Markets remain subdued in late afternoon session

Indian equity benchmarks remained subdued in late afternoon session, with the Nifty trading below 9900 level, following weak trade in European markets. Heavy selling pressure in Realty, Capital Goods, Industrials and IT stocks, too weighted on the sentiments. Besides, Global IT research firm Gartner further lowered its 2017 IT spending growth estimate to 2.4% from the 2.7% earlier on worries on digitisation. However, downside remained capped with the report that coming in line with the decline in retail inflation, India’s annual rate of inflation based on wholesale prices too eased in the month of June to record low level since July 2016, on account of easing manufactured products and fuel prices. According to the data released by the Ministry of Commerce & Industry, the country’s WPI in the month of June 2017 softened to 0.90% as compared to 2.17% in the previous month. Meanwhile, the government has set up a new wing to provide intelligence inputs and do big data analytics for taxmen for better policy formulation and taking action against tax evaders.

On the global front, European markets were trading in red, as investors looked ahead to earnings reports from Wall Street banks and monitored developments from a meeting between the French and US presidents. However, Asian markets were trading in green. Back home, in scrip specific development, Biocon traded higher, as the US Food and Drug Administration (USFDA) Oncologic Drugs Advisory Committee (ODAC) unanimously recommended approval of its proposed biosimilar Trastuzumab.

The BSE Sensex is currently trading at 32007.95, down by 29.43 points or 0.09% after trading in a range of 31897.87 and 32109.75. There were 15 stocks advancing against 16 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index was up by 0.08%, while Small cap index was down by 0.38%.

The top gaining sectoral indices on the BSE were Healthcare up by 0.89%, Utilities up by 0.78%, Telecom up by 0.48%, Power up by 0.33% and PSU up by 0.28%, while Realty down by 0.73%, Capital Goods down by 0.64%, Industrials down by 0.63%, IT down by 0.56% and Metal down by 0.55% were the top losing indices on BSE.

The top gainers on the Sensex were Kotak Mahindra Bank up by 1.77%, NTPC up by 1.47%, SBI up by 1.26%, Cipla up by 1.01% and Sun Pharma up by 0.72%. On the flip side, TCS down by 1.93%, Coal India down by 1.58%, Wipro down by 1.48%, Tata Motors - DVR down by 1.32% and Tata Motors down by 0.99% were the top losers.

Meanwhile, after the government’s decision to increase import duty on sugar from 40% to 50%, the rating agency ICRA in its latest report has said that a 10% increase in import duty on sugar is a positive for the industry, which is likely to support the domestic prices in the near term. The Centre has increased the import duty on sugar following the recent decline in the global sugar prices and improved outlook for domestic sugar production for the coming sugar season SY2018.

ICRA said that this move in turn will help sugar mills clear cane arrears to farmers. It also said that given the recent increase in the fair and remunerative (FRP) cane price for the coming season, a significant fall in domestic sugar prices, was a possibility had further imports (in addition to the recent 0.5 million tons duty free imports) been allowed, same could have adversely impacted the margins and the liquidity of sugar mills.

According to the report, the sugar production in India is set to increase by 16-20% in SY2018, to around 23.5 million tons (MT) to 24.5 MT. This growth will be driven largely by the increase in sugar production in Maharashtra and Uttar Pradesh. The closing stocks for SY2018 are likely to be around 4.0-4.5 MT, which would be sufficient before the production of the following season comes into the market, limiting the need for sugar imports into the country.

Moreover, global sugar prices have largely followed expectations on global supplies. The lower sugar import demand from India, coupled with an expectation of a global surplus in 2017/18 on account of increased production from Brazil and India, has resulted in a decline in the global sugar prices from around $540-$550/MT in January-February 2017 to $510/MT in March 2017 and further down to $445/MT in May 2017.

The CNX Nifty is currently trading at 9877.30, down by 14.40 points or 0.15% after trading in a range of 9845.45 and 9913.30. There were 23 stocks advancing against 28 stocks declining on the index.

The top gainers on Nifty were Aurobindo Pharma up by 5.06%, ACC up by 2.20%, GAIL India up by 1.94%, Kotak Mahindra Bank up by 1.73% and NTPC up by 1.37%. On the flip side, Indian Oil Corporation down by 2.26%, TCS down by 2.01%, Coal India down by 1.77%, Tata Motors - DVR down by 1.66% and Wipro down by 1.46% were the top losers.

Asian markets were trading mostly in green; FTSE Bursa Malaysia KLCI increased 0.15 points or 0.01% to 1,753.93, Shanghai Composite increased 4.25 points or 0.13% to 3,222.42, KOSPI Index increased 5.14 points or 0.21% to 2,414.63, Nikkei 225 increased 19.05 points or 0.09% to 20,118.86 and Hang Seng increased 43.06 points or 0.16% to 26,389.23. On the flip side, Jakarta Composite decreased 22.07 points or 0.38% to 5,807.97 and Taiwan Weighted decreased 16.24 points or 0.16% to 10,443.91.

European markets were mostly trading in red; UK’s FTSE 100 decreased 7.29 points or 0.1% to 7,406.15 and Germany’s DAX decreased 1.23 points or 0.01% to 12,640.10. On the flip side, France’s CAC increased 7.48 points or 0.14% to 5,242.88.