Markets continue to trade lower in early noon session

Indian equity benchmarks continued to trade lower in early noon session on account of selling by investors in the blue chip counters. Sentiment remained down beat with the Federation of Indian Chambers of Commerce and Industry’s (FICCI) survey which stated that the 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. Moreover, the India Meteorological Department (IMD) has hinted at a likely delay in the onset of the Southwest monsoon over Kerala by a week. IMD now expects the rains to hit Kerala coast only on June 7. Though a short delay may not have a severe impact on agri output, it is expected to weigh on market sentiment. Besides, selling in banking stocks too weighed down the sentiment. Public sector banks were trading lower after reporting a disappointing set of numbers for the quarter ended March 31, 2016 (Q4F16). Furthermore, investors even overlooked the National Council of Applied Economic Research’s (NCAER) projection that the India's economic growth rate to improve marginally to 7.7 per cent in 2016-17 against the backdrop of the India Meteorological Department's forecast of better monsoon rains this year.

On the global front, buoyant Japanese stocks led Asian stocks to modest gains on Monday, helping to offset some of the gloom from soft Chinese data, while the dollar firmed against the euro and yen after receiving a boost from upbeat US indicators. Back home, both the Sensex and Nifty were trading below their crucial 25,400 and 7,800 levels, respectively. In scrip specific development, share of Ahluwalia Contracts were trading higher after the company bagged fresh orders worth Rs 491 crore for work, including construction of an institutional and commercial building, for the South Asian University campus at New Delhi. Nilkamal was trading higher after the company reported 50% year on year (YoY) growth in standalone net profit at Rs 33 crore for the quarter ended March 31, 2016 (Q4FY16). The plastic products maker had registered a profit of Rs 22 crore in a year ago quarter.

The BSE Sensex is currently trading at 25385.65, down by 103.92 points or 0.41% after trading in a range of 25351.62 and 25606.92. There were 12 stocks advancing against 18 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.05%, while Small cap index down by 0.23%.

The top gaining sectoral indices on the BSE were IT up by 0.27%, Consumer Durables up by 0.12% and TECK up by 0.06%, while PSU down by 1.61%, Bankex down by 1.53%, Oil & Gas down by 0.81%, Power down by 0.58% and Realty down by 0.38% were the losing indices on BSE.

The top gainers on the Sensex were Dr. Reddys Lab up by 3.38%, Asian Paints up by 0.90%, Infosys up by 0.45%, TCS up by 0.38% and Lupin up by 0.35%. On the flip side, SBI down by 4.62%, ICICI Bank down by 3.18%, Bharti Airtel down by 2.23%, Axis Bank down by 2.14% and ONGC down by 1.93% were the top losers.

Meanwhile, finance Ministry in its 2015-16 annual Report has said that the gross non-performing assets (GNPAs) of banks could rise to 6.9 per cent by March 2017 in a “severe stress scenario”, the deadline given by Reserve Bank of India (RBI) Governor Raghram Rajan for banks' balance sheet clean-up, if the macro economic conditions deteriorate. The report quoting the RBI report said that the GNPA ratio may rise to 5.4 per cent by September 2016 from 5.1 per cent in September 2015. The Capital to Risk Asset Ratio, an indicator of bank's capital adequacy, could decline to 10.4 per cent by March 2017, from 12.7 per cent as of September 2015.

The report said that the main reasons for increase in NPAs of banks include sluggishness in domestic growth during the recent past, slowdown in recovery in the global economy and continuing uncertainty in the global markets leading to lower exports of various products like textile, engineering goods, leather, and gems. On external factors, it said, ban in mining projects, delay in clearance of projects in power and steel sector, volatility in prices of raw material and shortage of power have impacted operations in infrastructure sectors, which were aggressively funded by the banks in the past, have also resulted in rising NPAs.

Moreover, the report highlighted that the government has taken various steps to contain NPAs such as capital infusion in PSU banks, streamlining the appointment process and changes in laws for faster debt recovery. It said that in order to address the NPA situation, the government has taken sector specific measures in identified areas like road, steel, power and textiles. It is also setting up six new Debt Recovery Tribunals to facilitate recovery of bad loans.

The CNX Nifty is currently trading at 7783.60, down by 31.30 points or 0.40% after trading in a range of 7772.65 and 7845.65. There were 20 stocks advancing against 30 stocks declining on the index.

The top gainers on Nifty were Dr. Reddys Lab up by 3.22%, Tech Mahindra up by 1.41%, Bosch up by 0.90%, Asian Paints up by 0.78% and Bharti Infratel up by 0.77%. On the flip side, Bank of Baroda down by 8.67%, SBI down by 4.65%, ICICI Bank down by 3.29%, Bharti Airtel down by 2.31% and Axis Bank down by 2.12% were the top losers.

Asian markets were trading mostly in green; KOSPI Index increased 0.92 points or 0.05% to 1,967.91, Shanghai Composite increased 7.25 points or 0.26% to 2,834.36, Taiwan Weighted increased 13.91 points or 0.17% to 8,067.60 and Nikkei 225 increased 30.67 points or 0.19% to 16,442.88, Hang Seng increased 257.17 points or 1.3% to 19,976.46 while, Jakarta Composite decreased 28.6 points or 0.6% to 4,733.12 and FTSE Bursa Malaysia KLCI decreased 12.36 points or 0.76% to 1,615.90.