Benchmarks trade flat with negative bias in range-bound session of trade

In the extremely range-bound session of trade, Indian equity indices altering between positive and negative territory, were now trading flat with bit of negative bias as investors and foreign funds are adopting a cautious approach after recent gains. Besides, weak trend in Asian stocks coupled with depreciation in rupee value against the dollar, also weighed on the sentiment. However, the broader markets outperformed benchmark indices as investors turned their focus on fundamentally sound mid-cap and small-cap stocks as valuations in large-cap stocks seem stretched after yesterday’s rally. Investors got some comfort with Minister of State for Finance Arjun Ram Meghwal stressing that the new indirect tax regime is a major tool for improving ease of doing business and has also said that the government will be able to implement Goods and Services Tax (GST) from April 1, next year. On the agricultural front, India's kharif harvest is poised to jump 9% to 135 million tonnes, beating a six-year-old record. Some support also came in from reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 336.87 crore on September 22, 2016. Meanwhile, many export oriented companies gained traction, as the government has extended fiscal incentives to more items such as marine products at higher rates under a scheme with a view to boost exports, which remain in the negative zone. The total support extended by the government under the Merchandise Exports from India Scheme (MEIS) has been enhanced to Rs 23,500 crore per annum from the present Rs 22,000 crore.

On the global front, Asian markets were trading in red, on Friday as the US dollar strengthened and oil retreated from a two-week high. Crude fell below $ 46 a barrel with investors weighing prospects for major producers to agree output constraints at talks next week in Algiers. Japan's Nikkei share average edged down as investors took profits on financial stocks that had soared in the previous session and worries about a stronger yen that kept the market on edge. Meanwhile, US stocks closed near session highs on Thursday, with the Nasdaq Composite notching a record close, as investor enthusiasm following the Federal Reserve's most recent policy update spilled over into a second session.

Back home, stocks from Oil & Gas, Realty and Metal counters were supporting the markets, while those from Banking and FMCG counters were adding to the underlying cautious undertone. In scrip specific development, Morepen Laboratories rose on reports that the company may sell its over-the-counter brands to focus on active pharmaceutical ingredient and home diagnostics business as growth drivers. Furthermore, Lincoln Pharmaceuticals has jumped after the company developed a new oral spray for the first time in India.

The market breadth remained optimistic as there were 1266 shares on the gaining side against 1004 shares on the losing side, while 195 shares remained unchanged.

The BSE Sensex is currently trading at 28760.96, down by 12.17 points or 0.04% after trading in a range of 28714.93 and 28825.09. There were 20 stocks advancing against 10 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.70%, while Small cap index up by 0.64%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 1.07%, Realty up by 1.06%, Metal up by 0.65%, PSU up by 0.57% and Power up by 0.40%, while Bankex down by 0.49% and FMCG down by 0.29% were the few losing indices on BSE.

The top gainers on the Sensex were ONGC up by 1.18%, Cipla up by 1.07%, Reliance Industries up by 0.83%, Bharti Airtel up by 0.73% and Bajaj Auto up by 0.66%.

On the flip side, Axis Bank down by 3.67%, Lupin down by 1.39%, Hindustan Unilever down by 0.78%, ICICI Bank down by 0.67% and Tata Motors down by 0.63% were the top losers.

Meanwhile, the government has appointed 3 members of the Monetary Policy Committee (MPC) for four years. The MPC for the first time will take a call on the policy rate at the October 4 monetary review. The government appointed members are, Indian Statistical Institute's (ISI's) Chetan Ghate, Director of Delhi School of Economics Pami Dua and Indian Institute of Management (Ahmedabad) professor Ravindra H Dholakia. The three outside experts will join Reserve Bank of India (RBI) Governor Urjit Patel and two senior officials from the bank’s monetary policy department.

The Appointments Committee of the Cabinet cleared the three eminent experts as members on the MPC for a period of four years or until further orders, whichever is earlier. Among the three outsider experts Ghate was part of a five-member technical advisory committee that provided non-binding advice on interest rates to the RBI governor ahead of each policy review. The committee will be responsible for ensuring consumer inflation stays within a range of 2 to 6 percent, a target that was previously announced by the government. The members of the committee from RBI are governor Patel, deputy governor R. Gandhi, who is also in charge of the monetary policy, and executive director Michael Patra. Patel, who took over the helm at the RBI earlier this month, will have the casting vote in the six-member MPC in the event of a tie.

The MPC framework replaces the current system where the RBI governor and his internal team have complete control over monetary policy. While a committee advises RBI on monetary policy decisions, the central bank is under no obligation to accept its recommendations. The MPC will strive to ensure that the inflation target decided by the government and the central bank is met. RBI is now required to publish a monetary policy report every six months explaining the sources of inflation and the forecasts of inflation for the period between six to 18 months.

The CNX Nifty is currently trading at 8866.70, down by 0.75 points or 0.01% after trading in a range of 8847.40 and 8885.20. There were 28 stocks advancing against 23 stocks declining on the index.

The top gainers on Nifty were BHEL up by 1.87%, HCL Tech up by 1.32%, ONGC up by 1.29%, Bharti Infratel up by 1.19% and Cipla up by 1.08%. On the flip side, Axis Bank down by 3.69%, ACC down by 1.52%, Lupin down by 1.45%, Eicher Motors down by 0.90% and Ambuja Cement down by 0.83% were the top losers.

Asian markets were trading mostly in red; Nikkei 225 decreased 0.25%, Hang Seng slipped 0.05%, Jakarta Composite dipped 0.16%, Shanghai Composite shed 0.22% and FTSE Bursa Malaysia KLCI was down by 0.06%. On the flip side, KOSPI Index increased 0.04% and Taiwan Weighted was up by 0.53%.