Weak trade continues in late morning session

After getting slow start, Indian benchmark indices are trading flat with a negative bias, as investors remained nervous ahead of Britain’s referendum on its European Union status. Sentiments remained distressed with a private report that the likely build-up of a scenario of delayed monsoon and hardening of prices might lead to a longer than expected pause in rate cuts by the Reserve Bank of India. However, losses remained capped with RBI Governor Raghuram Rajan stating that the central bank is watching the situation and will infuse whatever liquidity is needed to keep Indian markets well behaved. And also with the government’s approval of setting up of a ‘Fund of Funds for Startups’ with a corpus of Rs 10,000 crore at SIDBI (Small Industries Development Bank), in line with the Start-up India Action Plan unveiled by it in January.

On the global front, Asian markets trading mostly lower on Thursday 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. Overnight, US stocks finished slightly lower, as polls showed the outcome of a UK referendum on whether to leave the European Union remained too close to call a day ahead of the vote. Besides, investors were disappointed after US existing home sales rose by 1.8 per cent to an annual rate of 5.53 million in May from a downwardly revised 5.43 million in April. The street was expecting existing home sales to climb 2.2 per cent to a rate of 5.57 million.

Back home, stocks from Realty, Power and Capital Goods counters were among the worst performers, while Auto, Banking and FMCG counters battled out against all odds. In scrip specific development, shares of Lupin surged after the company received final approval from the USFDA for Amabelz tablets (Estradiol and Norethindrone Acetate Tablets USP, 0.5mg/0.1mg and 1mg/0.5mg) to market a generic version of Amneal Pharmaceuticals' Activella tablets. Moreover, KEC International rallied after the company secured new orders worth of Rs 1,036 crore.

The market breadth on BSE was pessimistic, out of 2183 stocks traded, 755 stocks advanced, while 1317 stocks declined on the BSE. 

The BSE Sensex is currently trading at 26753.59, down by 12.06 points or 0.05% after trading in a range of 26739.12 and 26813.57. There were 12 stocks advancing against 18 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.17%, while Small cap index was lower by 0.30%.

The top gaining sectoral indices on the BSE were Auto up by 0.27%, Bankex up by 0.15% and FMCG up by 0.13%, while Realty down by 1.78%, Power down by 1.24%, Capital Goods down by 0.56%, PSU down by 0.41%, IT down by 0.38% were the top losing indices on BSE.

The top gainers on the Sensex were Sun Pharma Inds. up by 1.63%, Tata Motors up by 1.45%, Dr. Reddys Lab up by 1.33%, Lupin up by 1.27% and ITC up by 0.89%. On the flip side, NTPC down by 2.53%, Cipla down by 1.25%, Power Grid down by 1.09%, ONGC down by 1.05% and TCS down by 0.88% were the top losers.

Meanwhile, giving a boost to textile and garment sectors competitiveness globally, the government has given approval for a special Rs 6, 000-crore package for promotion of exports in Textile and Apparel sector. The package hopes to create one crore new jobs in the textile and apparel industry in three years, attracting investments of $11 billion and generating $30 billion in exports. Finance Minister Arun Jaitley said that the package will help in realizing the true potential of employment generation in the textile and apparel sector. He added that as India has advantage of economies of scale, hence it was decided to take steps to give a boost to the sector.

The package includes a slew of measures which include additional incentives for duty drawback scheme for garments, flexibility in labour laws to increase productivity as well as tax and production incentives for job creation in garment manufacturing. It will also provide more flexible labour laws and financial incentives for sector.

Under the package, the government has cleared the proposal to increase overtime hours for workers which are not to exceed 8 hours per week in line with International Labour Organization norms, in order to bring in flexibility in labour laws. Moreover, the government will bear the entire burden of employers’ contribution to the Employees’ Provident Fund (EPF) scheme for new employees of the garments industry earning less than Rs.15,000 a month for the first three years. Also, EPF shall be made optional for employees earning less than Rs.15,000 per month.

Furthermore, the package breaks new ground in moving from input to outcome based incentives by increasing subsidy under Amended-Technology Upgradation Fund Scheme (ATUFS) from 15 per cent to 25 per cent for the garment sector. The subsidy under the scheme would only be disbursed, once the estimated number of jobs is created. Not only this the package will roll out a scheme wherein manufacturers can claim a refund from the central government on various state levies such as value-added tax and central sales tax that have been paid. It also proposes to relax the criteria for claiming tax benefits under the Income Tax Act.

The CNX Nifty is currently trading at 8194.65, down by 9.05 points or 0.11% after trading in a range of 8188.30 and 8212.35. There were 24 stocks advancing against 27 stocks declining on the index.

The top gainers on Nifty were Sun Pharma up by 1.55%, Lupin up by 1.51%, Dr. Reddys Lab up by 1.41%, Tata Motors up by 1.38% and Zee Entertainment up by 0.98%. On the flip side, Bharti Infratel down by 4.04%, NTPC down by 2.79%, Tata Power down by 1.42%, ONGC down by 1.21% and Cipla down by 1.19% were the top losers.

Asian markets were trading mostly in red; Taiwan Weighted decreased 0.47%, Shanghai Composite shed 0.8%, Jakarta Composite slipped 0.32%, KOSPI Index declined 0.29% and FTSE Bursa Malaysia KLCI was down by 0.04%. On the flip side, Hang Seng increased 0.27% and Nikkei 225 was up by 0.78%.