Indian markets trade flat with negative bias

In an extremely range-bound session of trade, Indian equity indices altering between positive and negative territory, are now trading flat with bit of negative bias as investors remained cautious after India's economic growth unexpectedly slumped to its lowest in more than two years in the March quarter, stripping the country of its status as the world's fastest growing major economy. The country’s GDP or gross domestic product growth slowed to 6.1% in the fiscal fourth quarter from 7% in the third, while Gross value added (GVA), the difference between gross domestic product (GDP) and net indirect taxes, grew by only 5.6 per cent in Q4 - the lowest in at least eight quarters. Besides, a sharp fall in the output of coal, natural gas and crude oil pulled down growth in the group of eight core sectors to a three-month low in April. The core sector expanded 2.5 per cent in the first month of the new fiscal year, compared with 5.3% in March and 8.7% a year earlier.

However, losses remained capped with the report that Fiscal deficit in fiscal 2017 was 3.5% of GDP, in line with the budget projection, reflecting the government's commitment to the process of fiscal consolidation. In fiscal 2016, the deficit was 3.9% of GDP. Furthermore, the government's decision to unveil the budget early seems to have paid off with spending having picked pace in the first month of the financial year itself. The government spent 11.3% of the budgeted expenditure in April, with capital expenditure topping the overall spending. Meanwhile, sugar stocks gained traction after the report that India's 2017/18 sugar production will likely jump a quarter from the previous year to 25 million tonnes as decent monsoon rains are forecast. India's monsoon, which is forecast to deliver normal rainfall in 2017, lashed the country's southwest coast on Tuesday, two days ahead of usual.

On the global front, Asian markets were trading mixed on Thursday, as investors weighed economic data. Chinese market started the month on a bearish note, after a private survey showed that the country's manufacturing activity unexpectedly contracted in May for the first time in 11 months & companies shed more jobs as demand weakened and shrinking factory prices dented profits. The index fell to 49.6, weaker than expected, below the 50-point mark, which demarcates growth and contraction, and marked the third month in which the index has fallen. However, Japan's Nikkei gained after data showing recurring first-quarter corporate profits were the highest on record for the January to March period. Overnight, Wall Street closed slightly lower as financials lost ground after JPMorgan and Bank of America warned of revenue weakness in the current quarter, but gains in defensive plays offset the decline.

Back home, stocks from Healthcare, FMCG and Consumer Disc counters were supporting the markets, while those from Metal, Oil & Gas and Energy counters were adding to the underlying cautious undertone. In scrip specific development, Eicher Motors surged after the company’s motorcycle division has reported a 25% jump in total sales in May 2017 at 60,696 units, as against 48,604 units in the same month last year. Moreover, Pfizer gained after the company entered into an acquisition agreement with AstraZeneca AB, Sweden (AstraZeneca), pursuant to which the brand ‘Neksium’ is being acquired by the company in India for a consideration of Rs 75 crore, subject to completion of necessary conditions precedent.

The market breadth remained optimistic, as there were 1344 shares on the gaining side against 1024 shares on the losing side, while 121 shares remained unchanged.

The BSE Sensex is currently trading at 31137.18, down by 8.62 points or 0.03% after trading in a range of 31070.47 and 31213.12. There were 16 stocks advancing against 14 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.34%, while Small cap index up by 0.88%.

The top gaining sectoral indices on the BSE were Healthcare up by 1.45%, FMCG up by 1.10%, Consumer Disc up by 0.59%, Auto up by 0.41% and Industrials up by 0.34%, while Metal down by 1.19%, Oil & Gas down by 1.03%, Energy down by 0.88%, Bankex down by 0.56% and PSU down by 0.51% were the top losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 2.49%, Hindustan Unilever up by 2.27%, Hero MotoCorp up by 1.21%, ITC up by 1.15% and Mahindra & Mahindra up by 1.14%. On the flip side, Tata Steel down by 1.68%, ICICI Bank down by 1.47%, Axis Bank down by 1.30%, ONGC down by 1.19% and Reliance Industries down by 1.00% were the top losers.

Meanwhile, with the banks, especially public sector, reeling under a mountain of bad debt, they have sought a few relaxations from the Reserve Bank of India (RBI) in the current scheme for Sustainable Structuring of Stressed Assets (S4A) including waiver of promoters' personal guarantee, for speedy resolution of the non-performing assets (NPAs). They have also requested the regulator to allow fresh moratorium or extend repayment schedule or reduction of rate of interest under the scheme, which are not allowed in the exiting S4A guidelines.

Under the S4A scheme, the joint lender forum is required to obtain promoters personal guarantee before implementing the stress asset resolution plan. For stressed companies, the factors causing the stress are beyond the control of the promoters. Therefore, it is impractical to require furnishing of personal guarantee, especially in case of listed companies. So, the requirement of furnishing personal guarantee must be waived.

Lenders have said that the purpose of S4A is to remove the financial stress of companies for which some relaxation in terms of repayment schedule or reduction in rate of interest is needed. They also said that the RBI should allow them to grant fresh moratorium or extension of repayment schedule or reduction of rate of interest to help companies come out of stress. According to bankers, the level of sustainable debt should be based on an independent techno-economic viability (TEV) study and not be constrained by the minimum percentage of debt that will be sustainable.

The CNX Nifty is currently trading at 9613.55, down by 7.70 points or 0.08% after trading in a range of 9598.45 and 9634.65. There were 26 stocks advancing against 25 stocks declining on the index.

The top gainers on Nifty were Sun Pharma up by 2.31%, Hindustan Unilever up by 2.27%, Aurobindo Pharma up by 1.79%, Wipro up by 1.45% and Bharti Infratel up by 1.35%. On the flip side, Vedanta down by 2.26%, Hindalco down by 2.07%, Indiabulls Housing down by 1.92%, Indian Oil Corporation down by 1.64% and Tata Steel down by 1.62% were the top losers.

On the global front, Asian markets were trading mixed; Taiwan Weighted increased 0.47%, Hang Seng added 0.49% and Nikkei 225 was up by 0.98%. On the flip side, Shanghai Composite decreased 0.28%, KOSPI Index slipped 0.14% and FTSE Bursa Malaysia KLCI was down by 0.13%.