Benchmarks continue to trade in narrow range with negative bias

In the extremely range-bound session of trade, Indian equity benchmarks altering between positive and negative territory, were now trading with bit of negative bias as Investors turned cautious ahead of the expiry of derivatives contract on July 28, 2016. Sentiments remained down-beat with the report that sectors like construction, iron & steel, chemicals continued to face financial stress with dip in margins and profitability leading to higher number of credit rating downgrades in the June quarter. Further upside risks to price rise still prevails, largely owing to increasing international commodity prices and implementation of the seventh pay commission awards, while CPI inflation is likely to be in the range of 5.7-5.9% in July. According to private report, structural issues in the inflation dynamics continue to prevail as rural CPI inflation on average remains above the urban CPI inflation. However, investors got some comfort with the minister of State for Finance Arjun Ram Meghwal’s statement that Government is working overtime to build a consensus on the long-pending Goods and Services Tax bill with the hope of getting it passed during the ongoing Parliament session. Some support also came in from reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 891 crore on July 25, 2016.

On the global front, Asian markets were trading mixed with shares in Japan declining the most on the back of a stronger yen while caution ahead of policy meet from central banks in US and Japan and weakness in crude oil prices dampened sentiment. Further, US stock markets closed in the red on Monday as investors took a break after four weeks of gains that brought the market to record highs. Energy stocks tumbled as the price of oil slid by 2%, leaving U.S. benchmark crude down 12% this month.

Back home, stocks from Consumer Durables, Metal and Oil & Gas counters were supporting the markets, while those from Realty, Auto and Banking counters were adding to the underlying cautious undertone. In scrip specific development, Federal Bank gained after the company reported 18.33% rise in its net profit at Rs 167.31 crore for the quarter ended June 30, 2016 as compared to Rs 141.39 crore for the same quarter in the previous year. Moreover, IDBI Bank surged after the bank received its shareholders’ nod to raise up to Rs 28,000 crore from a mix of equity and bonds.

The market breadth remained optimistic as there were 1117 shares on the gaining side against 1027 shares on the losing side, while 141 shares remained unchanged

The BSE Sensex is currently trading at 28073.34, down by 22.00 points or 0.08% after trading in a range of 28058.31 and 28141.49. There were 14 stocks advancing against 16 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.20%, while Small cap index was up by 0.27%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 0.45%, Metal up by 0.33%, Oil & Gas up by 0.28%, IT up by 0.28% and PSU up by 0.22%, while Realty down by 0.53%, Auto down by 0.31% and Bankex down by 0.13% were the losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 1.57%, Wipro up by 1.11%, Axis Bank up by 1.06%, GAIL India up by 0.97% and Cipla up by 0.81%. On the flip side, Maruti Suzuki down by 1.32%, Lupin down by 1.16%, ICICI Bank down by 1.11%, Hero MotoCorp down by 0.89% and Asian Paints down by 0.73% were the top losers.

Meanwhile, the government has proposed to renegotiate all its bilateral investment pacts and to replace them with new treaties. Commerce and Industry Minister Nirmala Sitharaman has said that India has proposed to renegotiate all its bilateral investment agreements whose earlier validity had expired and will replace them with the new Bilateral Investment Treaties (BITs).  The minister added that out of the total 83 treaties signed by India so far, 58 are being terminated. The notices have been sent to the respective governments through the diplomatic channel. She further said that USA has expressed its desire to sign a treaty similar to the FTA signed with Japan and Korea and the technical discussions with the US side have been continuing on the basis of the revised treaty text. In December last year, the government had approved the revised Model Text for the Indian Bilateral Investment Treaty , which provides appropriate protection to foreign investors in India and Indian investors in the foreign country, in the light of relevant international precedents and practices, while maintaining a balance between the investor's rights and the Government obligations. It was then decided that the model BIT will be used for re-negotiation of existing BIT and negotiation of future BITs.

The CNX Nifty is currently trading at 8627.25, down by 8.40 points or 0.10% after trading in a range of 8620.45 and 8643.95. There were 23 stocks advancing against 28 stocks declining on the index.

The top gainers on Nifty were Tata Steel up by 1.65%, ACC up by 1.58%, Ambuja Cement up by 1.39%, Axis Bank up by 1.11% and Wipro up by 1.02%. On the flip side, Lupin down by 1.32%, Bharti Airtel down by 1.24%, Asian Paints down by 1.01%, ICICI Bank down by 1.01% and Maruti Suzuki down by 0.94% were the top losers.

Asian markets trading mixed; Taiwan Weighted increased 0.09%, KOSPI Index gained 0.65%, Shanghai Composite rose 0.48% and Hang Seng was up by 1.21%. On the flip side, Nikkei 225 declined 1.69%, Jakarta Composite slipped 0.11% and FTSE Bursa Malaysia KLCI was down by 0.25%.