Weak trade persist in late morning session

Indian equity benchmarks continued their weak trade in late morning session on account of selling in frontline blue chip counters taking cues from global counterparts. Traders remained concerned with a suspected terrorist attack in UK. The explosion struck an Ariana Grande concert in northern England on Monday, killing at least 19 people and injuring dozens. The rupee opened lower against dollar on account of buying of American currency by banks and importers. Pharma shares were among the worst hit in trade so far with frontline pharma shares like Sun Pharmaceuticals Industries, Cipla and Aurobindo Pharma leading the fall. The overall market breadth was extremely bearish with Mid cap and Small cap slipping by around two percent points. Investors shrugged off report by rating agency CRISIL which enlightened that even though steps taken by the Modi Government have not accelerated growth, they will benefit over the medium term, and bank NPAs and job creation demand greater focus of the administration now on. The agency said the government is trying to tackle difficult aspects like corruption, red-tape and inefficiencies, and the policy measures, along with fortuitous tailwinds, have meant India’s macroeconomic fundamentals are looking much better now.

Traders were seen piling up position in IT, Auto and TECK stocks, while selling was witnessed in HealthCare, Realty and Utilities stocks. In scrip specific development, Adani Enterprises tanked as investors turned wary of the company’s decision to defer investment decision in its Australian project. Broadcasting and cable TV service provider Den Networks was trading under pressure on reporting consolidated net loss at Rs 60.55 crore for the fourth quarter ended March 31. The company had posted consolidated net loss of Rs 210.30 crore in the January-March quarter of the previous fiscal. The market may remain volatile this week as traders may roll over positions in the Futures & Options (F&O) segment from the near month i.e. May 2017 series to next month i.e. June 2017 series. The near month May 2017 derivatives contracts will expire on Thursday i.e. May 25, 2017.

On the global front, Asian shares were trading mostly in red, after a deadly explosion at a concert venue in Manchester was said to be a terror attack. Japanese manufacturing activity expanded at the slowest pace in six months in May as export orders slowed, in a warning sign that global demand may be weakening. Back home, the NSE Nifty and BSE Sensex were trading below the psychological 9,400 and 30,500 levels respectively. The market breadth on BSE was negative in the ratio of 302:2007 while 98 scrips remained unchanged.

The BSE Sensex is currently trading at 30423.96, down by 147.01 points or 0.48% after trading in a range of 30388.49 and 30610.64. There were 11 stocks advancing against 19 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 1.95%, while Small cap index was down by 2.25%.

The top gaining sectoral indices on the BSE were IT up by 0.25%, Auto up by 0.16% and TECK up by 0.05%, while Healthcare down by 3.43%, Realty down by 2.45%, Utilities down by 2.25%, Consumer Durables down by 2.06% and Power down by 1.92% were the losing indices on BSE.

The top gainers on the Sensex were Maruti Suzuki up by 2.47%, Wipro up by 1.03%, Hindustan Unilever up by 0.92%, TCS up by 0.52% and ICICI Bank up by 0.49%.

On the flip side, Sun Pharma down by 7.11%, GAIL India down by 4.42%, Cipla down by 4.02%, Adani Ports & Special Economic Zone down by 2.53% and Lupin down by 2.24% were the top losers.

Meanwhile, in order to resolve the bad loan problem plaguing the banking sector, the Reserve Bank of India (RBI) has said that it will reconstitute the oversight committee (OC) under its aegis and also expand the committee to include more members so that requisite benches could be created to deal with the mounting volume of cases. The existing OC, which has two members, was constituted by the Indian Banks Association (IBA) in consultation with the RBI.

Outlining the action plan to implement the Banking Regulation (Amendment) Ordinance, 2017, the RBI has said that it is also working on a framework to facilitate an objective and consistent decision-making process for cases that may be referenced for resolution under the Insolvency and Bankruptcy Code, 2016 (IBC).  It also said that it has already sought information on the current status of the large stressed assets from the banks. In addition, it would also be constituting a committee comprised majority of its independent board members to advise it in this matter.

The RBI further said that it envisages an important role for the credit rating agencies in the resolution of stressed assets. Therefore, to prevent rating-shopping or any conflict of interest, the central bank has said that it is exploring the feasibility of rating assignments being determined by the RBI itself and also plans to create a pool out of contributions from banks, which would be used to pay rating agencies for their services.

The CNX Nifty is currently trading at 9395.05, down by 43.20 points or 0.46% after trading in a range of 9374.20 and 9448.05. There were 17 stocks advancing against 34 stocks declining on the index.

The top gainers on Nifty were Maruti Suzuki up by 2.48%, ICICI Bank up by 1.22%, Wipro up by 1.14%, Eicher Motors up by 1.08% and Hindustan Unilever up by 0.87%.

On the flip side, Sun Pharma down by 7.08%, Aurobindo Pharma down by 5.02%, Cipla down by 4.24%, GAIL India down by 3.95% and Lupin down by 2.41% were the top losers.

The Asian markets were trading mostly in red; Nikkei 225 decreased 19.55 points or 0.1% to 19,658.73, Jakarta Composite decreased 14.32 points or 0.25% to 5,735.12, Shanghai Composite decreased 10.2 points or 0.33% to 3,065.47 and FTSE Bursa Malaysia KLCI decreased 3.72 points or 0.21% to 1,771.23.

On the other hand, KOSPI Index increased 18.28 points or 0.79% to 2,322.31, Taiwan Weighted increased 23.25 points or 0.23% to 10,020.51 and Hang Seng increased 67.71 points or 0.27% to 25,459.05.