Benchmarks continue to trade in red; Nifty below 8750 mark

Indian equity indices are trading in red on a subdued note in absence of buying among investors who are reluctant to pick shares due, to fear that the central bank in the world’s biggest economies questioned the benefits of loose monetary policy. Market participants have turned increasingly jittery apart from the fears of US rate hike and a nuclear test by North Korea, there are other concerns like commodities slumped with Oil dropped after US oil drillers added rigs to look for new production as producers adapt to cheaper crude. Copper prices were stuck near its weakest in two months as investors turn increasingly bearish on the metal given prospects for rising supply.  On the domestic front, sentiments were undermined by weakness in Indian rupee against the dollar on increased demand of the American currency among importers and bankers. Investors also remained on sidelines ahead of the Indian Index of Industrial Production (IIP) data to be released today after the market hours, which is expected to raise bit of concern since there has been no material improvement in economic activity.

On the global front, Asian markets trading weak on Monday, with investors rattled by rising bond yields and talk the Federal Reserve might be serious about lifting U.S. interest rates as early as next week. Reports that the Bank of Japan was considering ways to steepen the Japanese yield curve, along with speculation that central banks more generally were running short on fresh stimulus options, also hit risk appetite globally. Meanwhile, oil dropped the most in more than a month after the biggest U.S. stockpile slump in 17 years was seen as a one-off caused by a tropical storm that disrupted imports and offshore production.

Back home, stocks from IT and TECK counters were supporting the markets, while those from Realty, Metal and Capital Goods counters were adding to the underlying cautious undertone. In scrip specific development, HDIL slumped after its consolidated net profit fell 30% y-o-y to Rs 40.89 crore on 2.7% decline in total income to Rs 265.21 crore in the quarter ended June 2016. On the other hand, Balkrishna Industries rallied after reporting 47% Y-o-Y growth in net profit at Rs 149 crore for the quarter ended June 30, 2016.

The market breadth remained pessimistic as there were 604 shares on the gaining side against 1748 shares on the losing side, while 126 shares remained unchanged.

The BSE Sensex is currently trading at 28400.02, down by 397.23 points or 1.38% after trading in a range of 28251.31 and 28481.11. There were 4 stocks advancing against 26 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 2.22%, while Small cap index down by 1.46%.

The few gaining sectoral indices on the BSE were IT up by 1.08% and TECK up by 0.46%, while Realty down by 2.85%, Metal down by 2.74%, Capital Goods down by 2.42%, Auto down by 2.36% and Bankex down by 2.31% were the losing indices on BSE.

The top gainers on the Sensex were Infosys up by 1.78%, Wipro up by 0.45%, Reliance Industries up by 0.34% and TCS up by 0.27%. On the flip side, Tata Steel down by 3.60%, Adani Ports &Special down by 3.44%, Axis Bank down by 3.41%, SBI down by 3.18% and Hero MotoCorp down by 3.17% were the top losers.

Meanwhile, giving more freedom to states to spend funds under Centrally Sponsored Schemes (CSS) to meet local developmental requirements, the government has announced new guidelines called flexi-fund for states with aim to meet local needs and requirements and pilot innovation to improve efficiency. As per the new guidelines, flexi-funds in each CSS have been increased from the current 10 per cent to 25 per cent for states and 30 per cent for Union Territories.

Now, states can use the fund to undertake mitigation or restoration activities in case of natural calamities or to satisfy local requirements in areas affected by internal security disturbances. It also stated that states if they want can set aside 25 per cent of any CSS as flexi-fund to be spent on any sub-scheme or component or innovation that is in line with the overall aim and objective of the approved Scheme.

The guidelines however said that the state governments will have to constitute a state-level sanctioning committee to avail of the flexi-fund facility. The flexi-fund facility is not for CSS which emanate from legislation, like MNREGA.

Based on the recommendations of the sub-group of chief ministers and consultations with stakeholders, Niti Aayog had issued instructions for rationalisation of CSS. The rationalisation is expected to ensure optimum utilisation of resources with better outcome through area-specific interventions. This would also ensure wider reach of benefits to target groups. Centrally Sponsored Schemes (CSS) are schemes that are implemented by State governments of India but are largely funded by the Central Government with a defined State Government share.

The CNX Nifty is currently trading at 8736.50, down by 130.20 points or 1.47% after trading in a range of 8699.40 and 8746.95. There were 6 stocks advancing against 45 stocks declining on the index.

The top gainers on Nifty were Infosys up by 1.88%, Tech Mahindra up by 1.24%, HCL Tech up by 1.02%, Wipro up by 0.47% and Reliance Industries up by 0.38%. On the flip side, Hindalco down by 5.52%, Yes Bank down by 4.70%, Bank of Baroda down by 4.54%, Adani Ports &Special down by 3.71% and Tata Steel down by 3.62% were the top losers.

Asian markets were trading deep into the red; Hang Seng tumbled 2.81%, Nikkei 225 declined 1.98%, Jakarta Composite fell 1.66%, Taiwan Weighted decreased 1.18%, Shanghai Composite dropped 2.21%, KOSPI Index shed 2.15% and FTSE Bursa Malaysia KLCI was down by 0.29%.