Benchmarks end a lackluster session with modest cut; broader markets outclass

It turned out to be a lackadaisical performance from the Indian benchmark indices on Tuesday as they failed to snap the session in the positive territory, settling marginally below the neutral line. The key indices oscillated in an extremely tight range through the session as market participants remained on the sidelines lacking conviction amid the persistent worries ahead of Thursday's British vote, as well as Federal Reserve chief Janet Yellen's two-day testimony before Congress starting later on Tuesday.  Besides, factors like depreciation in rupee values against the dollar and FIIs outflow in the previous session also weighed on the sentiment. Indian rupee weakened by twenty paise to trade at 67.51 against the US dollar at the time of equity markets closing due to fresh buying of the American currency by banks and importers. However, investors got some comfort with latest reform in Foreign Direct Investment (FDI) regime for a host of important sectors including defence, civil aviation and pharmaceuticals along with advancement of monsoon rains. Monsoon rains have covered nearly half of the country, accelerating planting of summer crops like paddy rice, soybeans, cotton and pulses. The June to September monsoon is crucial for farm output and economic growth in India, where just over half of arable land is fed by rain.

On the global front, Asian markets ended mostly higher as investors turned optimistic after the latest Brexit polls indicated that tables have turned, and the UK is learning towards remaining in the European Union. Two opinion polls on Monday showed 'Remain' camp regaining some momentum; while the online poll by YouGov gave Leave a 51/49 advantage. Further, European shares steadied on Tuesday after a sharp rally in the previous session, although commodities-related stocks came under pressure following a drop in mining and energy shares.

Earlier, the local benchmark got off to a soft start as the indices showed signs of consolidation in early trade, a session after the awe-inspiring close to a percent rally. The indices moved only sideways thereafter but touched intraday lows in the noon session due to lack of encouraging leads. However, some short covering in the dying hours of trade ensured that the bourses snap the session with moderate cuts. Finally the NSE’s 50-share broadly followed index Nifty, took a cut of around quarter a percent to settle above the crucial 8,200 support level, while Bombay Stock Exchange’s Sensitive Index, Sensex slipped by over fifty points and closed above the psychological 26,200 mark. However, broader markets managed to outperform the larger peers as the BSE’s midcap and smallcap indices settled with moderate gains. On the BSE sectoral space, the Power index remained the top laggard and settled with over half a percent cuts followed by the Bankex which too went home with similar losses. On the flipside, Auto stocks hogged the limelight as they settled with good gains on hopes that above normal monsoon would drive demand for two-wheelers and tractors among others, while the Consumer Durables and Oil & Gas counters too witnessed hefty buying interests.

Further, FM radio services providers edged higher after the ministry of information and broadcasting issued the notice inviting applications for e-auction of 266 FM radio channels.

The market breadth remained optimistic as there were 1316 shares on the gaining side against 1287 shares on the losing side, while 201 shares remained unchanged.

Finally, the BSE Sensex ended lower by 54.14 points or 0.20% to 26812.78, while the CNX Nifty dropped 18.60 points or 0.23% to 8,219.90. 

The BSE Sensex touched a high and a low 26925.64 and 26754.60, respectively. The broader indices made a positive closing; the BSE Mid cap index ended up by 0.12%, while Small cap index was higher by 0.36%.

The top gaining sectoral indices on the BSE were Auto up by 0.58%, Consumer Durables up by 0.39% and Oil & Gas up by 0.34%, while Power down by 0.70%, Bankex down by 0.65%, Capital Goods down by 0.39%, TECK down by 0.17% and Metal down by 0.15% were the top losing indices on BSE.

The top gainers on the Sensex were ONGC up by 1.68%, Mahindra & Mahindra up by 0.92%, Tata Motors up by 0.70%, Wipro up by 0.59% and HDFC up by 0.38%. On the flip side, Adani Ports &Special down by 1.72%, NTPC down by 1.43%, Axis Bank down by 1.37%, Asian Paints down by 1.18% and SBI down by 0.88% were the top losers.

Meanwhile, with an aim to push labor reforms, the labour ministry has lined up amendments of four key laws for the Cabinet’s approval. The laws include Shop & Establishment Act and also amendments to the Employees’ Provident Funds & Miscellaneous Provisions Act, 1952, amendments to the Maternity Benefits Act, 1961 and the amendments to the Employees' Compensation Act, 1923. The decision was taken after the meeting between the officials of the labour ministry and the Prime Minister's Office (PMO) last week. The idea is to line up enough legislation for Parliament’s approval in the upcoming monsoon session.

Among the four legislation, first that could soon get an approval from Cabinet is the Shop & Establishment Act, which will pave the way for retailers in order to remain open round the clock. The model Shop & Establishment Act is expected to come up for cabinet’s approval in this week. Under the model Shop & Establishment Act, which will be made effective through a notification, bricks-and-mortar stores will have the flexibility to remain open round the clock.  Further the Shop & Establishment Act will provide equal opportunity in order to compete with their online peers. At present, shops remains closed on a specified day depending on traditional practices and there is no provision for shops to remain open round the clock.

Moreover, as proposed by Jaitley in the previous budget a year ago the other amendments to the EPF & MP Act will provide EPFO subscribers an option of choosing between EPF and the New Pension System. However, the amendments to the Maternity Benefit Act could more than double the maternity leave to 26 weeks from the existing 12 weeks.

The CNX Nifty traded in a range of 8,257.25 and 8,202.15. There were 14 stocks advancing against 37 stocks decliners on the index.

The top gainers on Nifty were Hindalco up by 1.82%, Bharti Infratel up by 1.72%, ONGC up by 1.26%, Tata Motors - DVR up by 1.20% and Mahindra & Mahindra up by 0.96%. On the flip side, Aurobindo Pharma down by 2.38%, Tata Power down by 2.27%, NTPC down by 1.81%, Tech Mahindra down by 1.78% and Adani Ports &Special down by 1.74% were the top losers.

European markets were trading mostly in red; UK’s FTSE 100 decreased 19.77 points or 0.32% to 6,184.23 and Germany’s DAX was down by 1.07 points or 0.01% to 9,960.95, while France’s CAC was up by 8.6 points or 0.2% to 4,349.36.

Asian equity markets ended mostly higher on Tuesday on optimism Britain will vote to stay in the European Union, as investors awaited an economic report by the head of the US Federal Reserve. Two opinion polls on Monday showed 'Remain' camp regaining some momentum; while the online poll by YouGov gave Leave a 51/49 advantage. Japanese shares rose on Tuesday in choppy trade, as a weakening yen supported sentiment. However, Chinese shares gave up early gains to close lower after a late bout of selling emerged in small-cap stocks.