Markets trade lower amid weak global cues

After making a flat opening, Indian equity benchmarks continued oscillating between positive and negative territory, currently trading with negative bias on selling by participants in select blue chip stocks amid weak global cues. The US markets had ended lower on Monday as a bounce in Apple failed to offset concerns that the US Federal Reserve could raise interest rates sooner than later, while Asian markets were trading in red following the lackluster cues overnight from Wall Street. On the domestic front, there was cautiousness in the markets with SBI report stating that Credit growth in the country is unlikely to revive ‘materially’ in near term as demand conditions are still acting as a laggard. The yearly SBI Composite Index for May this year declined to 51.6, mainly due to lower credit growth. The monthly index, however, jumped to 50.3 in May from 46.5 in April due to increase in commercial vehicle and consumer durables sales. Besides, depreciation in Indian rupee against dollar too weighed down sentiments. The rupee slid for the ninth day as it depreciated 18 paise more to trade at over two and half month low of 67.67 against the dollar today, hit by sustained foreign fund outflows. Meanwhile, foreign portfolio investors (FPIs) sold shares worth a net Rs 65.60 crore on May 23, 2016, as per provisional data released by the stock exchanges.

In the scrip specific development, Novartis India rallied over 10 per cent on the BSE after the company announced that its board will meet on Thursday, May 26, 2016, to consider a proposal for buyback of the company's equity shares. VRL Logistics was locked in lower circuit of 20 per cent on the BSE, after the company reported 32% year-on-year decline in net profit at Rs 13.21 crore for the quarter ended March 2016 (Q4FY16).

On sectoral front, raders were seen piling up position in Power, FMCG, Metal and Realty, while selling was witnessed in Consumer Durables, Capital Goods, IT, TECK and Oil & Gas. The market breadth on BSE was negative in the ratio of 692:821, while 71 scrips remained unchanged.

The BSE Sensex is currently trading at 25208.85, down by 21.51 points or 0.09% after trading in a range of 25181.47 and 25266.11. 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 0.23%, while Small cap index lost 0.29%.

The gaining sectoral indices on the BSE were Power up by 0.38%, FMCG up by 0.25%, Metal up by 0.03% and Realty up by 0.02%, while Consumer Durables down by 0.76%, Capital Goods down by 0.69%, IT down by 0.63%, TECK down by 0.61% and Oil & Gas down by 0.54% were the losing indices on BSE.

The top gainers on the Sensex were NTPC up by 1.51%, Cipla up by 1.25%, Tata Motors up by 1.01%, Reliance Industries up by 0.81% and ITC up by 0.66%. On the flip side, Adani Ports &Special down by 1.66%, GAIL India down by 1.47%, ONGC down by 1.15%, Sun Pharma Inds. down by 0.99% and Infosys down by 0.94% were the top losers.

Meanwhile, State Bank of India (SBI) while releasing its Composite Index for the month of May, which mirrors the credit demand in the country and other data sets available in the public domain, has said that Credit growth in the country is unlikely to revive “materially” in near term as demand conditions are still acting as a laggard.

As per the report, the yearly SBI Composite Index for May this year declined to 51.6, mainly due to lower credit growth. Though, the monthly index, jumped to 50.3 in May from 46.5 in April mainly due to increase in commercial vehicle and consumer durables sales. SBI Composite Index for Apr'16 had increased to 52.2, a 5 month high compared to the last month of 49.5, while the Monthly Index had declined to 46.5, its 18 month low.

SBI in its report further noted that it is “too early and premature” to say about the credit growth picking up in the country and added that as the demand is still a laggard we are skeptical of credit growth picking up even as the banks are in the midst of balance sheet cleaning. It also said that the supposed correlation between balance sheet cleaning and credit growth picking up will only happen once the growth cycle picks up significantly.

Recently the Reserve Bank of India data too showed that loan growth of Indian banks fell to single digit after five months of double digit expansion, reflecting sluggish demand amid almost static factory output. Bank loans grew 9.2% year-on-year in the fortnight ending April 29, the slowest since December last year. The low factory output over a long stretch of time has slowed the demand for corporate credit which is believed to have slowed credit growth.

The CNX Nifty is currently trading at 7726.85, down by 4.20 points or 0.05% after trading in a range of 7715.80 and 7739.65. There were 22 stocks advancing against 29 stocks declining on the index.

The top gainers on Nifty were Tata Power up by 1.77%, NTPC up by 1.47%, Cipla up by 1.23%, Tata Motors up by 1.17% and Reliance Industries up by 0.83%. On the flip side, Adani Ports &Special down by 1.57%, ONGC down by 1.18%, Sun Pharma Inds. down by 1.08%, GAIL India down by 1.08% and Tech Mahindra down by 0.93% were the top losers.

Asian markets were trading in red, Nikkei 225 decreased 111.22 points or 0.67% to 16,543.38, Hang Seng decreased 80.06 points or 0.4% to 19,728.97, Taiwan Weighted decreased 36.19 points or 0.43% to 8,308.25, Shanghai Composite decreased 21.85 points or 0.77% to 2,821.79, KOSPI Index decreased 12.12 points or 0.62% to 1,943.13, Jakarta Composite decreased 11.24 points or 0.24% to 4,732.43 and FTSE Bursa Malaysia KLCI decreased 4.09 points or 0.25% to 1,630.80.