Benchmarks continue to trade in red in late morning session

Indian benchmark indices continued to trade in red in the late morning session as funds and retail investors engaged in reducing positions amid weak Asian cues. Sentiments remained subdued with the report that foreign portfolio investors (FPIs) sold shares worth a net Rs 299.51 crore on July 07, 2016. Besides, fall in crude oil prices coupled with depreciating rupee against dollar, too dampened sentiments. Indian rupee depreciated 10 paise to 67.49 against the US dollar in early trade due to increased demand for the American currency from importers amid foreign fund outflows. However, market participants got some comfort with the rating agency CRISIL’s report that India Inc is expected to see a two-year high growth rate of eight per cent in revenue during this financial year’s first quarter ended June 30, mainly driven by export-oriented units like information technology sector.

On the global front, Asian markets were trading in red on Friday, with investors remaining cautious due to the plunge in oil prices overnight, concerns that a correction in commodity prices is underway and also with Friday's scheduled release of US inflation data that carries the risk of market volatility. Market participants also preferred to stay on the sidelines ahead of the release of the key US monthly jobs report later in the day. The US Labor Department's monthly jobs report is expected to show an increase of about 180,000 jobs in June after employment edged up by just 38,000 jobs in May.

Back home, good buying was observed in Auto and information technology (IT) counters, while selling pressure was seen in PSU, Capital Goods and Oil & Gas counters. In scrip specific development, Gujarat Gas gained after the company received approval from the Petroleum and Natural Gas Regulatory Board’s (PNGRB) to lay, build, operate or expand city or local natural gas distribution networks (CGD) in Panchmahal and Anand districts of Gujarat. Zee Learn too rallied after its net profit for the first quarter ended June 2016 (Q1FY17) more than doubled to Rs 8.02 crore.

The market breadth remained pessimistic as there were 882 shares on the gaining side against 1305 shares on the losing side, while 106 shares remained unchanged.

The BSE Sensex is currently trading at 27095.81, down by 105.68 points or 0.39% after trading in a range of 27034.14 and 27294.82. There were 13 stocks advancing against 17 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index was up by 0.05%, while Small cap index was down by 0.22%.

The top gaining sectoral indices on the BSE were Auto up by 0.57%, IT up by 0.24%, while PSU down by 1.01%, Capital Goods down by 0.93%, Oil & Gas down by 0.75%, Metal down by 0.71% and Bankex down by 0.67% were the top losing indices on BSE.

The top gainers on the Sensex were Asian Paints up by 2.39%, Tata Motors up by 1.97%, Hero MotoCorp up by 1.35%, Cipla up by 1.21% and Lupin up by 0.95%. On the flip side, Bharti Airtel down by 2.50%, Adani Ports &Special down by 2.09%, ICICI Bank down by 1.66%, ONGC down by 1.52% and GAIL India down by 1.40% were the top losers.

Meanwhile, Labour Ministry is in favour of retirement fund body Employees Provident Fund Organisation (EPFO) increasing its investments in the stock markets through Exchange Traded Funds (ETFs). The, Labour Minister Bandaru Dattatreya has said that “We see the possibility of it increasing, but we want to discuss it with the Central Board of Trustees (CBT). I believe the investment in ETFs should rise.”

A meeting of EPFO’s apex decision making body, CBT headed by the Labour Minister is scheduled on July 8, where the issue of increasing investments in ETFs is expected to be taken up. Dattatreya however reiterated that the government will take the issue of investments in the stock markets “step by step” and maintain a “cautious approach”. The issue will also be discussed with the CBT.

In August last year, the EPFO had started investing 5 per cent of its investible deposits in ETFs and as it started giving good returns, there is a move to increase the proportion of such investments this fiscal. As per the Finance Ministry investment pattern, the investment can go up to 15 per cent. As on April 30, 2016 the amount invested was Rs 6,674 crore and this gave a return of Rs 6,786 crore, which is up by 1.68 per cent.

The CNX Nifty is currently trading at 8311.15, down by 26.75 points or 0.32% after trading in a range of 8287.55 and 8353.30. There were 23 stocks advancing against 28 stocks declining on the index.

The top gainers on Nifty were Asian Paints up by 2.34%, Tata Motors up by 2.15%, Aurobindo Pharma up by 2.12%, Zee Entertainment up by 1.55% and Hero MotoCorp up by 1.42%. On the flip side, Idea Cellular down by 3.29%, Bharti Airtel down by 2.56%, Bank of Baroda down by 2.28%, Bharti Infratel down by 2.28% and Adani Ports & Special down by 1.93% were the top losers.

Asian markets were trading in red, Hang Seng slumped by 0.93%, Nikkei 225 was down by 0.45%, Shanghai Composite lost 0.83%, KOSPI Index was lower by 0.66% and FTSE Bursa Malaysia KLCI decreased 0.35%.