Benchmarks continue weak trade in morning session

Indian equity benchmarks continued their weak trade in the morning trade on account of selling in blue chip counters. Geopolitical worries mainly weighed on the sentiments with remarks by President Donald Trump adding to concerns about rising tensions between the US and North Korea. The rupee opened lower against dollar on account of selling of American currency by banks and exporters. Foreign Portfolio Investors stood net sellers in domestic equity markets on Tuesday and sold shares worth Rs 166.32 crore with gross purchases and gross sales of Rs 3,834.07 crore and Rs 4,000.39 crore, respectively. Traders continued to remain worried after yesterday capital market regulator SEBI directed exchanges to initiate action against 331 suspected shell companies. SEBI’s restrictions on trading in 331 stocks have impacted about 36 lakh investors. These include some big names, such as Rakesh Jhunjhunwala, DSP Blackrock, HDFC Mutual, Reliance Mutual and UTI among domestic investors. Foreign institutions like Goldman Sachs, Fidelity, Blackrock and Smallcap World too are holders of some of these stocks. Telecom stocks like Bharti Airtel, Reliance Communications, MTNL and TTML were trading under pressure as the telecom operators failed to meet customer satisfaction benchmark. As per a survey conducted by the sector regulator TRAI across three circles -- Delhi, Madhya Pradesh and Karnataka, a majority of customers in these circles are dissatisfied by efforts of telecom operators to address the call drop issue and other major counts such as network signal, data speed, customer care service, overall telecom service by their service providers etc.

Traders were seen piling up position in Realty, Metal and Oil & Gas stocks, while selling was witnessed in Healthcare, FMCG and Industrials sector stocks. In scrip specific development, Sun Pharmaceuticals Industries was trading in red after the company’s majority-owned US subsidiary Taro Pharmaceutical Industries reported weak set of quarterly numbers. Taro said its profit halved to $54.5 million for June quarter from $109.9 million in the year ago quarter. Lanco Infratech touched lower circuit on reports that NCLT had approved insolvency proceeding against the company. Debt of Rs 44,365 crore was identified by RBI for insolvency of Lanco Infratech.

On the global front, Asian markets were trading in red, as heightened tensions on the Korean peninsula sent caution through markets. China’s annual producer price inflation held steady in July, with prices for key raw materials up slightly on expectations of deeper capacity cuts going into the winter months of heavy pollution, while consumer inflation slowed slightly. Back home, the BSE Sensex and NSE Nifty were trading below the psychological 32,000 and 10,000 levels respectively. The market breadth on BSE was negative in the ratio of 676:1416, while 118 scrips remained unchanged.

The BSE Sensex is currently trading at 31913.31, down by 100.88 points or 0.32% after trading in a range of 31843.45 and 31965.40. There were 11 stocks advancing against 20 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.53%, while Small cap index was down by 0.40%.

The top gaining sectoral indices on the BSE were Realty up by 0.97%, Metal up by 0.79%, Oil & Gas up by 0.68%, Utilities up by 0.58% and Energy up by 0.54%, while Healthcare down by 1.73%, FMCG down by 0.63%, Industrials down by 0.54%, Bankex down by 0.46% and Capital Goods down by 0.38% were the losing indices on BSE.

The top gainers on the Sensex were NTPC up by 1.90%, SBI up by 0.81%, Reliance Industries up by 0.63%, Power Grid up by 0.54% and TCS up by 0.52%.

On the flip side, Sun Pharma down by 3.06%, Dr. Reddy’s Lab down by 1.75%, Tata Motors down by 1.55%, Tata Motors - DVR down by 1.25% and Axis Bank down by 0.99% were the top losers.

Meanwhile, reacting to a 2016 World Bank report titled “Digital Dividends” speculates that automation threatens 69 percent jobs in India. The government has said that job loss through automation in India should not be a matter of concern as the “growth momentum” of the economy will result in new job opportunities.

Minister of State for Finance Arjun Ram Meghwal also said that the report “inter alia also states that ‘even if technologically feasible, large-scale net job destruction due to automation should not be a concern for most developing countries in the short term’ ”.

Meghwal further added that even in medium to long term, growth of Indian economy of over seven percent and steps being taken to enhance the growth momentum will result in further creation of new job opportunities and absorption of replaced labour. He added that the government has taken various steps for generating employment like encouraging the private sector, fast tracking various projects involving substantial investment and increasing public expenditure on different schemes.

The World Bank in its annual World Development Report (WDR) had stated that greater efforts must be made to connect more people to the Internet and to create an environment that unleashes the benefits of digital technologies for everyone.

The CNX Nifty is currently trading at 9950.95, down by 27.60 points or 0.28% after trading in a range of 9925.90 and 9969.80. There were 17 stocks advancing against 34 stocks declining on the index.

The top gainers on Nifty were Hindalco up by 2.34%, Indian Oil up by 2.18%, Vedanta up by 2.02%, NTPC up by 1.96% and SBI up by 0.81%.

On the flip side, Sun Pharma down by 3.03%, Aurobindo Pharma down by 2.97%, Indiabulls Housing down by 1.74%, Tata Motors down by 1.62% and Dr. Reddy’s Lab down by 1.51% were the top losers.

The Asian markets were trading in red; Nikkei 225 decreased 282.84 points or 1.41% to 19,713.17, Hang Seng decreased 183.94 points or 0.66% to 27,670.97, Taiwan Weighted decreased 97.87 points or 0.93% to 10,471.10, KOSPI Index decreased 20.33 points or 0.85% to 2,374.40, Shanghai Composite decreased 6.65 points or 0.2% to 3,275.23, FTSE Bursa Malaysia KLCI decreased 3.66 points or 0.21% to 1,777.99 and Jakarta Composite decreased 3.3 points or 0.06% to 5,807.26.