Markets continue to register losses in late morning session

Indicating a bearish mood, Indian equity benchmarks continued to register losses in late morning session, as weakness in Asian stocks weighed on sentiments. Investors remained pessimistic, as activity in the country's dominant service sector contracted at the sharpest rate in nearly four years in July after a new tax policy sowed confusion and sent new orders into free fall. The Nikkei India Services Purchasing Managers' Index fell to 45.9 in July. Some concerns also came with the Reserve Bank’s third bi-monthly monetary policy statement that farm loan waivers by state governments could result in possible fiscal slippages and undermine the quality of public spending. Besides, selling in Metal, Banking and Basic Materials stocks, also contributed to the losses.

On the global front, Asian markets were trading in red as investors locked in gains after the Dow Jones Industrial Average broke the 22,000 barrier for the first time in its 121-year history.  Political tensions after U.S. President Donald Trump signed the Russia sanctions bill also weighed on investors’ sentiments.

Back home, in scrip specific development, Sical Logistics was trading higher after the company received an approval to provide Corporate Guarantee to the extent of Rs 40 crore to Kamarajar Port on behalf of the company’s subsidiary for execution of the modification project. The board of directors at its meeting held on August 2, 2017 has approved for the same.

The BSE Sensex is currently trading at 32324.55, down by 152.19 points or 0.47% after trading in a range of 32282.46 and 32502.55. There were 11 stocks advancing against 20 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index was up by 0.05%, while Small cap index was down by 0.35%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 0.94%, Healthcare up by 0.79%, Energy up by 0.40%, Consumer Durables up by 0.37% and Telecom up by 0.28%, while Metal down by 1.46%, Bankex down by 1.16%, Basic Materials down by 0.63%, Auto down by 0.37% and Industrials down by 0.35% were the top losing indices on BSE.

The top gainers on the Sensex were Lupin up by 2.06%, Sun Pharma up by 1.11%, Hindustan Unilever up by 1.03%, TCS up by 0.96% and Power Grid Corporation up by 0.68%. On the flip side, SBI down by 1.71%, Coal India down by 1.70%, Axis Bank down by 1.46%, Tata Steel down by 1.43% and HDFC down by 1.32% were the top losers.

Meanwhile, with an aim to facilitate further market development and to ensure Foreign Portfolio Investors (FPIs) access to futures remains uninterrupted, the Reserve Bank of India (RBI) has proposed to allocate FPIs a separate limit of Rs 5,000 crore for long position in Interest Rate Futures (IRFs).

At present, the FPI limit for government securities is fungible between investments in securities and investment in bond futures. The limits prescribed for investment by FPIs in Government securities will then be exclusively available for acquiring such securities. FPI’s access to interest rate futures for hedging purposes will continue as before. The circular in this regard would be issued by the RBI after consultation with the government.

An IRF is a contract between a buyer and a seller agreeing to the future delivery of any interest-bearing asset such as government bonds. The cash-settled IRFs provides market participants with a better option to hedge risks arising from fluctuations in interest rates, which depend on various factors including RBI policy, demand for liquidity and flow of overseas funds. Banks, primary dealers, mutual funds, insurers, FIIs, corporates and brokers, as well as retail investors trade in this product.

The CNX Nifty is currently trading at 10036.35, down by 45.15 points or 0.45% after trading in a range of 10023.15 and 10081.15. There were 19 stocks advancing against 31 stocks declining on the index, while 1 stock remained unchanged.

The top gainers on Nifty were Indian Oil Corporation up by 3.74%, Aurobindo Pharma up by 2.30%, Lupin up by 2.09%, Bharti Infratel up by 1.58% and Tech Mahindra up by 1.53%. On the flip side, Hindalco down by 2.54%, Yes Bank down by 1.97%, Coal India down by 1.93%, SBI down by 1.75% and Tata Steel down by 1.75% were the top losers.

Asian markets were trading mostly in red; Nikkei 225 decreased 63.57 points or 0.32% to 20,016.47, Hang Seng decreased 51.67 points or 0.19% to 27,555.71, Taiwan Weighted decreased 49.39 points or 0.47% to 10,469.88, KOSPI Index decreased 43.51 points or 1.79% to 2,384.12, Jakarta Composite decreased 21.82 points or 0.37% to 5,802.43 and Shanghai Composite decreased 14.81 points or 0.45% to 3,270.25.

On the flip side, FTSE Bursa Malaysia KLCI increased 0.11 points or 0.01% to 1,770.72.