Benchmarks trade flat with negative bias

Indian equity benchmarks trimmed their losses but continued to trade flat with negative bias in late morning session, on account of selling in frontline blue chip counters. The rupee opened lower against dollar, on account of buying of American currency by banks and importers. Foreign Portfolio Investors (FPIs) bought shares worth a net Rs 488 crore on Tuesday with gross purchases and gross sales of Rs 5,058.09 crore and Rs 4,569 crore, respectively. Traders remained concerned with Finance Minister Arun Jaitley’s statement that people may have to face some difficulty initially during the Goods and Services Tax (GST) is rolled out, but in the long run the new indirect tax regime would help cut tax evasion and check price rise. He also said that the GST Council will look at bringing real estate within the GST net by next year and revisit taxing of petroleum products under the new regime in 1-2 years. Some pressure also crept in after global credit rating agency Fitch maintained its negative outlook on Indian banks because of erosion of the sector’s core capitalization, even as they enter the final phase of Basel III migration. This is based on its assessment that the sector’s core capitalization, which has been eroded in the last few years, will remain challenged unless it is boosted by adequate capital support from the authorities or equity raising from capital markets. Maintaining its negative outlook on Indian banks, Fitch Ratings has affirmed the Long-Term Issuer Default Ratings (IDRs) of eight Indian banks. 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. June 2017 series to next month i.e. July 2017 series. The near month June 2017 derivatives contracts will expire on Thursday i.e. June 29, 2017.

Traders were seen piling up position in Metal, Realty and Utilities stocks, while selling was witnessed in Consumer Durables, Capital Goods and Telecom stocks. In scrip specific development, OnMobile Global was trading firm on securing a 3-year deal with Banglalink, one of the leading digital communications services providers of Bangladesh to provide Ringback Tones and Reverse Ringback Tones to its customers. With this win, OnMobile’s flagship Ringback Tone will be available to more than 32 million customers of Banglalink in Bangladesh.

On the global front, Asian shares were trading in red, after Wall Street was knocked hard in the wake of a delay to a US healthcare reform vote. Japan’s Nikkei share average slipped facing headwinds from the dollar’s reversal of its rise against the yen. China’s economy continued to improve in the second quarter, with corporate profits rising and hiring up, a private survey showed, but it suggested the Asian giant may have to brace for tougher times ahead even though firms have been able to weather a tighter financing environment. Back home, the NSE Nifty and BSE Sensex were trading below the psychological 9,550 and 31,000 levels respectively. The market breadth on BSE was positive in the ratio of 1114:983, while 115 scrips remained unchanged.

The BSE Sensex is currently trading at 30941.92, down by 16.33 points or 0.05% after trading in a range of 30876.25 and 31000.48. There were 17 stocks advancing against 14 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.23%, while Small cap index was up by 0.20%.

The top gaining sectoral indices on the BSE were Metal up by 0.88%, Realty up by 0.78%, Utilities up by 0.70%, PSU up by 0.65% and Oil & Gas up by 0.63%, while Consumer Durables down by 1.03%, Capital Goods down by 0.43%, Telecom down by 0.15%, FMCG down by 0.12% and Healthcare down by 0.07% were the losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 1.59%, Power Grid up by 1.46%, Axis Bank up by 1.07%, ICICI Bank up by 1.04% and Maruti Suzuki up by 1.04%.

On the flip side, Asian Paints down by 2.05%, SBI down by 1.27%, HDFC down by 0.93%, Reliance Industries down by 0.73% and Larsen & Toubro down by 0.55% were the top losers.

Meanwhile, global ratings agency Moody's Investors Service in its latest report has said that the renewable energy market in India is likely to experience strong growth over many years, as the country is moving towards meeting its commitments under the Paris Climate Change agreement on climate change. Though, it has also pointed out that renewable energy projects face a few headwinds related to the weak credit quality of offtakers, an evolving regulatory framework along with financing and execution risks.

The ratings agency has explained that India's emission reduction commitments under the Paris agreement will lead to a sharp rise in renewable energy capacity. It also noted that the country is aiming to achieve 40% of cumulative installed capacity through from non-fossil fuel-based energy resources by fiscal year 2030 from a current level of 30%. Adding further, it said that the country also plans to expand its renewable energy installed capacity to the tune of 175 gigawatts (GW) by 2022 from the current capacity of 57GW. It added that such growth will be driven by the public and private sector. 

The report however said that the key offtakers for most renewable projects are state-owned distribution companies, and these firms typically demonstrate weak financial profiles. It also said that this situation poses a key challenge for developers and while there is no history of defaults under power purchase agreements, payment delays are quite common. Moody’s report pointed out that the overall policy framework for renewable energy is still evolving and noted that adherence to renewable purchase obligations has been low till now, leading to lower demand for renewable energy.

The CNX Nifty is currently trading at 9508.25, down by 3.15 points or 0.03% after trading in a range of 9479.80 and 9522.50. There were 30 stocks advancing against 21 stocks declining on the index.

The top gainers on Nifty were Tech Mahindra up by 1.92%, Indian Oil Corporation up by 1.72%, Ultratech Cement up by 1.61%, BPCL up by 1.48% and Tata Steel up by 1.47%.

On the flip side, Asian Paints down by 2.06%, Zee Entertainment down by 1.59%, SBI down by 1.31%, IndusInd Bank down by 1.31% and Aurobindo Pharma down by 1.22% were the top losers.

The Asian markets were trading in red; Taiwan Weighted decreased 110.06 points or 1.05% to 10,402.00, Hang Seng decreased 105.1 points or 0.41% to 25,734.89, Nikkei 225 decreased 61.21 points or 0.3% to 20,163.88, KOSPI Index decreased 6.9 points or 0.29% to 2,385.05, FTSE Bursa Malaysia KLCI decreased 5.54 points or 0.31% to 1,773.91 and Shanghai Composite decreased 2.43 points or 0.08% to 3,188.76.

Jakarta Stock Exchange was closed on account of national holiday.