Benchmarks make feeble start on weak global cues

Pressurized by feeble global cues, Indian equity benchmarks made a soft start and have slipped further with frontline gauges breaching their crucial 26,600 (Sensex) and 8,150 (Nifty) levels. Sentiment remained dampened after the US Federal Reserve kept interest rates unchanged. However, the central bank signaled that there may be two rate increases this year, saying it expects the US job market to strengthen after a recent slowdown. Traders also remained concerned with report that India’s merchandise exports contracted again, albeit at their slowest pace in 18 months in May as non-petroleum exports finally turned positive, led by exports of engineering goods and gems and jewellery. Exports contracted at 0.79% in May while imports slipped 13.16%, leaving a trade deficit of $6.27 billion.

In overseas markets, Asian stocks were trading mostly in red at this point of time with Japanese stocks falling behind their peers after the Bank of Japan (BoJ) kept monetary policy steady as was widely expected. Closer home, foreign portfolio investors (FPIs) sold shares worth a net Rs 108.23 crore on 15 June 2016, as per provisional data released by the stock exchanges. On the sectoral front, shares of three public sector oil marketing companies were mixed after prices of petrol and diesel were revised with effect from midnight of 15 June 2016. The market breadth on the BSE was evenly divided; there were 910 shares on the gaining side against 916 shares on the losing side, while 95 shares remained unchanged.

The BSE Sensex is currently trading at 26522.92, down by 203.42 points or 0.76% after trading in a range of 26481.38 and 26686.03. There were 4 stocks advancing against 26 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.19%, while Small cap index declined by 0.06%.

The few gaining sectoral indices on the BSE were Metal up by 0.46%, Consumer Durables up by 0.15%, Utilities up by 0.14% and Realty up by 0.03%, while Telecom down by 1.06%, Bankex down by 0.99%, TECK down by 0.90%, IT down by 0.84%, Finance down by 0.64% and Auto down by 0.59% were the top losing indices on BSE.

The top gainers on the Sensex were GAIL India up by 1.16%, Tata Steel up by 0.79%, Lupin up by 0.37% and Mahindra & Mahindra up by 0.02%. On the flip side, ICICI Bank down by 2.62%, Maruti Suzuki down by 1.81%, ITC down by 1.29%, NTPC down by 1.10% and Adani Ports & Special down by 1.08% were the top losers.

Meanwhile, the cabinet cleared a long awaited new civil aviation policy that seeks rules for airlines to fly overseas and radically increase regional air connectivity. With the policy, the government plans to create an ecosystem that will lead to an increase in air travel. It hopes to see sale of 30 crore air tickets per year in the domestic sector by 2022 and 50 crore by 2027 whereas for international travel, the target is 20 crore by 2027.

The policy also proposes a regional connectivity scheme by offering sops to airlines. Incentives may be offered to airlines to fly on regional routes. The government has proposed a Rs. 2,500 cap for an hour's flight on such routes to ensure affordability and a cap of Rs 1200 airfare for 30 minutes flight. But the new policy says the centre will refund 80 per cent of the losses incurred by airlines due to such caps. The draft policy proposes a 2 per cent cess in domestic and international tickets for the regional connectivity fund to be set up.

In a major development, 5/20 ruled will be replaced by 0/20 rule which implies that airlines will be allowed to fly abroad only if they have 20 aircraft, but there would be no restriction on the number of years of operation. Earlier, airlines had to wait for 5 years at least to have international flying permit under the ‘5/20’ norm.The policy has gone through several rounds of inter-ministerial discussions over the last 18 months and has been finalised after nearly eight months since the ministry came out with the revised draft in October 2015 and follows many rounds of deliberations with stakeholders.

The CNX Nifty is currently trading at 8142.85, down by 63.75 points or 0.78% after trading in a range of 8128.90 and 8180.65. There were 10 stocks advancing against 41 stocks declining on the index.

The top gainers on Nifty were GAIL India up by 1.59%, Hindalco up by 1.17%, Tata Steel up by 0.77%, Aurobindo Pharma up by 0.49% and Tata Power up by 0.46%. On the flip side, Bharti Infratel down by 3.20%, ICICI Bank down by 2.48%, Maruti Suzuki down by 1.86%, Zee Entertainment down by 1.46% and ITC down by 1.22% were the top losers.

Asian markets were trading mostly in red; Hang Seng declined 393.13 points or 1.92% to 20,074.39, Nikkei 225 tumbled 323.42 points or 2.03% to 15,596.16, Taiwan Weighted decreased 104.49 points or 1.21% to 8,501.88, KOSPI Index shed 13.91 points or 0.71% to 1,954.92, Shanghai Composite slipped 0.12 points to 2,887.09 and FTSE Bursa Malaysia KLCI was down by 11.34 points or 0.7% to 1,616.62. On the flip side, Jakarta Composite was up by 2.49 points or 0.05% to 4,817.31.