Indian benchmarks continue to trade lower in noon session

Indian benchmark indices were trading in red in noon session, as investors indulged in booking some profits off the table, amid a weak trend in Asian markets following overnight losses at the US markets. Sentiments remained downbeat on reports that the government wants to tighten even further the proposed Budget measure aimed at discouraging black money through restrictions on cash transactions to Rs 2 lakh from Rs 3 lakh. The government also plans to make inclusion of the Aadhaar ID mandatory in applications for permanent account number (PAN) cards.  Furthermore, Finance Minister Arun Jaitley moved 40 amendments to his seven-week-old Finance Bill 2017, which were strongly opposed by opposition parties, which felt the government was tagging along non-tax bills in the legislation to make them Money Bills, obviating the need for a nod from the Rajya Sabha where it does not have a majority yet.

On the global front, Asian markets were trading in red on Wednesday, following overnight declines in U.S. stocks, as investors worried that President Donald Trump will struggle to deliver promised tax cuts that propelled the markets to record highs in recent months, with nervousness deepening ahead of a key healthcare vote. The S&P 500 and Dow Jones Industrial Average lost over 1% in their worst one-day performances since before Trump's election victory in November. Further, Japanese shares extended losses after Kyodo News, citing a Japan government source, reported that North Korea may have launched several missiles on Wednesday morning. Meanwhile, Oil prices dipped on Wednesday as rising crude stocks in the United States underscored an ongoing global fuel supply overhang despite an OPEC-led effort to cut output.

Back home, barring IT index, which gained 0.12%, all the other indices were in the negative territory, with Consumer Durables, Telecom and Metal indices being significant losers. In scrip specific development, Nila Infrastructures surged after the company entered into a two separate Letter of Acceptance (LoA) with Gujarat State Road Transport Corporation (GSRTC) for development of Bus Terminal under Public Private Partnership. The market breadth remained pessimistic, as there were 821 shares on the gaining side against 1591 shares on the losing side, while 161 shares remained unchanged.

The BSE Sensex is currently trading at 29263.88, down by 221.57 points or 0.75% after trading in a range of 29219.59 and 29341.41. There were 6 stocks advancing against 23 stocks declining on the index, while one stock remained unchanged.

The broader indices were trading in red; the BSE Mid cap index was down by 0.84%, while Small cap index down by 0.46%.

The sole gaining sectoral index on the BSE was IT up by 0.12%, while Consumer Durables down by 1.56%, Telecom down by 1.50%, Metal down by 1.42%, Auto down by 1.24% and Capital Goods down by 1.03% were the top losing indices on BSE.

The top gainers on the Sensex were Axis Bank up by 0.97%, Cipla up by 0.79%, Dr. Reddy’s Lab up by 0.72%, Sun Pharma up by 0.43% and Wipro up by 0.08%. On the flip side, Bharti Airtel down by 2.50%, Tata Motors down by 1.62%, Mahindra & Mahindra down by 1.53%, ICICI Bank down by 1.45% and HDFC down by 1.36% were the top losers.

Meanwhile, stepping up its efforts to provide operational flexibility to multinational companies (MNCs) and their Indian subsidiaries, the Reserve Bank of India has amended the extant hedging guidelines. The move will provide flexibility for booking derivative contracts to hedge the currency risks arising from current account transactions of Indian subsidiaries of MNCs.

RBI in its new guidelines has said that the transactions under the facility will be covered under a tripartite agreement involving the Indian subsidiary, its non-resident parent / treasury & the bank and added that this agreement will include the exact relationship of the Indian subsidiary or entity with its overseas related entity, relative roles and responsibilities of the parties and the procedure for the transactions, including settlement.

To avail of the facility, a non-resident entity will have to be incorporated in a country that is member of the Financial Action Task Force (FATF) or member of a FATF-Style Regional body. Besides, the non-resident entity can approach a bank directly which handles the foreign exchange transactions of its subsidiary for booking derivative contracts to hedge the currency risk of and on the latter's behalf. The guidelines further stated that the Indian subsidiary will be responsible for compliance with the rules, regulations and directions issued under FEMA and any other laws applicable to the transactions in India.

The CNX Nifty is currently trading at 9053.95, down by 67.55 points or 0.74% after trading in a range of 9036.05 and 9072.90. There were 9 stocks advancing against 42 stocks declining on the index.

The top gainers on Nifty were HCL Tech up by 1.25%, Axis Bank up by 1.01%, Cipla up by 0.67%, Dr. Reddy’s Lab up by 0.63% and Sun Pharma up by 0.47%. On the flip side, Bharti Airtel down by 2.63%, Hindalco down by 2.27%, BHEL down by 2.04%, Tata Motors down by 1.83% and Mahindra & Mahindra down by 1.64% were the top losers.

Asian markets were trading in red; Nikkei 225 declined 2.12%, Hang Seng dropped 1.4%, Taiwan Weighted fell 0.5%, Jakarta Composite decreased 0.54%, Shanghai Composite shed 0.6%, FTSE Bursa Malaysia KLCI slipped 0.86% and KOSPI Index was down by 0.54%.