Benchmarks erase gains in late afternoon session

Indian equity benchmarks erased gains and started trading weak hovering near the neutral line in the late afternoon session on account of selling in frontline blue chip counters. Investors took note of Moody’s Investors Service report which stated that emerging market economies including India are becoming more vulnerable to global shocks with piling up of external debts. Traders were seen piling position in Power, Capital Goods and Metal stocks while selling was witnessed in IT, Bankex and TECK sector stocks. In scrip specific development, Bharat Financial Inclusion was trading firm after its net profit surged 285.75% to Rs 235.91 crore on 46.51% rise in total income to Rs 414.11 crore in Q1 June 2016 over Q1 June 2015. ADF Foods was trading in green after the company stated that it has scheduled a board meeting on July 27, 2016, to consider share buyback proposal. The announcement was made after market hours yesterday i.e. July 21 2016.

On the global front, Asian markets were trading mostly in red while the European markets were trading on pessimistic note. Back home, the NSE Nifty and BSE Sensex were trading below the psychological 8,550 and 27,800 levels respectively. The market breadth on BSE was positive in the ratio of 1406:1124 while 186 scrips remained unchanged.

The BSE Sensex is currently trading at 27710.66, up by 0.14 points after trading in a range of 27646.21 and 27813.80. There were 17 stocks advancing against 13 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.67%, while Small cap index was up by 0.64%.

The gaining sectoral indices on the BSE were Power up by 1.12%, Capital Goods up by 0.78%, Metal up by 0.64%, Realty up by 0.37% and Auto up by 0.31% while, IT down by 0.35%, Bankex down by 0.28%, TECK down by 0.05%, PSU down by 0.03% and FMCG down by 0.01% were the losing indices on BSE.

The top gainers on the Sensex were Power Grid Corporation up by 2.52%, Tata Motors up by 1.37%, NTPC up by 1.13%, GAIL India up by 1.13% and Larsen & Toubro up by 0.82%.

On the flip side, Bajaj Auto down by 1.37%, Sun Pharma down by 1.31%, Hindustan Unilever down by 1.22%, SBI down by 0.98% and Infosys down by 0.96% were the top losers.

Meanwhile, emerging market economies including India are becoming more vulnerable to global shocks with piling up of external debts. Moody's Investors Service in its latest report has said that India’s external debt as of 2015 at $474 billion has experienced the second largest rise since 2010 representing 16% of the Asia Pacific region's total debt. Besides, external debt to GDP ratio has moved up to 23% from 17% in 2005, although is still one of the lowest globally.

The report said that external debt for emerging economies has almost tripled in the last decade to $8,200 billion in 2015 from $3,000 billion in 2005 and over the last five years it has grown faster than GDP and foreign exchange reserves. As a result, the average emerging markets external debt to GDP ratio increased to 54% in 2015 from its decade-low of 40% in 2008. The average external debt to reserves ratio rose to 353% in 2015 from 251% in 2007.

Moody’s report further stated that Asia-Pacific regional debt has grown the strongest in the last decade, at an average rate of 13.5% a year. Asia-Pacific region’s increase in debt is of $1,400 billion over the last five years and represents almost 60% of the total increase in emerging market debt over that period. Whereas the average external debt to GDP ratio for Asia as a whole has recently rose to 47% in 2015 from 31% in 2008, this was however well below the 78% of emerging Europe, but comparable to the 48% in Latin America and the 43% in the Middle East and Africa region. While adding Moody’s said, the growth in debt was the highest in the Asia Pacific region, with the largest rise in external borrowing in China, India, Indonesia, Taiwan and Malaysia. While China's external debt to GDP ratio is still the second-lowest globally at 13% of GDP in 2015.

The CNX Nifty is currently trading at 8507.80, down by 2.30 points or 0.03% after trading in a range of 8489.80 and 8543.85. There were 26 stocks advancing against 25 stocks declining on the index.

The top gainers on Nifty were Power Grid Corporation up by 2.68%, Bharti Infratel up by 2.42%, Zee Entertainment up by 2.03%, Tata Power up by 1.63% and Aurobindo Pharma up by 1.59%.

On the flip side, Bosch down by 1.67%, Bajaj Auto down by 1.64%, ACC down by 1.59%, Sun Pharma down by 1.44% and Hindustan Unilever down by 1.18% were the top losers.

The Asian markets were trading mostly in red; Nikkei 225 decreased 182.97 points or 1.09% to 16,627.25, Taiwan Weighted decreased 43.42 points or 0.48% to 9,013.14, Hang Seng decreased 36.22 points or 0.16% to 21,964.27, Jakarta Composite decreased 28.9 points or 0.55% to 5,188.07, Shanghai Composite decreased 26.19 points or 0.86% to 3,012.82 and KOSPI Index decreased 1.88 points or 0.09% to 2,010.34.

On the other hand, FTSE Bursa Malaysia KLCI increased 1.69 points or 0.1% to 1,659.23.

The European markets were trading in red; UK’s FTSE 100 decreased 16.52 points or 0.25% to 6,683.37, Germany’s DAX decreased 32.83 points or 0.32% to 10,123.38 and France’s CAC decreased 12.28 points or 0.28% to 4,363.97.