Indian equities continue to trade in red in noon session

Indian benchmark indices continued to trade under the neutral line with over a quarter percent cut in noon session as funds and retail investors engaged in reducing positions amid a weak trend in other Asian markets. Sentiments remained downbeat with the inclusion of Chinese mainland stocks to the MSCI index, which could lead to hundreds of billions of dollars worth of share purchases, shrinking shares of other emerging markets, including India. Some concerns also came with the Fitch Ratings’ latest report indicating that demonetization 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. In its Global Economic Outlook (GEO), Fitch said Indian GDP growth slowed significantly to 6.1% in first quarter of 2017 from 7% in October-December 2016. However, losses remained capped with the report that India’s farm sector is poised for a boom as monsoon’s biggest threat, the El Nino phenomenon, has been completely ruled out and heavy showers in the key agricultural regions of Punjab, Haryana and Uttar Pradesh have created the right conditions for crop planting. The widely respected Australian weather office had formally withdrawn its El Nino alert and said that outlook for the phenomenon was inactive. Meanwhile, India has witnessed a whopping 30% rise in the foreign exchange earnings from the tourism sector in the month of May, as compared to the same period in the last two years and a 19% increase in tourist footfalls. According to the Reserve Bank of India's credit data of Travel Head from Balance of Payments, foreign exchange earnings (FEEs) during the month of May 2017 were Rs 12,403 crore as compared to Rs 10,260 crore in May 2016 and Rs 9,505 crore in May 2015.

On the global front, Asian markets were trading mostly lower on Wednesday, tracking the weak cues overnight from Wall Street after crude oil futures tumbled into negative territory. Investors reaction was muted to news that US index provider MSCI has decided to add Chinese A-shares into its benchmark Emerging Markets Index. MSCI will add 222 China A shares in the index starting in June 2018. Further, Japan's Nikkei share average edged down after a slightly stronger yen sapped risk appetite, while mining stocks underperformed on the back of weaker oil prices.

Back home, stocks from Realty, Capital Goods and FMCG counters were supporting the markets’ uptrend, while those from Oil & Gas, Metal and IT counters were adding to the underlying cautious undertone. In scrip specific development, SPML Infra surges after the company bagged various orders worth aggregating Rs 642 crore for Water Supply and Irrigation Projects in Gujarat, Madhya Pradesh and Jharkhand and Power Infra Development in West Bengal. Furthermore, Glenmark Pharmaceuticals gained after the company entered into a licensing agreement with Boston-based APC Therapeutics Inc., a biopharmaceutical company focused on building a portfolio of best-in-class immuno-oncology (IO) therapies, for exclusive rights to a small molecule, oncology compound based on Antigen Presenting Cell (APC) biology.

The market breadth remained pessimistic, as there were 1121 shares on the gaining side against 1155 shares on the losing side, while 156 shares remained unchanged.

The BSE Sensex is currently trading at 31213.32, down by 84.21 points or 0.27% after trading in a range of 31193.61 and 31305.60. There were 11 stocks advancing against 20 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.05%, while Small cap index up by 0.32%.

The top gaining sectoral indices on the BSE were Realty up by 1.01%, Capital Goods up by 0.39%, FMCG up by 0.18% and Telecom up by 0.11%, while Oil & Gas down by 0.75%, Metal down by 0.75%, IT down by 0.67%, Auto down by 0.60% and TECK down by 0.57% were the top losing indices on BSE.

The top gainers on the Sensex were Larsen & Toubro up by 0.63%, Sun Pharma up by 0.53%, SBI up by 0.43%, Reliance Industries up by 0.35% and ITC up by 0.29%. On the flip side, ONGC down by 1.87%, TCS down by 1.65%, Cipla down by 1.53%, Lupin down by 1.49% and Tata Motors down by 1.38% were the top losers.

Meanwhile, Commerce Secretary Rita Teaotia has said in a bid to boost India’s shipments, leading exporters and industry associations have sought incentives such as credit at affordable rates from the government. She added that Federation of Indian Export Organisations (FIEO) also raised certain issues related with Goods and Services Tax (GST) and urged the government to extend 5 percent benefit to the exporters of branded products.

In addition, the Commerce Secretary has said that exporters flagged the issue of facilitation of e- commerce trade from more number of ports and ‘how the refund process for the e-commerce would be treated under the new tax regime. She also said that many export promotion councils (EPCs) have sought additional support through the Merchandise Exports from India Scheme (MEIS), enhanced interest subvention. Therefore, she noted that many of the comments and inputs were focused on exports, which has started showing positive growth. Though, she said exporters would need support in order to continue to grow over the next few years. Under MEIS, the government provides duty benefits at 2 percent, 3 percent and 5 percent, depending upon the product and country.

Meanwhile, India’s merchandise exports grew by 8.32 percent to $24014.62 million in May 2017 on the back of robust performance by sectors such as petroleum, chemicals, engineering goods as well as gems and jewellery. However, the overall trade deficit shot up to nearly 30-month high of $13841.72 million in May as against $6272.90 million in the year-ago period, driven by a sharp uptick in gold imports.

The CNX Nifty is currently trading at 9617.10, down by 36.40 points or 0.38% after trading in a range of 9609.35 and 9650.45. There were 11 stocks advancing against 40 stocks declining on the index.

The top gainers on Nifty were Bank of Baroda up by 0.96%, Hindustan Unilever up by 0.72%, Larsen & Toubro up by 0.56%, Sun Pharma up by 0.45% and Reliance Industries up by 0.44%. On the flip side, ONGC down by 2.31%, BPCL down by 1.95%, Cipla down by 1.94%, TCS down by 1.74% and Bosch down by 1.71% were the top losers.

Asian markets were trading mostly in red; Hang Seng decreased 0.5%, Nikkei 225 shed 0.45%, KOSPI Index declined 0.57%, FTSE Bursa Malaysia KLCI decreased 0.21% and Shanghai Composite was down by 0.03%.

On the flip side, Taiwan Weighted increased by 0.04% and Jakarta Composite was up by 0.01%.