Indian equities remain in red terrain on high WPI data

Indian equity benchmarks continued their trade in red territory in afternoon session, on the back of high Wholesale Price Index (WPI) data. India's wholesale inflation grew 5.77 percent in June, a four-and-half year high, driven by some food items and fuel prices.  Sentiments also remained weak with Department of Industrial Policy and Promotion’s (DIPP) data showing that FDI inflows in the services sector declined by about 23% to $6.7 billion in 2017-18. Besides, concerns over widening trade deficit too weighed on the sentiment. India's trade deficit widened to a 43-month high of $16.60 billion compared with $12.96 billion in the same month last year, driven largely by a surge in oil prices and a weaker rupee. The broader markets too participated in the fall. However, the markets trimmed some of their losses, as traders found some support with Economic Affairs Secretary Subhash Chandra Garg’s statement that the Indian economy is at a take off stage and is expected to be the world’s third largest by 2030 with GDP worth $10 trillion. In scrip specific developments, 3i Infotech was down by around four percent after reporting over 2-fold jump in its net profit at Rs 39.54 crore for the quarter ended June 30, 2018, as compared to Rs 17.70 crore for the same quarter in the previous year.

On the global front, Asian markets were trading in red, as new data showed China’s economy slowed slightly in the second quarter, compounded by the fear of a full-scale Sino-US trade war looming over markets. Back home, the BSE Sensex is currently trading at 36475.46, down by 66.17 points or 0.18% after trading in a range of 36420.20 and 36658.71. There were 13 stocks advancing against 18 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 1.24%, while Small cap index was down by 1.59%.

The few gaining sectoral indices on the BSE were IT up by 1.54%, TECK up by 1.14% and FMCG up by 0.16%, while Realty down by 2.27%, Healthcare down by 2.17%, Telecom down by 1.87%, Metal down by 1.84% and Basic Materials down by 1.56% were the losing indices on BSE.

The top gainers on the Sensex were Infosys up by 3.63%, Hindustan Unilever up by 1.90%, Asian Paints up by 1.31%, NTPC up by 1.24% and Indusind Bank up by 1.02%. On the flip side, Tata Steel down by 3.67%, Tata Motors - DVR down by 3.49%, ICICI Bank down by 3.06%, Sun Pharma down by 2.97% and Tata Motors down by 2.90% were the top losers.

Meanwhile, the finance ministry may approach capital market regulator Securities and Exchange Board of India (SEBI) to seek relaxation for certain public sector banks (PSBs) for meeting the minimum 25 percent public shareholding norm. There are 13 state-run banks wherein the government holding is above 75 percent. If these banks are unable to meet the norm by August deadline, the Department of Financial Services will have to approach the SEBI for exemption.

Listed public sector undertakings (PSUs), including banks, have already been provided one year extension till August 21 to comply with the norms. Successive capital infusion in the NPA-ridden banks has taken the government’s holding higher, eating into public float over the last two years. Many PSBs are planning to tap the markets to raise more than Rs 50,000 crore in FY19 to shore up their capital base for business growth and meeting regulatory global risk norms. 

Currently, several methods are available to listed companies to comply with the requirements. These include issuance of shares to public; offer for sale; sale of shares held by promoters through secondary market institutional placement programme; rights issue to public shareholders; and bonus shares to public shareholders. Also, Qualified Institutional Placement (QIP) and sale of shares up to 2 percent held by promoters or promoter groups in the open market through block and bulk deal can be done to achieve the minimum 25 percent public float.

The CNX Nifty is currently trading at 10986.50, down by 32.40 points or 0.29% after trading in a range of 10964.10 and 11019.50. There were 20 stocks advancing against 30 stocks declining on the index.

The top gainers on Nifty were Infosys up by 2.97%, Tech Mahindra up by 2.01%, Hindustan Unilever up by 1.71%, Asian Paints up by 1.38% and NTPC up by 1.24%. On the flip side, Dr. Reddys Lab down by 9.22%, Tata Steel down by 3.74%, Lupin down by 2.99%, Sun Pharma down by 2.97% and ICICI Bank down by 2.91% were the top losers.

All the Asian markets were trading in red; Hang Seng decreased 40.80 points or 0.14% to 28,484.64, KOSPI shed 8.91 points or 0.39% to 2,301.99, Taiwan Weighted dipped 47.09 points or 0.44% to 10,817.45, Straits Times was down by 26.49 points or 0.82% to 3,233.86, Jakarta Composite dropped 71.03 points or 1.21% to 5,873.04 and Shanghai Composite fell 20.82 points or 0.74% to 2,810.36.