Benchmarks erase all gains; starts trading in red

The Sensex and Nifty wiped off their early gains and were trading in red in late afternoon trade due to profit-booking by funds and retail investors ahead of June-quarter corporate results starting next week. Sentiment remained down beat with the International Monetary Fund (IMF) report Indian banks are vulnerable to further decline in profits as they face slow credit growth and elevated non-performing assets, but stressed that additional and needed more time to deal with the problem of bad loans. Investors failed to get any sense of relief with the Arun Jaitley statment that India strongly supports the capital increase in the World Bank but the country's readiness to take a larger share in the global lender than the dynamic formula. Weakness in European market too dampened sentiment. European markets remained subdued over speculation on curtailment of stimulus measures by the European Central Bank (ECB).

Back home, on the sectoral front, banking stocks were witnessing volatile moves as weekly derivative contract of Bank Nifty will expire later in the day. In scrip specific development, Yes bank rises after the bank has signed a Memorandum of Understanding (MoU) with Ducati India, one of the most desired premium motorcycle brands, for its retail finance options for customers across all the dealerships.

The BSE Sensex is currently trading at 28130.80, down by 90.18 points or 0.32% after trading in a range of 28086.72 and 28328.56. 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 0.38%, while Small cap index was down by 0.42%.

The gaining sectoral indices on the BSE were Oil & Gas up by 2.70%, PSU up by 0.42%, Metal up by 0.28%, while Realty down by 1.01%, IT down by 0.78%, TECK down by 0.72%, Auto down by 0.61%, Power down by 0.58% were the losing indices on BSE.

The top gainers on the Sensex were GAIL India up by 3.61%, Reliance Industries up by 2.06%, Hindustan Unilever up by 1.55%, ONGC up by 0.52% and HDFC Bank up by 0.45%. On the flip side, Mahindra & Mahindra down by 2.11%, ICICI Bank down by 1.70%, Axis Bank down by 1.56%, ITC down by 1.46% and NTPC down by 1.44% were the top losers.

Meanwhile, with an overall objective of deepening bond markets, the Finance Ministry has set up a Public Debt Management Cell (PDMC) to rationalize government borrowings and better cash management. The PDMC which will be initially housed at the RBI’s Delhi office will be upgraded to a statutory Public Debt Management Agency (PDMA) in about two years.

Finance Minister Arun Jaitley said that in February 2015 Budget speech he had proposed to set up a PDMA to deepen Indian Bond market and now “I intend to begin this process this year by setting up a PDMA which will bring both India’s external borrowings and domestic debt under one roof.”

The PDMC which will be converted into PDMA within two years will allow separation of debt management functions from RBI to PDMA in a gradual and seamless manner, without causing market disruptions. The PDMC will have only advisory functions to avoid conflict with statutory functions of the RBI. Besides, it will plan government borrowings, including market borrowings and domestic borrowing activities like issuance of Sovereign Gold Bond. Also, it will manage government’s liabilities, monitor cash balances, improve cash forecasting, foster a liquid and efficient market for government securities along with advising government on matters related to investment, capital market operations and administration of interest rates on small savings, among others.

Furthermore, PDMC will develop an Integrated Debt Database System (IDMS) as a centralised database for all liabilities of government, on a near real-time basis and undertake requisite preparatory work for PDMA. Ministry further said that the transition process from PDMC to PDMA would be implemented by a joint implementation committee (JIC). The PDMC would be staffed by 15 debt managers from Budget Division, RBI, current Middle Office and other government units.

The CNX Nifty is currently trading at 8716.65, down by 27.30 points or 0.31% after trading in a range of 8706.80 and 8781.15. There were 16 stocks advancing against 35 stocks declining on the index.

The top gainers on Nifty were GAIL India up by 3.87%, BPCL up by 3.48%, Grasim Industries up by 3.05%, Reliance Industries up by 2.06% and Tata Power up by 1.66%. On the flip side, Bank of Baroda down by 2.45%, Zee Entertainment down by 2.36%, Mahindra & Mahindra down by 2.14%, HCL Tech. down by 1.94% and Ultratech Cement down by 1.89% were the top losers.

Asian markets were trading in green; FTSE Bursa Malaysia KLCI increased 1.96 points or 0.12% to 1,664.88, Taiwan Weighted jumped 12.03 points or 0.13% to 9,284.31, KOSPI Index was up by 12.3 points or 0.6% to 2,065.30, Nikkei 225 increased 79.86 points or 0.47% to 16,899.10 and Hang Seng rose 164.19 points or 0.69% to 23,952.50. On other hand, Jakarta Composite decreased 22.93 points or 0.42% to 5,397.72.

European markets were trading in red; UK’s FTSE 100 decreased 14.48 points or 0.21% to 7,018.77 and Germany’s DAX was down by 3.46 points or 0.03% to 10,582.32. On flip side, France’s CAC increased 1.21 points or 0.03% to 4,491.16.