Benchmarks prolong consolidation for second straight session

Indian benchmark indices prolonged the lull for second straight day and finished the session on a dull note, marginally below the neutral line, as investors at large remained reluctant to build on long positions ahead of tomorrow’s crucial referendum that will decide whether Britain will stay in the European Union or not. The session largely remained characterized by choppiness as the aimless indices moved only slowly near the previous closing levels after the early decline. Sentiments remained downbeat with the report that India's fuel consumption grew 6.7% in May over that 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, weakness in rupee further dented sentiments. Extending losses against the American currency for the third straight day, Indian rupee depreciated further by 5 paise to 67.54 at the time of equity markets closing on persistent dollar demand from banks and importers. However, market participants get some comfort with an UNCTAD report stating that India's foreign direct investment is likely to cross $ 60 billion this year on 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. Moreover, monsoon arrived to drought-hit Vidarbha and Marathwada regions of Maharashtra, and the Bundelkhand region in Uttar Pradesh and Madhya Pradesh as well as other northern states of the country.

On the global front, all the Asian equity indices barring Japan's benchmark Nikkei 225 finished the day’s trade in the positive terrain on Wednesday as investors turned optimistic after US Federal Reserve Chair Janet Yellen's statement that the Fed would remain cautious in raising interest rates. Sentiment was also boosted by higher oil prices, with US crude joining Brent above $50 a barrel after data from the American Petroleum Institute showed a larger-than-expected draw on stocks.  However, the Japanese market declined after the yen strengthened against other major currencies.  Meanwhile, European counterparts were trading mostly in the positive territory where major indices like CAC, DAX and FTSE were trading with a gain of 0.10-0.30 percent at this point of time.

Back home, after getting feeble start, the local benchmark indices showed some strength in early trades, but the sentiments turned pessimistic in late morning trades and indices started drifting lower, however the market regained its momentum in the final hour of trade and finished the day 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 around fifty points and closed above the psychological 26,750 mark. On the BSE sectoral space, barring the Realty and Metal counters, all the gauges closed in the negative territory with indices like Auto and FMCG suffering lacerations of 0.77% and 0.57% respectively. Though there were no other sectoral gainers, there were some among individual gainers like Adani Ports & Special, Dr. Reddys Lab and Coal India which gained some traction in the session.

The market breadth remained pessimistic as there were 985 shares on the gaining side against 1595 shares on the losing side, while 200 shares remained unchanged.

Finally, the BSE Sensex ended lower by 47.13 points or 0.18% to 26765.65, while the CNX Nifty dropped 16.20 points or 0.20% to 8,203.70. 

The BSE Sensex touched a high and a low 26887.29 and 26617.45, respectively. The broader indices made a negative closing; the BSE Mid cap index ended down by 0.12%, while Small cap index was lower by 0.60%.

The only gaining sectoral index on the BSE were Realty up by 0.24% and 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% and TECK down by 0.18% were the top losing indices on BSE.

The top gainers on the Sensex were Adani Ports &Special up by 1.87%, Dr. Reddys Lab up by 1.76%, Coal India up by 1.25%, Lupin up by 1.04% and Hero MotoCorp up by 0.70%. On the flip side, Tata Motors down by 2.58%, GAIL India down by 1.88%, Hindustan Unilever down by 1.43%, ITC down by 1.12% and Reliance Industries down by 0.68% were the top losers.

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 traded in a range of 8,238.35 and 8,153.25. There were 21 stocks advancing against 30 stocks decliners on the index.

The top gainers on Nifty were Adani Ports &Special up by 2.24%, Dr. Reddys Lab up by 1.83%, Coal India up by 1.28%, Lupin up by 1.15% and Ambuja Cement up by 0.98%. On the flip side, Bharti Infratel down by 3.20%, Tata Motors - DVR down by 3.10%, Tata Motors down by 2.64%, GAIL India down by 2.17% and Bosch down by 1.42% were the top losers.

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.