Benchmarks extend losses in late morning session

Indian equity benchmarks extended their losses in the late morning session on account of selling in frontline blue chip counters. The sentiments were trading under pressure after rupee depreciated to trade at fresh three-week low against the dollar at the forex market following increased demand for the American currency from importers and banks. The dollar firmed up against some global currencies on US interest rate hike hopes this year after the Federal Reserve Vice Chairman Stanley Fischer stated that country’s economy was picking up, which weighed on the rupee. Stock investors’ hopes of some aggressive monetary policy easing have been dashed following the selection of Urjit Patel as the new Reserve Bank of India (RBI) governor. The appointment of Patel, known for his focus on lowering inflation, like Raghuram Rajan, has sent the right signals to the global investment community about policy continuity. RBI’s deputy governor SS Mundra expects Urjit Patel to ensure continuity in policy as the next RBI governor. He sees no major shift in outlook with new governor. Traders were seen piling position in FMCG, Realty and Consumer Durables stocks, while selling was witnessed in Metal, Auto and TECK sector stocks. In scrip specific development, hectic buying activity was witnessed in aviation stocks like Jet airways, SpiceJet and InterGlobe Aviation on report that domestic air passenger traffic jumped by nearly 26 percent in July, registering double-digit growth for the 24th consecutive month with lower fares attracting more fliers. 

On the global front, Asian stocks were mostly down, with traders likely holding their horses ahead of a speech from Federal Reserve chair Janet Yellen at Jackson Hole scheduled on Friday. Bank Indonesia left interest rates unchanged for the second-consecutive month, waiting for the previous, recent easing measures to work on the economy. Back home, the NSE Nifty and BSE Sensex were trading below the psychological 8,650 and 28,000 levels respectively. The market breadth on BSE was negative in the ratio of 1010:1148, while 134 scrips remained unchanged.

The BSE Sensex is currently trading at 27965.05, down by 111.95 points or 0.40% after trading in a range of 27923.79 and 28143.28. There were 7 stocks advancing against 23 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.31%, while Small cap index was down by 0.20%.

The gaining sectoral indices on the BSE were FMCG up by 0.66%, Realty up by 0.59% and Consumer Durables up by 0.30%, while Metal down by 0.99%, Auto down by 0.68%, TECK down by 0.66%, IT down by 0.62% and Bankex down by 0.57% were the losing indices on BSE.

The top gainers on the Sensex were Hindustan Unilever up by 2.07%, ITC up by 1.18%, GAIL India up by 0.27%, Cipla up by 0.26% and HDFC up by 0.23%.

On the flip side, Lupin down by 1.99%, Sun Pharma down by 1.67%, Tata Steel down by 1.45%, ICICI Bank down by 1.44% and Hero MotoCorp down by 1.17% were the top losers.

Meanwhile, after selecting Urjit Patel as the next governor of the Reserve Bank of India, the government is likely to initiate the process of finalising names of three independent directors for Monetary Policy Committee (MPC) and the decision is expected to be taken in the next few days or may be in the beginning of the next month. The committee will fix the benchmark interest rate of Reserve Bank of India (RBI) and set inflation targets.

The government has already started the process of finalizing three members for the panel, while the RBI has nominated executive director Michael Patra to be its nominee on it, in addition to the Governor and the Deputy Governor in-charge of the monetary policy department. The government nominees have been selected by a search-cum-selection Committee lead by Cabinet Secretary with RBI Governor, Economic Affairs Secretary and three experts in the field of economics / banking / finance / monetary policy as its members.

The next bi-monthly RBI policy, scheduled on October 4, will be decided by the Monetary Policy Committee (MPC).  Therefore, even if the appointment takes time, the MPC can continue the work with regard to setting up interest rate to meet the inflation target fixed by the government.  Under the agreement with the government, RBI is committed to anchoring retail inflation at 4 per cent (plus/minus 2 per cent) and has set itself a target of 5 per cent by next March as part of a 'glide path' to achieving the median mark.

Members of the MPC will be appointed for a period of four years and shall not be eligible for reappointment. The idea of setting up an MPC was mooted by an RBI-appointed committee led by deputy governor Urjit Patel in February 2014. Though it had recommended a five-member committee where three members would be from RBI and two external members would be appointed by the RBI governor and the deputy governor in-charge.

The CNX Nifty is currently trading at 8629.45, down by 37.45 points or 0.43% after trading in a range of 8615.30 and 8684.85. There were 12 stocks advancing against 38 stocks declining, while 1 stock remained unchanged on the index.

The top gainers on Nifty were Hindustan Unilever up by 2.28%, ITC up by 1.30%, BPCL up by 1.22%, BHEL up by 0.74% and IndusInd Bank up by 0.53%.

On the flip side, Hindalco down by 2.08%, Sun Pharma down by 2.01%, Lupin down by 1.95%, Ultratech Cement down by 1.71% and Bank of Baroda down by 1.70% were the top losers.

The Asian markets were trading mostly in red; Hang Seng decreased 76.68 points or 0.33% to 22,860.54, Taiwan Weighted decreased 73.85 points or 0.82% to 8,960.42, Shanghai Composite decreased 18.88 points or 0.61% to 3,089.22 and KOSPI Index decreased 12.76 points or 0.62% to 2,043.48.

On the other hand, FTSE Bursa Malaysia KLCI increased 1.02 points or 0.06% to 1,688.70, Jakarta Composite increased 2.49 points or 0.05% to 5,418.53 and Nikkei 225 increased 43.95 points or 0.27% to 16,589.77.