Markets turn negative; Nifty holds 9650 mark

Indian equity benchmarks turned negative in late afternoon session after consolidating through the morning session, with the Nifty trading just above 9650 mark. Traders turned cautious with Fitch Rating’s latest report that demonetisation of old Rs 500 and 1,000 notes had a material impact on spending as reflected in significant slowing of GDP growth in January-March and warned that the ongoing steep decline in investment could spell risks to growth potential. The gains were erased as investors remained on the sidelines ahead of Goods and Services Tax (GST) rollout. Finance Minister Arun Jaitley confirmed that GST will be officially rolled out on the midnight of June 30. He said in the short-term there will be some challenges, but it will have positive impact on GDP. However, positive European markets and healthy buying in consumer durables, oil and gas and IT stocks limited the downside. Meanwhile, as per the BSE data, on Monday, foreign institutional investors were net sellers to the tune of Rs 250 crore, while domestic investors bought equities worth Rs 529 crore.

On the global front, European markets were trading in green, as investors turned their attention to individual stock news and data. Media stocks led the gains on with almost all stocks in the sector trading higher shortly after the open. However, Asian markets were trading in red. Back home, in scrip specific development, HCL Technologies (HCL) gained after the company launched Next Generation Research Platform (NGRP), a pre-competitive drug-discovery ecosystem built with open standards. This Platform will provide research scientists with a collaborative ecosystem, greater computational resources, and the ability to mine research data to make more informed scientific decisions, while improving productivity by automating and eliminating manual administrative tasks.

The BSE Sensex is currently trading at 31291.98, down by 19.59 points or 0.06% after trading in a range of 31261.49 and 31392.53. There were 12 stocks advancing against 18 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.14%, while Small cap index was up by 0.12%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 0.99%, IT up by 0.79%, TECK up by 0.65%, Industrials up by 0.64% and Oil & Gas up by 0.51%, while Realty down by 0.64%, Utilities down by 0.51%, Power down by 0.41%, Consumer Disc down by 0.27% and FMCG down by 0.21% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 3.77%, Tata Motors - DVR up by 1.78%, Infosys up by 1.41%, ONGC up by 1.11% and Tata Steel up by 0.91%. On the flip side, Power Grid down by 2.07%, Lupin down by 1.71%, Axis Bank down by 1.26%, HDFC down by 1.18% and Bajaj Auto down by 0.85% were the top losers.

Meanwhile, the capital market regulator, Securities and Exchange Board of India (SEBI) may ease the acquisition rules to allow investors to buy distressed assets from banks. The market regulator in its upcoming board meeting is expected to come up with an easy pricing formula for an open offer to public shareholders and lock-in requirements for acquirers of distressed companies, based on the demand for extension of these exemptions. At present, such relaxations are given only to banks and the regulator has been granting exemptions to banks acquiring the stock of listed distressed companies. RBI too has been in consultation with Sebi on dealing with distressed companies.

SEBI has been regularly suggesting various measures to tackle the problem of rising bad loans and has received feedback that such exemptions need to be extended to other prospective buyers as well. It recently made several relaxations to the securities regulations to allow a more efficient corporate debt restructuring including easier preferential allotments norms, crackdown on wilful defaulters and open offer relaxation.

The government and regulators have taken several measures to tackle the banking sector nonperforming asset (NPA) problem. Banks have been advised by RBI to reduce NPAs and initiate stringent actions to recover dues from borrowers. Sebi board in its meeting is also likely to tighten offshore derivatives instruments (ODI) or participatory notes (p-notes) regulations.

The CNX Nifty is currently trading at 9653.15, down by 4.40 points or 0.05% after trading in a range of 9643.75 and 9676.50. There were 24 stocks advancing against 27 stocks declining on the index.

The top gainers on Nifty were Tata Power up by 3.97%, Tata Motors up by 3.72%, Tata Motors - DVR up by 1.98%, Infosys up by 1.37% and Ambuja Cement up by 1.35%. On the flip side, Power Grid down by 2.10%, Lupin down by 1.82%, Eicher Motors down by 1.62%, GAIL India down by 1.56% and HDFC down by 1.29% were the top losers.

Asian markets were trading mostly in red; Hang Seng decreased 81.51 points or 0.31% to 25,843.04, FTSE Bursa Malaysia KLCI decreased 6.51 points or 0.36% to 1,782.39, Shanghai Composite decreased 4.36 points or 0.14% to 3,140.01 and KOSPI Index decreased 1.67 points or 0.07% to 2,369.23. On the flip side, Jakarta Composite increased 36.56 points or 0.64% to 5,778.47, Taiwan Weighted increased 73.86 points or 0.72% to 10,324.46 and Nikkei 225 increased 162.66 points or 0.81% to 20,230.41.

All European markets were trading in green; France’s CAC rose 25.21 points or 0.47% to 5,335.93, UK’s FTSE 100 increased 25.56 points or 0.34% to 7,549.37 and Germany’s DAX was up by 52.41 points or 0.41% to 12,941.36.