Markets trade flat with negative bias

Indian equity benchmarks were trading flat with negative bias in morning session, following weak global cues. Metal, Healthcare and realty stocks fell over 1 percent. However, IT and TECK stocks bucked the negative trend and traded with gains with over a percent. Traders were cautious on a report that the green-shoots of demand growth seen in some rural pockets is driven by farm loan waivers and not likely due to real increases in rural incomes and wages, indicative that the economy is still some time away from a full-blown rural revival. Some cautiousness also came with a report highlighting that merchandise trade deficit scaled a 61-month peak of $16.6 billion in June, as a higher net oil import bill offset gains from a contraction in gold and precious stone imports. The markets also took note of a report that although corporate earnings for the June quarter will get a boost from a favourable base, more cash in the system and a weaker currency, higher raw material costs, bigger loan-loss provisions for banks and muted demand for materials in a dull economy could keep profit growth subdued. However, traders overlooked Finance Minister Piyush Goyal’s statement that the Centre is looking at simplify the companies law to provide relief to businesses. The government is of the view that they should not face legal problems and prosecution except for matters of serious nature.

On the global front, Asian markets were trading in red, after data from China showed the world's second-largest economy slowed slightly in the second quarter. Besides, investors remain cautious over the impact of the heated Sino-US trade war. Back on domestic turf, in scrip specific development, Fine Organic Industries surged on inking agreement with Citi Bank N.A., Jersey Branch for availing external commercial borrowing of $18.75 million to finance the capital expenditure of the company.

The BSE Sensex is currently trading at 36518.67, down by 22.96 points or 0.06% after trading in a range of 36445.16 and 36658.71. There were 11 stocks advancing against 20 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index slipped 1.13%, while Small cap index was down by 1.25%.

The few gaining sectoral indices on the BSE were IT up by 1.85%, TECK up by 1.60% and FMCG was up by 0.41%, while Realty down by 1.95%, Healthcare down by 1.93%, Metal down by 1.37%, Basic Materials down by 1.35% and Energy down by 1.20% were the top losing indices on BSE.

The top gainers on the Sensex were Infosys up by 4.33%, Asian Paints up by 1.60%, Hindustan Unilever up by 1.34%, Wipro up by 1.00% and NTPC was up by 0.98%. On the flip side, ICICI Bank down by 2.85%, Sun Pharma down by 2.78%, Tata Motors - DVR down by 2.63%, Tata Steel down by 2.17% and Tata Motors was down by 2.03% were the top losers.

Meanwhile, the Department of Industrial Policy and Promotion (DIPP) in its latest data showed that India’s foreign direct investment (FDI) inflows in the services sector has dropped by about 23% to $6.7 billion in the last financial year (FY18) as compared to $8.68 billion in previous financial year (FY17). The services sector contributes over 60% to country’s Gross Domestic Product (GDP) and includes finance banking, insurance, outsourcing, R&D, courier, tech testing and analysis.

Decline in foreign inflows could put pressure on the country's balance of payments and may also impact the value of the rupee. FDIs are important for India as it would require huge investments in the coming years to overhaul the infrastructure sector to boost growth. Besides, FDI in chemicals sector too registered a marginal decline in growth rate in 2017-18, when it attracted $ 1.30 billion investments as compared to $1.39 billion in 2016-17.

As far as overall FDI inflows are concerned, the growth rate recorded a five-year low of 3% at $44.85 billion in FY18. The slowdown in FDI was on account of re-routing of investments to economies like the US which witnessed an increase in interest rates together with a stronger dollar. The declining growth rate of FDI is more of an exogenous effect and the policy makers will have to continue to focus on macro-economic management.

The CNX Nifty is currently trading at 10994.75, down by 24.15 points or 0.22% after trading in a range of 10975.60 and 11019.50. There were 18 stocks advancing against 32 stocks declining on the index.

The top gainers on Nifty were Infosys up by 3.68%, Tech Mahindra up by 1.81%, Asian Paints up by 1.52%, Hindustan Unilever up by 1.17% and Indusind Bank was up by 0.97%. On the flip side, Dr. Reddy’s Lab down by 8.80%, Sun Pharma down by 2.83%, Lupin down by 2.80%, ICICI Bank down by 2.75% and Tata Steel was down by 2.24% were the top losers.

Asian markets were trading in red; Taiwan Weighted fell 9.80 points or 0.09% to 10,854.74, Straits Times slipped 27.51 points or 0.85% to 3,232.84, Jakarta Composite declined 57.85 points or 0.98% to 5,886.22, Hang Seng dropped 25.45 points or 0.09% to 28,499.99, KOSPI lost 6.65 points or 0.29% to 2,304.25 and Shanghai Composite was down by 13.42 points or 0.48% to 2,817.76.