Sensex, Nifty continue weak trade in late morning session

Indian equity benchmarks continued their weak trade in late morning session, on account of continuous selling in Healthcare, Realty and FMCG stocks amid lower Asian markets. Sentiments remained pessimistic with government saying that names of over 2.09 lakh firms have been struck off from register of companies for failing to comply with regulatory requirements and action has been initiated to restrict operations of their bank accounts. Some concerns also came with former RBI Governor Raghuram Rajan’s statement that the biggest challenge is cleaning up the balance sheets of public sector banks. Investors shrugged off the new Commerce and Industry Minister Suresh Prabhu’s statement that the Ministry will soon bring out a policy framework for facilitating access to global markets for the Indian agriculture produce.

On the global front, Asian markets were trading mostly in red as investors found ample reasons to stay away from risky assets amid still-high tensions on the Korean Peninsula and the powerful hurricane approaching the United States. Back home, in scrip specific development, Gravita India traded jubilantly after the company raised capacity at its Chittoor unit to 28,000 MTPA from 12,000 MTPA. The company added 16,000 MTPA capacity at Chittoor, in Andhra Pradesh, making it the flagship plant of the Jaipur-based company. Besides, the broader markets showed some fervor and traded with notable gains, performing better than their larger peers.

The BSE Sensex is currently trading at 31654.22, down by 155.33 points or 0.49% after trading in a range of 31586.53 and 31713.50. There were 10 stocks advancing against 21 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.16%, while Small cap index was up by 0.22%.

The top gaining sectoral indices on the BSE were Basic Materials up by 0.57%, Metal up by 0.48%, Consumer Durables up by 0.40%, Energy up by 0.30% and Utilities up by 0.17%, while Healthcare down by 1.07%, Realty down by 1.06%, FMCG down by 0.88%, IT down by 0.47% and TECK down by 0.43% were the top losing indices on BSE.

The top gainers on the Sensex were Kotak Mahindra Bank up by 1.01%, Reliance Industries up by 0.68%, Hero MotoCorp up by 0.54%, NTPC up by 0.50% and Hindustan Unilever up by 0.34%. On the flip side, Sun Pharma down by 3.32%, ITC down by 2.00%, Tata Motors - DVR down by 1.89%, Lupin down by 1.89% and Adani Ports & SEZ down by 1.05% were the top losers.

Meanwhile, noting that work is still in progress to reform India's public-sector banks (PSBs), Reserve Bank of India’s (RBI) former governor Raghuram G Rajan has said that one of the biggest challenge is cleaning up of their balance sheets. He also said that it is extremely important that the banks get back into the business of lending as that is holding up the economy at this particular point of time.

Rajan further said that PSBs would only improve if they have competition. In order to increase competition in the banking sector, he said that the RBI issued lot of things which include giving 23 bank licenses. On financial inclusion, he stated that instead of focusing on lending money and bring them under the banking fold, the focus should be on making the people manage their money and then provide them credit. He said financial inclusion would work in the long run only if it is made profitable for the banks.

Talking on the mergers in the banking sector, Former Governor has said that mergers can happen between healthy banks and not amongst weak ones and the central government should be careful in this regard. In case of weak banks, he pointed out that more time has to be spent on cleaning up their balance sheets. He added that the effort needs management capacity to make weak bank's balance sheets healthy.

The CNX Nifty is currently trading at 9913.80, down by 38.40 points or 0.39% after trading in a range of 9882.55 and 9916.60. There were 21 stocks advancing against 30 stocks declining on the index.

The top gainers on Nifty were GAIL India up by 2.19%, Ambuja Cement up by 1.40%, Yes Bank up by 1.13%, Hindalco up by 0.97% and Indiabulls Housing Finance up by 0.82%. On the flip side, Sun Pharma down by 2.98%, ITC down by 2.16%, Lupin down by 2.06%, Tata Motors - DVR down by 1.96% and Axis Bank down by 1.40% were the top losers.

Asian markets were trading mostly in red; Hang Seng decreased 185.51 points or 0.67% to 27,555.84, Taiwan Weighted decreased 69.98 points or 0.66% to 10,547.86, Nikkei 225 decreased 34.4 points or 0.18% to 19,351.41, Jakarta Composite decreased 14.98 points or 0.26% to 5,815.00 and KOSPI Index decreased 7.39 points or 0.32% to 2,319.23.

On the flip side, FTSE Bursa Malaysia KLCI increased 0.63 points or 0.04% to 1,770.26 and Shanghai Composite increased 1.79 points or 0.05% to 3,386.11.