Benchmarks pare gains to enter into red terrain

Local equity benchmarks pared all of their initial gains and entered into red terrain to trade with marginal losses, after hitting a lifetime high of 37,496.80, as investors turned cautious ahead of the Reserve Bank of India (RBI) policy meet that begins on July 30. Though, the decision on either hiking the policy repo rate or maintaining status quo will be a close call at the upcoming bi-monthly policy review, majority of the Monetary Policy Committee members may prefer the latter. The street will closely watch the June corporate earnings of companies like Tech Mahindra, Idea Cellular, Axis Bank, IndiGo among others. Some cautiousness came with Union Cabinet minister Arun Jaitley’s statement that the government sacrificed Rs 70,000 crore in revenue collection due to the goods and services tax (GST) rate cuts for over 450 items since the new indirect tax regime was implemented in July last year. However, losses remained capped with a report that Agriculture Ministry has suggested several measures including setting up of a system for forecasting demand, green logistics corridor for perishables, and use of e-commerce, to boost shipments of agriculture commodities to $ 60 billion by 2022.

On the global front, Asian markets were trading mostly in red, after a steep decline in the US technology sector weighed on Wall Street at the end of the week despite data showing the economy was growing. Back home, the index gainers included banks, with PSU banks seeing an upbeat performance led by Bank of Baroda which surged over 9%. ICICI Bank was also trading more than 1% higher after June quarter results.

The BSE Sensex is currently trading at 37305.68, down by 31.17 points or 0.08% after trading in a range of 37305.40 and 37496.80. There were 18 stocks advancing against 13 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index slipped 0.28%, while Small cap index was up by 0.21%.

The top gaining sectoral indices on the BSE were PSU up by 1.56%, Oil & Gas up by 0.78%, Energy up by 0.51%, Consumer Durables up by 0.51% and Utilities was up by 0.49%, while IT down by 0.72%, TECK down by 0.65%, Capital Goods down by 0.36%, Telecom down by 0.22% and Auto was down by 0.17% were the top losing indices on BSE.

The top gainers on the Sensex were SBI up by 2.25%, Vedanta up by 1.77%, ONGC up by 1.77%, Power Grid up by 1.50% and ICICI Bank was up by 1.50%. On the flip side, Wipro down by 1.48%, Infosys down by 1.24%, Kotak Mahindra Bank down by 1.23%, Larsen & Toubro down by 1.15% and Adani Ports & SEZ was down by 1.08% were the top losers.

Meanwhile, in order to promote exports in India, the Commerce and Industry Minister Suresh Prabhu has said that exports segment needs to include under the priority sector lending category. He said ‘Exports is a strategic issue which promotes India’s interest and therefore it is a strategic priority for India (but) not a priority sector lending for banking sector. This is a complete paradox.’ He added that this is not a commercial banking problem, but the one related to the regulator.

Prabhu further said that this issue has been taken up with the Reserve Bank of India (RBI). He added that ‘I have already told the RBI governor that you must treat exports as priority sector lending’. He also said ‘Banking is a very important issue and we must address it and we will continue to work on it and make sure that the genuine credit requirements of the sector are met’. He explained that, amid the current operating environment, treating exports under the priority sector lending will help India achieve the target of becoming a $10 trillion economy by 2035. He said with joint efforts of the government, industry and other stakeholders, India will definitely be able to become a $5-trillion economy within 7-8 years and will become a $10 trillion economy by 2035.

The Minister also said ‘We want to grow at a rate which is closer to 8-9%, and it can’t be done without global trade...this is the first time that world trade itself is facing fundamental challenges...the entire edifice of WTO has been challenged, and that the future of the institution is in crisis. This raises the need for us to chart a path forward, based upon international trade as a key driver’. He said the country’s exports in last fiscal were the highest in the last six years and have been growing at a higher rate in the last few months. he added that ‘I think we are now growing at over 20%. If we continue this, India may be able to again register record growth in exports this fiscal as well’.

The CNX Nifty is currently trading at 11262.50, down by 15.85 points or 0.14% after trading in a range of 11261.45 and 11309.35. There were 24 stocks advancing against 26 stocks declining on the index.

The top gainers on Nifty were HPCL up by 2.29%, SBI up by 2.11%, ONGC up by 1.89%, Vedanta up by 1.64% and Titan Company was up by 1.52%. On the flip side, Wipro down by 1.51%, Adani Ports & SEZ down by 1.44%, Eicher Motors down by 1.38%, Bajaj Finance down by 1.33% and Larsen & Toubro was down by 1.27% were the top losers.

Asian markets were trading mostly in red; KOSPI fell 0.73 points or 0.03% to 2,294.26, Taiwan Weighted slipped 55.73 points or 0.51% to 11,020.05, Nikkei 225 lost 166.03 points or 0.74% to 22,546.72, Straits Times dropped 19.65 points or 0.59% to 3,305.33, Hang Seng declined 225.81 points or 0.79% to 28,578.47 and Shanghai Composite was down by 4.68 points or 0.16% to 2,868.91.

On the other side, Jakarta Composite was up by 17.58 points or 0.29% to 6,006.72.