Markets slip into negative terrain in afternoon deals

In the extremely range-bound session of trade, Indian equity indices altering between positive and negative territory, have now slipped into negative terrain in afternoon trade on account of selling in frontline blue chip stocks such as Tata Steel, Hero MotoCorp, Infosys and Asian Paints among others. Investors failed to get solace with the Asian Development Bank (ADB) report which predicted Asia’s economy to expand faster in 2017; South Asia to remain the fastest growing of all sub-regions and India to achieve a 7.4 percent growth due to strong consumption. Moreover, depreciation in Indian rupee against the dollar too aided the downtrend. The rupee weakened 12 paise to 64.40 against the dollar on Thursday, hurt by fresh demand for the American currency from importers. In scrip specific development, Axis Bank was up by around three percent after unveiling its digital invoice discounting platform ‘Invoicemart’, in order to improve access of funds to micro, small and medium sector enterprises (MSMEs).

On the global front, Asian markets were trading mostly in green, following across-the-board records on Wall Street where traders were buoyed by another day of strong earnings. The Bank of Japan kept monetary policy steady, but once again pushed back the timing for achieving its ambitious inflation target, reinforcing views that it will lag well behind other major central banks in scaling back its massive stimulus program.

The BSE Sensex is currently trading at 31915.10, down by 40.25 points or 0.13% after trading in a range of 31915.10 and 32057.12. There were 12 stocks advancing against 19 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index was down by 0.35%, while Small cap index was up by 0.28%.

The top gaining sectoral indices on the BSE were Bankex up by 0.36%, Capital Goods up by 0.22%, Realty up by 0.18%, Consumer Durables up by 0.17% and Industrials up by 0.12%, while Metal down by 0.73%, IT down by 0.71%, TECK down by 0.67%, Telecom down by 0.52% and Basic Materials down by 0.45% were the top losing indices on BSE.

The top gainers on the Sensex were Axis Bank up by 3.10%, ONGC up by 0.95%, Cipla up by 0.89%, Larsen & Toubro up by 0.69% and Mahindra & Mahindra up by 0.68%. On the flip side, Tata Steel down by 1.87%, Hero MotoCorp down by 0.93%, Infosys down by 0.93%, Asian Paints down by 0.93% and Bharti Airtel down by 0.84% were the top losers.

Meanwhile, with the transition to a new realty regulatory framework under the Real Estate (Regulation and Development) Act (RERA), which came into force on May 1, domestic rating agency, ICRA in its latest report has said that the move is expected to slow down the upcoming real estate project launches, increase working capital requirements of developers, thus putting pressure on their operational performance during the financial year 2017-18. 

The rating agency has stated that the effective implementation of RERA is expected to increase customer confidence and improve demand prospects over the long term, but in the short-term, it may pose various challenges for developers. It also observed that the current transition period of RERA implementation is likely to be challenging for developers as they need to realign their business operations to comply with the new regulations.

Adding further, ICRA has said that constraints imposed by the Act will adversely impact the business model of unorganized developers and it can be expected that there will be some level of consolidation in the industry. However, it clarified that this will benefit larger developers who have the resources and financial flexibility to withstand the near term challenges and scale up execution levels as required.

Under the Act, state governments need to frame rules with respect to the various provisions, and set up a state level regulatory authority to implement these norms. While many states have notified their real estate rules, certain states are yet to be complete this step. Even fewer states have set up the regulatory authority as required under the Act.

The CNX Nifty is currently trading at 9884.30, down by 15.30 points or 0.15% after trading in a range of 9884.30 and 9922.55. There were 16 stocks advancing against 35 stocks declining on the index.

The top gainers on Nifty were Axis Bank up by 3.23%, ONGC up by 1.04%, Ambuja Cement up by 0.91%, Cipla up by 0.89% and Mahindra & Mahindra up by 0.77%. On the flip side, Bharti Infratel down by 2.20%, Tata Steel down by 1.86%, Ultratech Cement down by 1.04%, HCL Tech. down by 1.03% and Infosys down by 1.01% were the top losers.

The Asian markets were trading mostly in green, Shanghai Composite increased 10.14 points or 0.31% to 3,241.12, KOSPI Index rose 11.9 points or 0.49% to 2,441.84, Jakarta Composite added 13.61 points or 0.23% to 5,820.30, Hang Seng was up by 83.12 points or 0.31% to 26,755.28 and Nikkei 225 surged 123.73 points or 0.62% to 20,144.59.

On the flip side, Taiwan Weighted decreased 6.74 points or 0.06% to 10,499.36 and FTSE Bursa Malaysia KLCI was down by 2.06 points or 0.12% to 1,755.21.