April 2016 stood at $20568.85 million, which was 6.74 per cent lower than the level of $22054.72 million during April, 2015. In Rupee terms the exports was valued at Rs 136720.11 crore, which was 1.21 per cent lower than the level of Rs. 138400.44 crore in the same period last year. The growth in exports has fallen for the US, the EU, China and Japan by 3.87 per cent, 0.04 per cent, 25.34 per cent and 1.10 per cent, respectively for February 2016. In April, exports declined in most major categories including petroleum products, ready-made garments, engineering goods, cotton yarn, carpet, leather, rice and cashew. However, items such as gems & jewellery, tobacco, electronic products, chemicals and pharmaceuticals posted an increase.

Meanwhile, Imports during April, 2016 were valued at $25413.72 million in dollar terms, 23.10 per cent lower over the level of imports valued at $33047.02 million in same period last year. In rupee terms imports were valued at Rs 168923.71 crore, which was 18.54 per cent lower than Rs 207380.63 crore during April 2015. The massive fall in the crude oil prices over the past year has brought down the import bill.

Oil imports which accounts for 31 percent of the total imports dropped by 24.01 per cent to $ 5655.92 million as against oil imports valued at $7442.92 million in the corresponding period last year. Non-oil imports during April, 2016 were estimated at $19757.80 million which was 22.83 per cent lower than non-oil imports of $25604.10 million in April, 2015.

The commerce ministry said that the trend of falling exports is in tandem with other major world economies. Federation of Indian Export Organisations has expressed its hope that the exports will enter the positive zone in June-July as the fall had been arrested to some extent in March and April and expect double-digit growth from October onwards.

The CNX Nifty is currently trading at 7800.95, down by 13.95 points or 0.18% after trading in a range of 7796.05 and 7845.65. There were 24 stocks advancing against 26 stocks declining on the index.

The top gainers on Nifty were Dr. Reddys Lab up by 3.06%, Tech Mahindra up by 1.88%, Bosch up by 1.39%, Asian Paints up by 1.11% and Zee Entertainment up by 0.99%. On the flip side, Bank of Baroda down by 7.32%, SBI down by 2.70%, Bharti Airtel down by 2.34%, Idea Cellular down by 1.98% and GAIL India down by 1.94% were the top losers.

Asian markets were trading mostly in green, KOSPI Index was up by 0.05%, Shanghai Composite up by 0.2%, Taiwan Weighted up by 0.27%, Nikkei 225 up by 0.48% and Hang Seng up by 1.01%. On the flip side, Jakarta Composite was down by 0.6% and FTSE Bursa Malaysia KLCI was down by 0.76%.