Markets continue to trade in red; Nifty slips below 7850 mark

Indian benchmark indices continued to trade in red in late morning session on absence of positive triggers which could take the markets higher and profit booking in frontline line blue-chip stocks. Sentiments remained down-beat with the repot that foreign portfolio investors (FPIs) sold shares worth a net Rs 224.97 crore on May 17, 2016.  Besides, weak trend in Asian stocks coupled with depreciation in rupee value against the US dollar also weighed on the sentiment. Indian rupee depreciated by 8 paise to trade at 66.95 against the US dollar in early trade, due to sustained demand for the American unit from importers and banks. However, losses remained capped with a Nielsen survey that indicate Indian consumers were the most confident in the world in terms of job prospects, personal finances and concerns in the first quarter of 2016 with their confidence index touching a nine-year high during the period.  On the global front, Asian stocks declined on Tuesday as investors weighed after upbeat US economic reports led to renewed speculation that the US Federal Reserve could raise interest rates next month. Japanese shares and the yen fluctuated as investors weighed whether better-than-expected economic growth reduces the need for stimulus. Japan’s economy grew an annualized 1.7 percent last quarter, beating estimates for 0.3 percent growth, and averting a recession. Stock markets in Hong Kong and China fell after a top Chinese official made no mention of a trading link between the two cities. 

Back home, Stocks from Auto, Banking, FMCG and Teck counters were among the worst performers, while PSU and Oil & Gas counters battled out against all odds. In scrip specific development, shares of Voltas have gained after the company reported a rise of 49.47% in its consolidated net profit at Rs 176.43 crore for the quarter ended March 31, 2016 as compared to Rs 118.04 crore for the corresponding quarter in the FY15.  On the other hand, GlaxoSmithkline Consumer Healthcare had declined after the company registered a fall of 8.18% in its net profit at Rs 180.68 crore for the quarter ended March 31, 2016 as compared to Rs 196.78 crore for the same quarter in the previous year. The market breadth on BSE was negative, out of 2142 stocks traded, 890 stocks advanced, while 1138 stocks declined on the BSE. 

The BSE Sensex is currently trading at 25543.71, down by 229.90 points or 0.89% after trading in a range of 25506.11 and 25671.48. There were 3 stocks advancing against 27 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.39%, while Small cap index down by 0.04%.

The top gaining sectoral indices on the BSE were PSU up by 0.26% and Oil & Gas up by 0.22%, while Auto down by 1.62%, Bankex down by 0.89%, FMCG down by 0.87%, TECK down by 0.76% and IT down by 0.65% were the top losing indices on BSE.

The top gainers on the Sensex were ONGC up by 1.57%, SBI up by 0.96% and Dr. Reddys Lab up by 0.18%. On the flip side, Maruti Suzuki down by 2.24%, BHEL down by 2.15%, Bajaj Auto down by 1.99%, Hero MotoCorp down by 1.94% and Tata Motors down by 1.65% were the top losers.

Meanwhile, moving a step further on its Budget announcement, the Finance Ministry has set up a five-member committee for a comprehensive review of the 12 year old Fiscal Responsibility and Budget Management (FRBM) Act and to suggest a future road map. The panel will be headed by former Member of Parliament and former Revenue and Expenditure Secretary NK Singh. The other members of the committee include, Chief Economic Advisor to the Finance Ministry Arvind Subramanian, former Finance Secretary Sumit Bose, Deputy Governor of the Reserve Bank of India Urjit Patel and National Institute of Public Finance and Policy (NIPFP) Director Rathin Roy will be its members.

The committee will suggest the future roadmap, keeping in view the broad objective of fiscal consolidation and prudence and the changes required in the context of the uncertainty and volatility in the global economy. Besides, the committee is expected to look into various aspects, factors and considerations for determining the FRBM target. Finance Ministry in its release has said that the committee will determine the need and possibility of having a ‘fiscal deficit range’ as the target in place of the existing fiscal deficit number and aligning the ‘fiscal expansion or contraction’ with ‘credit contraction of expansion’ respectively in the economy.

The committee will also make its assessment and provide its views on the expected impact of its recommendations on the general government deficit and other parameters. It will also look into various aspects, factors, considerations which go into determining the FRBM targets. The committee will be delegated with additional terms of reference and further it may consult department/agencies of the government, experts and institutions if considered necessary. The panel will submit its recommendations by October 31, 2016.

In the Budget 2016-17, Finance Minister Arun Jaitley had announced that the government would set up a committee to review and give recommendations on the FRBM roadmap for the future and whether it should move from a fixed target to a range and aligned with credit contraction or expansion.

The CNX Nifty is currently trading at 7823.95, down by 66.80 points or 0.85% after trading in a range of 7811.50 and 7852.50. There were 7 stocks advancing against 44 stocks declining on the index.

The top gainers on Nifty were ONGC up by 1.64%, HCL Tech up by 1.32%, SBI up by 0.99%, Yes Bank up by 0.13% and Dr. Reddys Lab up by 0.10%. On the flip side, Bosch down by 2.24%, Hero MotoCorp down by 2.23%, Maruti Suzuki down by 2.23%, Bajaj Auto down by 1.83% and BHEL down by 1.82% were the top losers.

Asian markets were trading mostly in red, Hang Seng was down by 1.69%, Shanghai Composite down by 1.74%, KOSPI Index down by 0.76%, Nikkei 225 down by 0.34% and FTSE Bursa Malaysia KLCI down by 0.02%. On the flip side, Jakarta Composite was up by 0.12% and Taiwan Weighted was up by 0.01%.