Markets continue to trade on dull note; Nifty hovers near day’s low

Indian equity benchmarks continued to trade on a dull note in late afternoon session, as investors booked profit ahead of inflation data due today and the US Federal Reserve policy meeting later this week. Inflation in India is expected to have cooled to a new record low of 2.60% in May, which could add pressure on the Reserve Bank of India (RBI) to cut interest rates later in the year. Some concerns also came with the private report that farm loan waivers are populist actions and frequent occurrence of such populist actions may lead to risks of impaired credit discipline and weak risk-reward for banks and reduced credit availability for borrowers. Sentiments also remained dampened, as the State Bank of India expressed concern that demonetisation, announced in November 2016, may continue to result in slowing down of the economy, and adversely affect its business. It said that the long-term impact of this move on the Indian economy and the banking sector is uncertain. Meanwhile, state-run oil marketing companies (OMCs) have set up a system for the smooth rollout of the daily revision of transport fuel prices across the country. Petrol and diesel prices will be revised daily from June 16 onwards by the three OMCs in sync with global crude oil prices.

On the sectoral front, shares of housing finance companies (HFCs) were trading higher after the RBI lowered risk-weights assigned to home loans lent on or after June 7. However, banking stocks were trading in red ahead of a meet between Arun Jaitley and public sector banks (PSBs) heads to discuss the issue of non-performing assets (NPAs).

On the global front, European markets were trading in red, as investors took a cautious approach as they came to terms with a hung parliament in the U.K. and awaited a meeting of the Federal Reserve later this week. Asian markets were trading in red. Back home, in scrip specific development, Century Plyboards (India) traded higher after the company halked out Capex plan of Rs 282 crore in next two years for its various expansion projects. The company is investing Rs 222.63 crore in the current fiscal and remaining Rs 60 crore in FY19. It had drawn up Rs 751 crore capex plan, of which it had already spent Rs 154.63 crore in FY16 and Rs 313.92 crore in FY17.

The BSE Sensex is currently trading at 31078.74, down by 183.32 points or 0.59% after trading in a range of 31047.30 and 31225.43. There were 6 stocks advancing against 24 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.58%, while Small cap index was down by 0.46%.

The top gaining sectoral indices on the BSE were IT up by 0.43%, Healthcare up by 0.37%, Realty up by 0.29% and TECK up by 0.22%, while Capital Goods down by 2.11%, Industrials down by 1.48%, Bankex down by 0.86%, Auto down by 0.69% and Consumer Durables down by 0.69% were the top losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 2.33%, Infosys up by 1.37%, GAIL India up by 0.49%, Lupin up by 0.28% and Tata Steel up by 0.13%. On the flip side, Larsen & Toubro down by 3.28%, Tata Motors down by 1.76%, Bajaj Auto down by 1.55%, Wipro down by 1.48% and ICICI Bank down by 1.34% were the top losers.

Meanwhile, Finance Minister Arun Jaitley, pointing to a large number of structural reforms taken in the last few years, has expressed hope that India’s economic growth will turn around and improve this year, highlighting significant advantages of the demoentisation move which was announced last year.

Jaitley said that the government was aware about the fact that demonetization would cause a cash crunch in India but had envisaged long-term advantages and pointed that the noteban has led to a great and a substantial movement towards digitisation of the economy. He also expects a substantial increase in the tax base on the back of noteban.

Further the FM said that with the upcoming the Goods and Services Tax (GST) and forecast of a good monsoon this year, the county’s growth would increase. The finance minister said that the important challenge is with regard to a private sector investment, however hoping that the problem of the Indian banking system will be addressed over the next one year or so and if it happens, India will again pick up significant growth.

The CNX Nifty is currently trading at 9607.10, down by 61.15 points or 0.63% after trading in a range of 9599.95 and 9647.05. There were 10 stocks advancing against 41 stocks declining on the index.

The top gainers on Nifty were Tech Mahindra up by 3.01%, Sun Pharma up by 2.31%, Infosys up by 1.25%, Aurobindo Pharma up by 0.56% and GAIL India up by 0.42%. On the flip side, Larsen & Toubro down by 3.44%, Bank of Baroda down by 3.28%, Tata Motors - DVR down by 2.72%, Tata Motors down by 1.76% and Wipro down by 1.72% were the top losers.

Asian markets were trading mostly in red; Hang Seng decreased 322.25 points or 1.24% to 25,708.04, Nikkei 225 decreased 104.68 points or 0.52% to 19,908.58, Taiwan Weighted decreased 89.69 points or 0.88% to 10,109.96, KOSPI Index decreased 23.82 points or 1% to 2,357.87 and Shanghai Composite decreased 18.52 points or 0.59% to 3,139.88. On the flip side, Jakarta Composite increased 39.12 points or 0.69% to 5,714.65.

All European markets were trading in red; Germany’s DAX decreased 56.38 points or 0.44% to 12,759.34, France’s CAC decreased 28.55 points or 0.54% to 5,271.16 and UK’s FTSE 100 decreased 21.06 points or 0.28% to 7,506.27.