Markets trade lower in early deals eyeing result of Assembly elections

Indian equity markets are bleeding once again in the early deals on Thursday on the back of weak cues from global equity indices after FOMC meeting minutes raised case of an interest rate hike in the near future. Investors’ sentiments were also pressured on reports that foreign portfolio investors (FPIs) sold shares worth a net Rs 250.70 crore on May 18, 2016, as per provisional data released by the stock exchanges. The sentiments were further weighed down by Indian rupee depreciating 23 paise against the US dollar to 67.20 in early trade today, its weakest level since March, on account of appreciation of the American currency overseas amid foreign fund outflows. The stock markets may remain volatile as participants are closely monitoring the results of the Assembly elections in West Bengal, Tamil Nadu, Assam, Kerala and Puducherry scheduled today. However, the session was productive for broader indices, which outperforming larger counterparts were trading marginally in green. Traders were also getting some encouragement with global rating agency Standard and Poor’s (S&P) statement that India is likely to remain insulated from the developments in the Chinese economy provided the government carries out structural reforms to take the economy to an eight per cent growth path.

In the scrip specific development, Torrent Power dropped over 10 percent on the BSE after the company reported a consolidated net profit of Rs 28 crore for the quarter ended March 2016 (Q4FY16) as compared to Rs 182 crore in the same quarter of the previous year. It had profit of Rs 372 crore in December quarter. Sun TV Network plunged over 11 percent as early trends indicated the AIADMK will return to power in Tamil Nadu.

On the global front, US markets ended mostly higher on Wednesday after minutes from the Federal Reserve's most recent meeting indicated that most of its members are ready to lift rates at the next meeting on June 14-15, if the data improves. Asian markets, barring Japan and China, were trading in red. Additionally, a stronger US dollar weighed on commodity prices and dragged down resources stocks.

Back Home, most of the sectoral indices on BSE were reeling under pressures, stocks from FMCG, Bankex, TECK, Power and PSU counters were the prominent losers of the session. On the flip side, stocks from Metal, Auto and Realty counter were the only gainers of the session. The market breadth on BSE was positive in the ratio of 760: 676 while 92 scrips remained unchanged.

The BSE Sensex is currently trading at 25582.32, down by 122.29 points or 0.48% after trading in a range of 25568.18 and 25714.56. There were 5 stocks advancing against 25 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.06%, while Small cap index gained 0.12%.

The gaining sectoral indices on the BSE were Metal up by 0.23%, Auto up by 0.07% and Realty up by 0.02%, while FMCG down by 0.63%, Bankex down by 0.55%, TECK down by 0.50%, Power down by 0.46% and PSU down by 0.42% were the losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 1.58%, Lupin up by 1.33%, Tata Steel up by 0.58%, Wipro up by 0.23% and Mahindra & Mahindra up by 0.03%. On the flip side, HDFC down by 1.38%, ITC down by 1.28%, ONGC down by 1.17%, NTPC down by 0.99% and Bharti Airtel down by 0.98% were the top losers.

Meanwhile, government’s latest success in passing of the New Bankruptcy Code has been applauded by the US officials too; stating that the move coupled with American tax authorities accepting bilateral advance pricing agreements (APA), will lead to US industry finding 'to do business' in India much easier. On May 12, the Rajya Sabha passed the Insolvency and Bankruptcy Code 2016, which the US believes will make it easier for American companies to do more business in India.

Director General, US and Foreign Commercial Service, and Assistant Secretary, Global Markets, US Department of Commerce Arun M Kumar said that “Many US companies are increasingly optimistic about the shift in tone, but are waiting to see further tangible progress in India’s business climate. Even as some states have moved swiftly up the rankings, India still ranks lowest among the G20 countries on the World Bank’s 2016 Doing Business report.”

He further added that to enhance its position in global supply chains and deepen its integration with the world economy, India will need to harmonise product standards with international rules. Standards barriers - such as certain testing, certification, and registration requirements - not only pose obstacles to US companies, but hamper the pace of India’s integration into the global economy.

He acknowledged India's e-commerce market as the fastest growing in the world and said that over the last two years, US businesses invested over $15 billion in India, and will reportedly sign deals worth another $27 billion over the next two years. However, according to him a high-standard Bilateral Investment Treaty (BIT) will help augment big-ticket investments from US into India. Recently India and the US held technical-level talks at the Finance Ministry on BIT.

The CNX Nifty is currently trading at 7834.45, down by 35.70 points or 0.45% after trading in a range of 7827.50 and 7876.20. There were 9 stocks advancing against 42 stocks declining on the index.

The top gainers on Nifty were Tata Motors up by 1.47%, Tata Motors - DVR up by 1.43%, BPCL up by 1.16%, Lupin up by 1.04% and Yes Bank up by 0.99%. On the flip side, Bharti Infratel down by 1.83%, ITC down by 1.34%, ONGC down by 1.28%, HDFC down by 1.21% and Idea Cellular down by 1.09% were the top losers.

Asian markets were trading mostly in red, Hang Seng decreased 104.83 points or 0.53% to 19,721.58, Taiwan Weighted decreased 55.51 points or 0.68% to 8,104.17, Jakarta Composite decreased 36.62 points or 0.77% to 4,697.74, KOSPI Index decreased 13.41 points or 0.69% to 1,943.32 and FTSE Bursa Malaysia KLCI decreased 1.46 points or 0.09% to 1,634.26.

On the flip side, Shanghai Composite increased 11.91 points or 0.42% to 2,819.42 and Nikkei 225 increased 30.23 points or 0.18% to 16,674.92.