Benchmarks trim losses to trade near the neutral line

Indian equity benchmarks trimmed losses and have started showing some signs of upmove in the afternoon session on account of buying in frontline blue chip counters. Sentiments got some support with India Ratings and Research stating that the sharp fall in retail inflation in August has increased the chances of monetary easing by the central bank. Some support also came with a survey report stating that implementation of Goods & Service Tax (GST) will lead to increased tax compliance and attract more foreign direct investments across sectors due to tax transparency and ease of doing business. Further, the gains in Banking, PSU, Oil & Gas, Realty and Power stocks also supported the domestic equity markets. However, gains remained capped after the report showed that India's industrial growth fell sharply in July after rising for two months, with data suggesting that the monsoon has not revived rural demand and investments are yet to pick up.  Growth as measured by the Index of Industrial Production (IIP) contracted 2.4% in July, led by a 3.4% fall in manufacturing and a 0.8% rise and a 1.6% gain in mining output and power generation, respectively.

On the global front, Asian markets were trading mostly in red as concerns grew about the fading impact of the world’s major central banks to stimulate growth. Back home, the BSE Sensex is currently trading at 28343.95, down by 9.59 points or 0.03% after trading in a range of 28259.38 and 28416.41. There were 15 stocks advancing against 15 stocks declining on the index. In scrip specific development, Dr Reddy's Laboratories rose half a percent after it got listed as an index component of the Dow Jones Sustainability Indices (DJSI) 2016 in the pharmaceuticals, biotechnology and life sciences industry group.

The broader indices were trading in green; the BSE Mid cap index was up by 0.77%, while Small cap index was up by 0.90%.

The top gaining sectoral indices on the BSE were Bankex up by 0.59%, PSU up by 0.52%, Oil & Gas up by 0.47%, Realty up by 0.46% and Power up by 0.46%, while Metal down by 0.36%, IT down by 0.22%, Auto down by 0.11% and TECK down by 0.06% were the losing indices on BSE.

The top gainers on the Sensex were Cipla up by 2.08%, NTPC up by 1.76%, SBI up by 1.50%, Asian Paints up by 1.39% and ICICI Bank up by 1.23%. On the flip side, Coal India down by 1.98%, TCS down by 1.40%, Tata Steel down by 1.23%, Tata Motors down by 1.20% and ONGC down by 1.15% were the top losers.

Meanwhile, for the first time after the nationwide general strike called by the central trade unions (CTUs) on September 2, a ministers’ panel, chaired by Finance Minister Arun Jaitley, is likely to meet on September 15 to discuss the Labour Code on Wages and the Small Factories Bill.

The panel will deliberate various issues which are also likely to include the Wage Code and the Small Factories Bill. The high-level group had met in December last year to discuss the two legislations and at that time everybody was on board regarding the content of the legislations, the group decided to put them on hold till the passage of GST Bill. Now the road ahead seems to be clear for the government to push for more big-ticket legislation.

The Wage Code seeks to empower government to fix a minimum wage applicable in all sectors across the entire country and also allow fixing a benchmark wage for workers which will have to be adhered to by the states. The states will be free to prescribe higher wages, while the Small Factories (Facilitation and Regulation of Employment and Conditions of Services) Bill is significant as it aims to improve ease of doing business in India and seeks to create an ecosystem for encouraging small businesses. Besides, it also seeks to exempt small units with less than 40 workers from tedious compliance of 14 labour laws including Employees Provident Funds & Miscellaneous Provisions Act and Employees State Insurance (ESI) Act. 

The CNX Nifty is currently trading at 8720.70, up by 5.10 points or 0.06% after trading in a range of 8688.90 and 8737.60. There were 29 stocks advancing against 22 stocks declining on the index.

The top gainers on Nifty were Bank of Baroda up by 3.31%, Yes Bank up by 2.20%, NTPC up by 2.06%, Tata Power up by 2.02% and Cipla up by 1.95%. On the flip side, Coal India down by 1.89%, TCS down by 1.39%, Eicher Motors down by 1.35%, ONGC down by 1.10% and Tata Steel down by 1.08% were the top losers.

Asian markets were trading mostly in red, Nikkei 225 decreased 114.8 points or 0.69% to 16,614.24, Jakarta Composite decreased 78.43 points or 1.5% to 5,137.13, Taiwan Weighted decreased 38.53 points or 0.43% to 8,902.30, Shanghai Composite decreased 24.86 points or 0.82% to 2,998.65 and FTSE Bursa Malaysia KLCI decreased 16.36 points or 0.98% to 1,660.82. On the flip side, KOSPI Index increased 7.88 points or 0.4% to 1,999.36 and Hang Seng increased 31.11 points or 0.13% to 23,246.87.