Post Session: Quick Review

Indian equity benchmarks failed to negotiate a positive close on Wednesday with local bourses ending slightly in red terrain, as traders opted to stay away from risky assets a day ahead of the Brexit referendum. The key gauges displayed listless performance for most part of the day’s trade as the aimless benchmarks appeared exhausted and traded mostly in a narrow band, lacking any significant upside triggers. Bout of volatility dragged benchmarks lower in late trade and the indices even went on to test important psychological 26,700 (Sensex) and 8,150 (Nifty) levels, but the key gauges got some support near those intraday low levels, as they trimmed their some of their losses from thereon as investors continued hunt for fundamentally strong stocks.

Sentiments remained dampened with the report that India’s fuel consumption increased 6.7% in May over a year ago, reflecting greater use of cars and increased air traffic in an expanding economy, while crude oil production fell 3.3%, increasing import dependence to 81.9% from 81.3%. Besides, depreciation in Indian rupee too weighed down sentiment. Continuing its slide for the third straight day, the rupee depreciated further by 5 paise to 67.54 against the US dollar at the time of equity markets closing on sustained demand for the American currency from importers and banks. Markets shrugged off firm global cues with European counters making a firm start on Wednesday, with two key regional indexes hitting their highest level in more than two weeks, as firmer financial stocks led markets higher. Asian stocks ended higher as nervous investors counted down to Britain’s make-or-break European Union referendum, while Federal Reserve Chair Janet Yellen’s cautious tone on future rate hikes added to a subdued mood in markets.

Back home, losses remained capped with an UNCTAD report, stating that India’s foreign direct investment is likely to cross $ 60 billion this year on a favourable policy environment even as the FDI flows globally are set to witness a decline. It has said that the large increase of announced greenfield investments in manufacturing industries may provide further impetus to FDI this year. Traders also took some encouragement with report that the monsoon finally hit most parts of Maharashtra and central India. With this, sowing of kharif crops like paddy, cotton, maize, oilseeds and pulses are expected to gather pace. Monsoon is expected to cover south Gujarat, parts of Madhya Pradesh, East Uttar Pradesh and Bihar in the next 48 hours. There will be better rainfall during the next 15 days over central India. On the sectoral front, select stocks from auto counter gained on the back of advancement of monsoons. On the flip side, textile stocks ended lower despite Cabinet giving approval to the new textile policy which will help in boosting the textile sector.

The NSE’s 50-share broadly followed index -- Nifty -- declined by around twenty points but managed to hold the psychological 8,200 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex -- dropped by around fifty points to finish below the psychological 26,750 mark. Broader markets too struggled to get any traction and ended the session with a cut of around half a percent.

The market breadth remained in the favour off decliners, as there were 988 shares on the gaining side against 1,597 shares on the losing side, while 195 shares remain unchanged. (Provisional)

The BSE Sensex ended at 26765.65, down by 47.13 points or 0.18% after trading in a range of 26617.45 and 26887.29. There were 15 stocks advancing against 15 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index was down by 0.12%, while Small cap index down by 0.60%. (Provisional)

The gaining sectoral indices on the BSE were Realty up by 0.24%, Metal up by 0.02%, while Auto down by 0.77%, FMCG down by 0.57%, Capital Goods down by 0.40%, Power down by 0.34%, TECK down by 0.18% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were Adani Ports &Special up by 1.99%, Dr. Reddys Lab up by 1.89%, Lupin up by 1.21%, Coal India up by 1.20% and Wipro up by 0.76%. On the flip side, Tata Motors down by 2.60%, GAIL India down by 2.08%, Hindustan Unilever down by 1.39%, ITC down by 1.13% and Tata Steel down by 0.99% were the top losers. (Provisional)

Meanwhile, Coal Secretary Anil Swarup has said that the framework of commercial mining has been prepared by the coal ministry and will allocate 16 coal mines to state-run utilities for commercial mining by September this year. He said allocation of coal blocks to state utilities for commercial use is the first step towards opening up the coal sector. The 16 mines have geological reserves of 2.137 billion tonnes and are expected to annually add an additional 40 million tonnes of coal production in the country.

Swarup said that out of the 16 mines identified for commercial coal mining by state government-run utilities, eight will be given to the host state while eight will be available for public sector companies of other states. The host States for which eight mines have been reserved are Chhattisgarh, Jharkhand, Madhya Pradesh, Maharashtra, Odisha, Telangana and West Bengal.

The government has invited applications from state utilities for allotment of 16 coal blocks for commercial use.  Allotments are expected after the coal ministry scrutinises the applications and decides on the winners. Commenting on the same, Swarup said that the government expects to discover market-determined prices for coal through these mines production where is expected to start in another year or two after their allotment.

On the pricing front, Swarup said that currently Coal India is determining the price. With another entity coming in, some sort of a market will be created and price discovery will happen. The Coal Mines Special Provision Act 2015 passed by Parliament on March 20, provides for opening up commercial coal mining to private and public entities.

The CNX Nifty ended at 8203.70, down by 16.20 points or 0.20% after trading in a range of 8153.25 and 8238.35. There were 25 stocks advancing against 26 stocks declining on the index. (Provisional)

The top gainers on Nifty were Adani Ports & Special up by 2.02%, Dr. Reddys Lab up by 1.84%, Coal India up by 1.44%, Ambuja Cement up by 1.10% and Lupin up by 0.85%. On the flip side, Tata Motors - DVR down by 3.05%, Bharti Infratel down by 2.59%, Tata Motors down by 2.52%, GAIL India down by 2.03% and Ultratech Cement down by 1.38% were the top losers. (Provisional)

European markets were trading in green; France’s CAC increased 6.97 points or 0.16% to 4,374.21, UK’s FTSE 100 rose 7.78 points or 0.12% to 6,234.33 and Germany’s DAX was up by 39.01 points or 0.39% to 10,054.55.

Asian equity markets ended mostly higher on Wednesday, as investors remained wary ahead of the vote on Britain's possible exit from the European Union. Chinese shares ended higher, as Federal Reserve Chair Janet Yellen played down the risk of a US recession in her testimony before Congress and the People's Bank of China said it would allow qualified foreign companies to issue shares on the mainland. However, Japanese shares lost ground with the dollar's weakness following cautious comments by Yellen on Capitol Hill dented the outlook for exporters' profitability. Yellen said a cautious approach on interest rates remains appropriate amid considerable uncertainty about the economic outlook. Yellen suggested that the Fed will need to see an improvement in the labor market before considering another rate hike.