Markets trade marginally in red after a flat start

Indian markets seem to be in a consolidation mood, tailing the weakness in other regional peers and major bourses after a flat start have turned marginally lower in early morning trade. Apart from the fading post Brexit rally cheers, traders are concerned with a private report stating that investments in projects remained elusive in the first quarter of the financial year 2016-17 with stalled projects running into an estimated Rs 11.2 lakh crore. It said that three-fourths of them came from the private sector, and they were stalled due to excess capacity and high debt levels. The report further added that most of the stalled projects are in the electricity (31%) and steel (25%) sectors. Also, the SBI Chairman Arundhati Bhattacharya has said that Brexit is “not good” for the world, as becoming less inclusive and less connected is not the right thing and nations will benefit more by globalization. However, any big losses were restricted with Finance Minister Arun Jaitley’s statement, calling India a 'sweet spot' in the subdued global economy. He has said that indication of “good rains” will further boost the country’s growth momentum. Traders are also cautious ahead of the expansion of the Union Cabinet and change of guard with ministry allocations.

On the sectoral front, while metal, banking and FMCG have gained some traction others are showing some profit taking led by auto, power, realty and tech. In scrip specific action Jaypee group stocks have surged along with UltraTech Cements after UltraTech bettered its offer from the earlier agreed Rs 15,900 crore and reiterated that it would buy the Jaypee's cement plants in five states with an aggregate capacity of 17.2 million tonne per annum (mtpa) along with a grinding unit of 4 million tonne per annum for Rs 16,189 crore.

The BSE Sensex is currently trading at 27259.73, down by 19.03 points or 0.07% after trading in a range of 27222.60 and 27348.66. There were 11 stocks advancing against 19 stocks declining on the index.

The broader indices were outperforming the benchmarks and were trading in green; the BSE Mid cap index was up by 0.11%, while Small cap index was up by 0.22%.

The gaining sectoral indices on the BSE were Metal up by 0.63%, PSU up by 0.39%, FMCG up by 0.25%, Consumer Durables up by 0.22%, Capital Goods up by 0.19%, while Auto down by 0.39%, Realty down by 0.30%, TECK down by 0.30%, Oil & Gas down by 0.28%, Power down by 0.25% were the losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 1.37%, Adani Ports &Special up by 1.22%, ICICI Bank up by 0.97%, Dr. Reddys Lab up by 0.95% and SBI up by 0.81%. On the flip side, Bajaj Auto down by 1.73%, Bharti Airtel down by 1.26%, NTPC down by 1.25%, GAIL India down by 1.02% and HDFC Bank down by 0.73% were the top losers.

Meanwhile, government may not cut excise duty on petrol and diesel in the near term if it accepts the suggestion made in the approach paper, submitted by the Chief Economic Adviser (CEA) Arvind Subramanian last month, to the Finance Ministry for maintaining status quo when oil prices can climb by another $ 15 a barrel. CEA has suggested status quo on excise duties till oil prices climb to $ 65 per barrel, from the present $ 49 levels.

CEA stated in the approach paper, any rise in prices above $ 65 a barrel should be equally borne by the consumers and the government, consumers by way of paying higher retail rates and the government by cutting excise duty on the two auto fuels. If crude oil price were to average $ 65 a barrel from July to end of the year, half of the burden on the fiscal would be Rs 46,000 crore, or 0.3 per cent of GDP. Further he added that, every incremental $ 5 per barrel increase in global oil prices would translate into Rs 2-2.1 per litre increase in retail prices if the 50:50 burden sharing mechanism is followed.

India is dependent on imports to meet 80 per cent of its oil needs, it spent $ 63.96 billion on crude oil import in 2015-16, about half of $ 112.7 billion outgo in the previous fiscal. For the current fiscal, the import bill has been pegged at $ 66 billion at an average import price of $ 48 per barrel. Every rupee per litre increase in petrol price leads to 0.02 per cent rise in Wholesale Price Index (WPI) inflation and 0.07 per cent for the same amount of increase in diesel rates.

The CNX Nifty is currently trading at 8357.45, down by 13.25 points or 0.16% after trading in a range of 8347.60 and 8381.45. There were 19 stocks advancing against 31 stocks declining on the index.

The top gainers on Nifty were Tata Steel up by 1.43%, Bank Of Baroda up by 1.41%, Adani Ports &SEZ up by 1.20%, Dr. Reddys Lab up by 0.93% and SBI up by 0.78%. On the flip side, Bajaj Auto down by 1.77%, NTPC down by 1.54%, Bharti Airtel down by 1.26%, GAIL India down by 1.05% and Tata Motors - DVR down by 1.04% were the top losers.

The Asian markets were trading mostly in red barring the Shanghai Composite, which was up by 12.06 points or 0.4% to 3,000.66.

On the other hand, Hang Seng declined by 173.36 points or 0.82% to 20,885.84, Nikkei 225 lost 120.75 points or 0.77% to 15,655.05, Taiwan Weighted declined by 46.95 points or 0.54% to 8,713.63, Jakarta Composite was lower by 45.07 points or 0.9% to 4,971.58, KOSPI Index decreased by 7.63 points or 0.38% to 1,987.67 and FTSE Bursa Malaysia KLCI was down by 4.92 points or 0.3% to 1,649.92