Benchmark trade flat with negative bias

Indian equity benchmarks were trading flat with negative bias in morning session, tracking weak Asian clues as investors braced for caution ahead of the planned implementation of trade restrictions between the US and China. Some cautiousness also came with a private report stating that the government decision to significantly increase minimum support price (MSP) for several kharif crops to boost farmers’ incomes could push inflation upwards and widen the fiscal deficit. The Reserve Bank of India could subsequently raise interest rates to counter the potential inflationary impact. However, downside remained capped with a report that even though there are risks in achieving 3.3% fiscal deficit target for the year ending March 2019, the government may still meet its target. Traders also took note of Commerce and Industry Minister Suresh Prabhu’s statement that India’s exports are growing at a healthy rate and may record about 20% growth in June. However, these are challenging times for global trade as countries are taking protectionist measures.

On the global front, Asian markets were trading mostly in red, as financial markets remained in a state of anxious uncertainty on the eve of a US deadline to slap tariffs on Chinese imports. United States plans to implement tariffs on $50 billion worth of imports from China as both nations remained locked in a bitter trade dispute. Back home, in scrip specific development, Biocon gained on getting EU GMP certification for manufacturing facility in Bangalore. Besides, Yes Bank advanced getting approval from SEBI to commence Mutual Fund business.

The BSE Sensex is currently trading at 35,623.51, down by 21.89 points or 0.06% after trading in a range of 35,598.06 and 35,748.26. There were 11 stocks advancing against 20 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.05%, while Small cap index was up by 0.15%.

The top gaining sectoral indices on the BSE were Energy up by 0.65%, FMCG up by 0.63%, Healthcare up by 0.49%, Bankex up by 0.30% and Oil & Gas was up by 0.11%, while Consumer Durables down by 2.19%, IT down by 1.36%, TECK down by 1.33%, Metal down by 1.28% and Telecom was down by 1.21% were the top losing indices on BSE.

The top gainers on the Sensex were Yes Bank up by 2.89%, ITC up by 1.30%, Reliance Industries up by 1.11%, Mahindra & Mahindra up by 0.84% and HDFC Bank was up by 0.76%. On the flip side, Tata Motors down by 3.37%, Infosys down by 3.34%, Tata Motors - DVR down by 2.73%, Bajaj Auto down by 1.77% and Tata Steel was down by 1.71% were the top losers.

Meanwhile, with an aim to strengthen Regional Rural Banks (RRBs) lending capacity, the government has approved extension of recapitalisation scheme for RRBs for next three years up to 2019-20. This will enable the RRBs to maintain the minimum prescribed Capital to Risk Weighted Assets Ratio (CRAR) of 9 per cent. A strong capital structure and minimum required level of CRAR will ensure financial stability of RRBs which will enable them to play a greater role in financial inclusion and meeting the credit requirements of rural areas.

The scheme started in 2010-11 and was extended twice in 2012-13 and 2015-16. The last extension was up to March, 2017.  A total of Rs 1,107.20 crore, as government’s share, out of Rs 1,450 crore, has been released to RRBs till March 2017. The remaining Rs 342.80 crore will be utilised to provide recapitalisation support to RRBs whose Capital to CRAR is below 9 per cent, during 2017-18, 2018-19 and 2019-20.  There were 56 functioning RRBs as of March, 2017 and had extended credit of Rs 2,28,599 crore.

RRBs were set up with the objective to provide credit and other facilities, especially to the small and marginal farmers, agricultural labourers, artisans and small entrepreneurs in rural areas.  They are jointly owned by the Centre, the concerned state government and sponsor banks with the issued capital shared in the proportion of 50 per cent, 15 per cent and 35 per cent, respectively.

The CNX Nifty is currently trading at 10,758.45, down by 11.45 points or 0.11% after trading in a range of 10,756.35 and 10,786.05. There were 21 stocks advancing against 28 stocks declining, while one stock remained unchanged on the index.

The top gainers on Nifty were Yes Bank up by 3.07%, Ultratech Cement up by 2.25%, Bajaj Finserv up by 1.32%, UPL up by 1.25% and ITC was up by 1.21%. On the flip side, Titan Co down by 5.32%, Infosys down by 3.48%, Tata Motors down by 3.30%, Tata Steel down by 2.32% and Bajaj Auto was down by 1.77% were the top losers.

Asian markets were trading mostly in red; Nikkei 225 slipped 240.82 points or 1.12% to 21,476.22, Taiwan Weighted declined 93.01 points or 0.88% to 10,628.86, Hang Seng fell 343.84 points or 1.23% to 27,897.83, KOSPI lost 17.60 points or 0.78% to 2,247.86, Shanghai Composite dropped 24.36 points or 0.89% to 2,734.77 and Jakarta Composite as down by 20.12 points or 0.35% to 5,713.52. On the other side, Straits Times was up by 1.88 points or 0.06% to 3,246.77.