Benchmarks continue to trade in deep red

Indian bourses continued to trade in red in the late morning session, with the Sensex losing over 900 points and Nifty falling below the 8000 level, amid weak Asian cues, after early counting on the EU referendum indicated that 'leave' votes are slightly more than 'remain'. On the domestic front, sentiments got undermined with the report that monsoon rains in India were 7 percent below average in the week ending June 22, 2016. The June-September monsoon rains have remained 18 percent low so far, but have covered almost the entire country.  Sharp fall in the rupee further dented sentiments. Indian rupee was trading at 68.12 per dollar in early deals, down by 87 paise as compared to previous closing of 67.25 per dollar level on Friday. Meanwhile, market-participants failed to drew any comfort with Finance Minister Arun Jaitley’s statement India is well prepared to deal with the short and medium term consequences of Brexit. He also said that India’s macro-economic fundamentals are sound with a very comfortable external position, a rock-solid commitment to fiscal discipline, and declining inflation.

Carnage came to global markets on Friday, were all the Asian equity markets disintegrated like a ‘house of cards’ as results of an historic referendum showed Britain had voted to leave the European Union, sending sterling on a record plunge. The volatility started in currencies and spread to markets from Australia to Tokyo, where shares gave up gains from the open. Meanwhile, many believes that  such a body blow to global confidence could well prevent the Federal Reserve from raising interest rates as planned this year, and might even provoke a new round of emergency policy easing from all the major central banks.

Back on street, all sectoral indices on the BSE were in the red with Realty index emerging as the top loser down by over five and half percent, followed by Metal and Auto indices among others. In scrip specific development, Reliance Power declined after the company received a show-cause notice from Union ministry of coal (MoC) for the delay in developing coal blocks associated with its 4,000-Mw Ultra Mega Power Project (UMPP) at Tilaiya in Jharkhand. On the flip side, Sun Pharmaceutical Industries gained after the company announcing 75 lakh shares buyback.

The market breadth on BSE was extremely pessimistic, out of 2180 stocks traded, 171 stocks advanced, while 1932 stocks declined on the BSE.

The BSE Sensex is currently trading at 26037.77, down by 964.45 points or 3.57% after trading in a range of 25944.53 and 26367.48. There were 1 stocks advancing against 29 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 3.12%, while Small cap index was lower by 3.62%.

The top losing sectoral indices on the BSE were Realty down by 5.72%, Metal down by 5.36%, Auto down by 5.32%, Bankex down by 4.95%, Capital Goods down by 4.16%, while there were no gainers on the BSE sectoral indices.

The top losers on the Sensex were Tata Motors down by 11.06%, Tata Steel down by 8.63%, ICICI Bank down by 6.19%, Axis Bank down by 5.57% and SBI down by 5.20%. On the flip side, Sun Pharma up by 0.32% was the only gainer on the index.

Meanwhile, the government has extended the timeline for states to join the Ujwal Discom Assurance Yojana (UDAY), meant for the revival of debt-laden discoms, by one year till 31 March, 2017 from the earlier stipulated date of March 31, 2016. The proposal is cleared in order to facilitate all states that want to benefit from the scheme and could not join scheme or issue bonds to pay off discoms debt due to various reasons like elections and regulatory approvals.

Under the UDAY scheme, the states were required to join the scheme formally last fiscal and issue bonds to pay off discoms 50 percent debt in 2015-16 and were supposed to issue bonds to pay off additional 25 percent of the discoms debt in the current fiscal. However, some states could not join the scheme and some could not issue bonds due to various reasons. As with this decisions, these state would be able issue the bonds to pay of 75 percent of state discoms debts as on September, 30, 2015 during the current fiscal itself.

Till date, 19 states have agreed to join the UDAY scheme. The discoms have total outstanding debt of Rs 4.3 lakh crore as on September 30, 2015. States that have joined UDAY issued bonds of nearly Rs 1 lakh crore in 2015-16 under the scheme to clear 50 per cent of the outstanding debt. Further, as per the requirement of the scheme, discoms bonds worth Rs 11,524 crore were floated. In the current fiscal, bonds worth Rs 14,801 crore have been floated by Uttar Pradesh.

Launched in November last year, UDAY scheme deals with the burgeoning debt of discoms in the country. It was estimated that outstanding debt of discoms has increased from about Rs 2.4 lakh crore in 2011-12 to about Rs 4.3 lakh crore in 2014-15, with interest rates upto 14-15 percent. It was also estimated that state discoms suffer a loss of over Rs 60,000 crore every year. The main objective of the scheme is to get these discoms out of circle of debt and allow them to buy power to increase consumption in the country.

The CNX Nifty is currently trading at 7963.85, down by 306.60 points or 3.71% after trading in a range of 7938.60 and 8058.45. There was 1 stock advancing against 50 stocks declining on the index.

The top losers on Nifty were Tata Motors down by 11.26%, Tata Motors - DVR down by 9.83%, Tata Steel down by 8.85%, Hindalco down by 7.83% and ICICI Bank down by 6.45%. On the flip side, Sun Pharma up by 0.25% was the only gainer on the index.

Asian markets were reeling under pressure; Nikkei 225 tumbled 7.81%, Hang Seng slumped 4.92%, Taiwan Weighted declined 2.58%, Jakarta Composite decreased 2.28%, KOSPI Index plunged 3.47%, Shanghai Composite shed 1.91% and FTSE Bursa Malaysia KLCI was down by 1.38%.