Indian equities continue weak trade; Metal stocks fall

Adding some losses, Indian equity benchmarks continued to trade lower in early afternoon session, as selling momentum in the equities persisted. Sentiment on the street weakened further with a report stating that the total investments through participatory notes (P-notes) into Indian capital markets declined to a 9-year low of Rs 1 lakh crore in April amid stringent norms put in place by the Securities and Exchange Board of India to check the misuse of these instruments. The market participants overlooked report that the government has approved a corpus of Rs 5,000 crore for the setting up of a dedicated micro irrigation fund (MIF) under the National Bank for Agriculture and Rural Development (Nabard). However, the broader indices were holding up their fort in green with gains in the range of 0.10%-0.30%.  In scrip specific development, Divis Laboratories was up by over a percent after USFDA completed inspection at its Unit 1 manufacturing facility in Telangana with zero observations under Form 483.

On the global front, Asian markets were trading mostly in red, despite the overnight gains on Wall Street as the increase in US bond yields weighed on investor sentiment. Besides, Japan’s core machinery orders fell in March for the first time in three months, but manufacturers forecast a rise for April-June, suggesting capital expenditure could hold up despite news that the economy contracted in the first quarter.

The BSE Sensex is currently trading at 35238.97, down by 148.91 points or 0.42% after trading in a range of 35233.99 and 35510.01. There were 11 stocks advancing against 20 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.27%, while Small cap index was up by 0.18%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 1.85%, Capital Goods up by 0.34%, Industrials up by 0.29%, Utilities up by 0.21% and Auto up by 0.20%, while Metal down by 0.95%, Bankex down by 0.43%, Energy down by 0.40%, Basic Materials down by 0.30% and Healthcare down by 0.27% were the top losing indices on BSE.

The top gainers on the Sensex were Coal India up by 1.89%, Tata Motors up by 1.77%, Wipro up by 1.35%, Tata Motors - DVR up by 0.90% and Hindustan Unilever up by 0.76%. On the flip side, Tata Steel down by 2.26%, Dr. Reddy’s Lab down by 1.43%, HDFC down by 1.40%, Bharti Airtel down by 1.16% and Reliance Industries down by 0.99% were the top losers.

Meanwhile, the share of foreign portfolio investments (FPI) through participatory notes (P-notes) in domestic capital markets has declined to nine-year low of Rs 1 lakh crore at the end of April, due to tough rules put in place by Securities and Exchange Board of India (SEBI) to check the misuse of these instruments. This is the lowest level since June 2009 when the cumulative value of such investments stood at Rs 97,885 crore. According to SEBI data, total value of P-note investments in Indian markets including equity, debt and derivatives, at April end slipped to Rs 100,245 crore from Rs 106,403 crore at the end of March and Rs 106,760 crore in February.

Of the total, P-note holdings in equities at April-end were at Rs 72,321 crore, while in debts and derivatives were at Rs 27,274 crore and Rs 3,748 crore respectively. The quantum of foreign portfolio investors’ (FPIs) investments via P-notes dropped to 3 percent during the period under review from 3.4 percent in the preceding month. P-notes are issued by registered FPIs to overseas investors who wish to be part of the Indian stock markets without registering themselves directly. They, however, need to go through a proper due diligence process.

SEBI had notified stricter norms stipulating a fee of $1,000 on each instrument to check any misuse for channelising black money. It also prohibited FPIs from issuing such notes where the underlying asset is a derivative, except those which are used for hedging purposes. These measures were an outcome of a slew of other steps taken by the regulator in the recent past. In April 2017, SEBI had barred resident Indians, NRIs and entities owned by them from making investment through P- notes.

The CNX Nifty is currently trading at 10702.30, down by 38.80 points or 0.36% after trading in a range of 10698.40 and 10777.25. There were 19 stocks advancing against 31 stocks declining on the index.

The top gainers on Nifty were GAIL India up by 2.62%, Coal India up by 2.03%, Bharti Infratel up by 1.92%, Tata Motors up by 1.66% and Titan Co up by 1.25%. On the flip side, Hindalco down by 2.86%, BPCL down by 2.20%, Tata Steel down by 2.14%, UPL down by 1.67% and Cipla down by 1.63% were the top losers.

The Asian markets were trading mostly in red; Hang Seng decreased 131.84 points or 0.42% to 30,978.36, Taiwan Weighted dipped 63.76 points or 0.59% to 10,833.81, Shanghai Composite was down by 19.17 points or 0.6% to 3,150.40 and KOSPI Index shed 11.37 points or 0.46% to 2,448.45.

On the flip side, FTSE Bursa Malaysia KLCI increased 5.55 points or 0.3% to 1,863.81, Jakarta Composite was up by 40.77 points or 0.7% to 5,882.23 and Nikkei 225 added 121.14 points or 0.53% to 22,838.37.