Benchmarks continue weak trade on global worries

Indian equity benchmarks continued their weak trade in the late afternoon session on account of negative global cues. Brexit concerns are back to the fore after US Federal Reserve kept its rates unchanged overnight. Minister of State for Finance Jayant Sinha stated that the government and the Reserve Bank of India (RBI) are assessing the possible fallouts if Britain votes to leave the European Union. Investors took cautious approach 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. Traders were seen piling position in Metal stocks while selling was witnessed in Bankex, Auto and Capital Goods sector stocks. In scrip specific development, Ujjivan Financial Services was trading in red as RBI has put the company on its ban list for foreign investment, which means overseas investors will not be able to buy further equity in the firm. State Bank of Travancore, State Bank of Mysore and State Bank of Bikaner and Jaipur were trading firm for second consecutive day on Cabinet nod for their merger with the State Bank of India. Indian Hotels Company was trading in green reports that foreign brokerage house has upgraded the stock to overweight from underweight earlier with a higher price target.

On the global front, the Asian markets were trading in red while the European markets were trading on pessimistic note. Back home, the NSE Nifty and BSE Sensex were trading below the psychological 8,150 and 26,500 levels respectively. The market breadth on BSE was negative in the ratio of 817:1642 while 150 scrips remained unchanged.

The BSE Sensex is currently trading at 26484.10, down by 242.24 points or 0.91% after trading in a range of 26314.91 and 26686.03. There were 5 stocks advancing against 25 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.50%, while Small cap index down by 0.54%.

The gaining sectoral indices on the BSE were Metal up by 0.09%, while Bankex down by 1.35%, Auto down by 1.02%, Capital Goods down by 1.01%, Power down by 0.89% and Realty down by 0.87% were the losing indices on BSE.

The top gainers on the Sensex were GAIL India up by 0.99%, Asian Paints up by 0.72%, Wipro up by 0.45%, Lupin up by 0.16% and SBI up by 0.12%.

On the flip side, ICICI Bank down by 3.70%, Maruti Suzuki down by 2.51%, NTPC down by 1.88%, Bharti Airtel down by 1.83% and ITC down by 1.40% were the top losers.

Meanwhile, the Cabinet Committee on Economic Affairs (CCEA) has given its approval for the second planned Initial Public Offering (IPO) of equity in state-owned companies for this financial year. It has approved disinvestment of 10% paid up equity of Housing and Urban Development Corporation (Hudco).

The government has approved a price discount of up to five per cent on the issue price to retail (small) investors and Hudco employees. The actual discount to them will be approved by the Alternative Mechanism based on recommendations of a High-Level Committee of Officers. As per the government’s statement, the paid-up equity capital of Hudco, with a net worth of Rs 7,800 crore, was Rs 2,002 crore as on end-March 2015. The face value of each share is Rs 10 at present.

In order to meet its ambitious stake sale target for 2016-17, the government is planning IPOs of equity in four public sector units and hopes to garner around Rs 8,000 crore. The department of investment and public asset management has identified Hindustan Aeronautics and Rashtriya Ispat Nigam as the companies it wants to take public, apart from Hudco and Cochin Shipyard, preparation for which is well under way.

For the current financial year, the government has set a disinvestment target of Rs 56,500 crore. Of this, Rs 36,000 crore is likely to come from minority stake sale in PSUs, including IPOs and Rs 20,500 crore from strategic sale. The government, which is planning to sell the stake in 15 PSUs in this fiscal, has already kick-started the disinvestment programme for the current fiscal with 11.36 percent stake sale in NHPC, which fetched Rs 2,700 crore.

The CNX Nifty is currently trading at 8123.15, down by 83.45 points or 1.02% after trading in a range of 8074.45 and 8180.65. There were 6 stocks advancing against 45 stocks declining on the index.

The top gainers on Nifty were Hindalco up by 2.25%, GAIL India up by 1.29%, Eicher Motors up by 0.93%, Asian Paints up by 0.80% and Wipro up by 0.43%.

On the flip side, Bharti Infratel down by 3.81%, ICICI Bank down by 3.73%, Maruti Suzuki down by 2.55%, Ultratech Cement down by 2.13% and IndusInd Bank down by 2.01% were the top losers.

The Asian markets were trading in red; Nikkei 225 decreased 485.44 points or 3.05% to 15,434.14, Hang Seng decreased 429.1 points or 2.1% to 20,038.42, Taiwan Weighted decreased 112.23 points or 1.3% to 8,494.14, KOSPI Index decreased 16.84 points or 0.86% to 1,951.99, Shanghai Composite decreased 14.39 points or 0.5% to 2,872.82, FTSE Bursa Malaysia KLCI decreased 11.85 points or 0.73% to 1,616.11 and Jakarta Composite decreased 5.77 points or 0.12% to 4,809.06.

The European markets were trading in red; UK’s FTSE 100 decreased 35.03 points or 0.59% to 5,931.77, Germany’s DAX decreased 78.12 points or 0.81% to 9,528.59 and France’s CAC decreased 36.35 points or 0.87% to 4,135.23.