Indian bourses trade flat with negative bias

In the extremely range-bound session of trade, Indian equity indices altering between green and red territory, were now trading flat with bit of negative bias, tracking subdued trend in Asian markets after North Korea test-launched an intermediate-range ballistic missile days before leaders from the Group of 20 nations are due to discuss steps to rein in Pyongyang's weapons programmes. On the domestic front, fear of uncertainty over the implementation of the Goods and Services Tax (GST) has cast its shadow on manufacturing activities as growth in the sector fell to a four-month low in June, showed the widely-tracked Nikkei purchasing managers' index (PMI). The PMI dropped to 50.9 in June from 51.6 the previous month, as a softer rise in new orders resulted in weaker growth in production. Meanwhile, Telecom stocks came under selling pressure after telecom group GSMA said that the disruptive pricing due to heightened competition in the Indian telecom space would continue for at least another year and the situation is no different from other markets where carriers were cutting tariff to beat competition. Also, Auto stocks declined on reports that the Maharashtra government decided to increase tax on the registration of all new vehicles by 200 basis points.

On the global front, Asian markets were trading lower on Tuesday, as investors remained cautious ahead of the Reserve Bank of Australia's interest rate decision due later in the day. Besides, news that North Korea launched a ballistic missile that may have landed in Japan's exclusive economic zone also weighed on investors’ sentiments. Meanwhile, US markets closed mostly higher on Monday, on the first day of trading in July and the second half of 2017 in positive territory - though off the day’s best levels - on the back of a rally in energy and financials, but tech shares lagged behind. Gains accelerated in an abbreviated session ahead of holiday on Tuesday, after an upbeat report on manufacturing. American manufacturers are growing at the fastest pace in almost three years, reflecting improved economic conditions both at home and abroad.

Back home, stocks from Energy, Oil & Gas and IT counters were supporting the markets’ uptrend, while those from Realty, Consumer Durables and Capital Goods counters were adding to the underlying cautious undertone. In scrip specific development, Indian Hume Pipe Company gained after the company secured work order of Rs 260.75 crore from Public Health Engineering Department, Ajmer in Rajasthan. Furthermore, Wockhardt rose after the company received final approval from United States Food and Drug Administration (USFDA) for its ANDA for 0.1% ophthalmic solution of Olopatadine HCI.

The market breadth remained optimistic, as there were 1187 shares on the gaining side against 1101 shares on the losing side, while 119 shares remained unchanged.

The BSE Sensex is currently trading at 31203.86, down by 17.76 points or 0.06% after trading in a range of 31174.24 and 31353.46. There were 9 stocks advancing against 22 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.24%, while Small cap index down by 0.09%.

The top gaining sectoral indices on the BSE were Energy up by 0.98%, Oil & Gas up by 0.53%, IT up by 0.16% and TECK up by 0.01%, while Realty down by 0.76%, Consumer Durables down by 0.56%, Capital Goods down by 0.55%, Auto down by 0.49% and Telecom down by 0.44% were the top losing indices on BSE.

The top gainers on the Sensex were Reliance Industries up by 1.68%, NTPC up by 1.15%, Adani Ports & SEZ up by 1.03%, ONGC up by 1.01% and Infosys up by 0.72%. On the flip side, Hero MotoCorp down by 2.01%, Dr. Reddys Lab down by 1.52%, Wipro down by 1.29%, Axis Bank down by 1.23% and Tata Motors - DVR down by 1.13% were the top losers.

Meanwhile, in order to increase foreign capital inflows in the country, the Reserve Bank of India (RBI) has increased the foreign portfolio investor (FPI) investment limit in Central Government Securities (G-secs) as well as in State Development Loans (SDLs) for the quarter July-September 2017, which will be effective from July 4, 2017.

According to the RBI’s notification, the limit for investment by FPIs in G-secs will move up to Rs 2,420 billion from earlier Rs 2,310 billion, while in SDLs, the limit will go up to Rs 331 billion from Rs 270 billion. Hence, the total limit for FPIs will increase to Rs 2,751 billion from Rs 2,580 billion. Besides, future increases in the limit for FPI investment in G-secs will be allocated in the ratio of 75% for long-term category of FPIs & 25% for general category. On the other hand, for SDLs, the allocation ratio will be the same like G-secs in order to keep harmonization between them. Market regulator Securities and Exchange Board of India (SEBI) will issue the operational guidelines relating to allocation and monitoring of limits of the enhanced FPI investment in the central government securities and SDLs.

As per the RBI notification, the central bank has done away with the practice of transferring unutilised limits of long-term category to general category of FPIs. The revised limit comes in to force as per RBI's review of the medium term framework with relation to investment of FPIs in government securities.

The CNX Nifty is currently trading at 9606.65, down by 8.35 points or 0.09% after trading in a range of 9600.95 and 9650.65. There were 17 stocks advancing against 34 stocks declining on the index.

The top gainers on Nifty were Reliance Industries up by 1.94%, BPCL up by 1.43%, Adani Ports & SEZ up by 1.13%, NTPC up by 0.99% and ONGC up by 0.94%. On the flip side, Indiabulls Housing Finance down by 2.63%, Hero MotoCorp down by 1.79%, Dr. Reddys Lab down by 1.60%, Wipro down by 1.39% and Gail India down by 1.24% were the top losers.

Asian markets were trading in red; Hang Seng declined 1.61%, Taiwan Weighted shed 0.62%, Jakarta Composite decreased 0.66%, Shanghai Composite dropped 0.53%, KOSPI Index slipped 0.6%, FTSE Bursa Malaysia KLCI slipped 0.28% and Nikkei 225 was down by 0.32%.