Benchmarks wipe some losses; trade continues in red

Indian equity benchmarks wiped off some losses in the late afternoon session but were still trading in red due to weak trend in other Asian markets as investors dumped riskier assets. Markets had already been on edge after a steady stream of negative news this week in the form of rising Brexit uncertainty and a growing crisis in Italian banks. Investors maintained a cautious approach after global financial services major stated that India’s economy may grow at a slightly slower pace of 7.4% this fiscal amid weaker global demand and risk aversion, flagging methodological concerns in computation of official GDP data. The report highlighted that some of the factors that are weighing on the economy include weaker global demand, banking sector risk aversion, sluggish domestic private investment, gradually climbing oil prices, and statistical auto-correction in growth prints. Traders were seen piling position in Auto, IT and TECK stocks while selling was witnessed in Capital goods, PSU and Oil & Gas sector stocks. In scrip specific development, hectic selling was witnessed in telecom stocks like Bharti Airtel, Idea Cellular and Reliance Communications after the Department of Telecommunication stated that it is in process of issuing notices to six telecom operators for combined payment of Rs 12,000 crore for understatement of revenue between 2006-07 and 2009-10. On the other hand, Zee Learn was trading firm after its net profit surged 102.78% to Rs 8.01 crore on 17.52% increase in total income from operations to Rs 42.06 crore in Q1 June 2016 over Q1 June 2015. The result was announced after market hours yesterday.

On the global front, Asian markets were trading in red while the European markets were trading on optimistic note. Back home, the NSE Nifty and BSE Sensex were trading below the psychological 8,350 and 27,200 levels respectively. The market breadth on BSE was negative in the ratio of 1065:1464 while 140 scrips remained unchanged.

The BSE Sensex is currently trading at 27139.02, down by 62.47 points or 0.23% 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 0.18%, while Small cap index was down by 0.03%.

The gaining sectoral indices on the BSE were Auto up by 0.67%, IT up by 0.38% and TECK up by 0.04% while, Capital Goods down by 0.86%, PSU down by 0.79%, Oil & Gas down by 0.76%, Metal down by 0.52% and Bankex down by 0.33% were the losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 2.43%, Asian Paints up by 2.27%, Hero MotoCorp up by 1.53%, Cipla up by 1.14% and Power Grid Corporation up by 0.86%.

On the flip side, Bharti Airtel down by 2.27%, GAIL India down by 1.99%, Adani Ports & Special Economic Zone down by 1.83%, Coal India down by 1.49% and ONGC down by 1.43% were the top losers.

Meanwhile, with Britain deciding to exit from the European Union (EU), the Indian industry body Confederation of Indian Industry (CII), which led its annual delegation to London this week to take stock of ‘The Future of UK-India Economic Relations’ has said that Brexit opened up the possibility of new opportunities as a Free Trade Agreement (FTA) between India and the UK could be easier to accomplish at a bilateral level. CII said that there was “political drive and willingness” on both the sides and the Brexit will be the best era for Indian industries to collaborate.

The industry body pointed that India had been negotiating a Free Trade Agreement with the EU for over nine years, but was stuck due to various issues. Now these issues will instantly go away between India and the UK and the agreement would be beneficial for both the sides. CII said that “India-UK relations will sustain with or without Britain’s relationship with the EU and will only thrive and prosper in the years ahead.”

CII further said that the both countries share a number of complementarities and there are lower sensitivities, entering into an FTA with Britain will now be faster than with the entire bloc. Sectors such as automobile will not be sensitive in an FTA with the UK as the UK is not into manufacturing of too many small cars. Similarly, products such as textile from India could gain easier access to the UK. Besides, there is lot of export opportunities for Indian companies in sectors including garments and textiles in Britain.

The CNX Nifty is currently trading at 8326.70, down by 11.20 points or 0.13% after trading in a range of 8287.55 and 8353.30. There were 25 stocks advancing against 26 stocks declining on the index.

The top gainers on Nifty were Tata Motors up by 2.61%, Asian Paints up by 2.19%, Tata Motors - DVR up by 2.15%, IndusInd Bank up by 1.75% and Hero MotoCorp up by 1.74%.

On the flip side, Idea Cellular down by 2.58%, Bharti Infratel down by 2.41%, Bharti Airtel down by 2.24%, GAIL India down by 1.99% and Bank of Baroda down by 1.64% were the top losers.

The Asian markets were trading in red; Nikkei 225 decreased 169.26 points or 1.11% to 15,106.98, Hang Seng decreased 142.75 points or 0.69% to 20,564.17, Shanghai Composite decreased 28.75 points or 0.95% to 2,988.09, KOSPI Index decreased 10.98 points or 0.56% to 1,963.10 and FTSE Bursa Malaysia KLCI decreased 8.18 points or 0.5% to 1,642.53.

Jakarta and Taiwan Stock Exchange was closed on account of national holiday.

The European markets were trading in green; UK’s FTSE 100 increased 17.32 points or 0.27% to 6,551.11, France’s CAC increased 20.02 points or 0.49% to 4,137.87 and Germany’s DAX increased 73.63 points or 0.78% to 9,492.41.