Benchmarks extend losses in early noon session

Indian bourses extended their losses in early noon session with Sensex and Nifty trading down by 229 and 64 points respectively. Stocks from Basic Materials, Bankex and IT counters were trading lower, while Capital Goods, Power and Realty counters were supporting the markets. Some cautiousness prevailed in the markets as India’s retail inflation based on Consumer Price Index (CPI) jumped to a seven-month high of 3.05% in May. The inflation was higher than the revised 2.99% in the preceding month, but below 4.87% recorded in May 2018. Also, the inflation still remained within Reserve Bank of India’s (RBI’s) target of 4% for the inflation rate. However, traders took note of United Nations' report that India ranked among the top 20 host economies for FDI inflows in 2017-18 as Foreign Direct Investment (FDI) to India grew by 6 per cent to $42 billion in 2018, with strong inflows in the manufacturing, communication and financial services sectors, and cross-border merger and acquisition activities.

On the global front, Asian markets were trading in red, as the Hong Kong market was hit for the second straight session following a day of massive street protests, while oil prices flirted with five-month lows due to higher U.S. crude inventories and a bleak demand outlook. Back on street, in scrip specific developments, shares of NMDC falls as the company halts iron ore production at all mines except Kumaraswamy Mines. Besides, Interglobe Aviation edged up as the airline will start daily non-stop flights from Ahmedabad to Guwahati and Bagdogra from July 5, as part of its endeavour to strengthen domestic connectivity.

The BSE Sensex is currently trading at 39527.80, down by 229.01 points or 0.58% after trading in a range of 39502.73 and 39724.47. There were 8 stocks advancing against 23 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index lost 0.85%, while Small cap was index down by 0.95%.

The few gaining sectoral indices on the BSE were Capital Goods up by 0.25%, Power up by 0.21%, and Realty was up by 0.12%, while Basic Materials down by 0.89%, Bankex down by 0.87%, IT down by 0.73%, Healthcare down by 0.72% and Metal was down by 0.72% were the top losing indices on BSE.

The top gainers on the Sensex were Power Grid up by 1.26%, Larsen & Toubro up by 0.72%, Kotak Mahindra Bank up by 0.49%, Bharti Airtel up by 0.47% and Axis Bank was up by 0.40%. On the flip side, Yes Bank down by 10.43%, Indusind Bank down by 6.30%, Tata Motors - DVR down by 2.83%, Vedanta down by 1.94% and Tata Motors was down by 1.66% were the top losers.

Meanwhile, the Union Cabinet, chaired by the Prime Minister Narendra Modi, has given its approval for implementation of the Special Economic Zones (Amendment) Bill, 2019 in the ensuing session of Parliament. The bill will replace Special Economic Zones (Amendment) Ordinance, 2019, which was promulgated in March, 2019. The ordinance had paved the way for trusts to set up units in special economic zones (SEZs).

After an amendment of a section of the SEZs Act, 2005, a trust or any entity notified by the central government will be eligible to be considered for grant of permission to set up a unit in these zones, which enjoy certain tax and other incentives. The amendment also seeks to provide flexibility to the central government to include 'trusts' in the definition of a 'person', any entity that the central government may notify from time to time. This will facilitate investments in SEZs.

SEZs are major export hubs in the country as the government provides several incentives including tax benefits and single-window clearance system. The developers and units of these zones enjoy certain fiscal and non-fiscal incentives such as no licence requirement for import; full freedom for subcontracting; and no routine examination by customs authorities of export/import cargo. They also enjoy direct and indirect tax benefits. Exports from SEZs paced up about 15 percent to Rs 5.52 lakh crore in 2017-18.

The CNX Nifty is currently trading at 11841.85, down by 64.35 points or 0.54% after trading in a range of 11831.30 and 11897.40. There were 14 stocks advancing against 36 stocks declining on the index.

The top gainers on Nifty were BPCL up by 1.82%, Power Grid up by 1.20%, Larsen & Toubro up by 0.75%, Bharti Airtel up by 0.54% and Zee Entertainment was up by 0.47%. On the flip side, Yes Bank down by 10.83%, Indusind Bank down by 6.90%, Vedanta down by 2.06%, Grasim Industries down by 1.83% and Tata Motors was down by 1.75% were the top losers.

Asian markets were trading in red; KOSPI fell 4.45 points or 0.21% to 2,104.30, Nikkei 225 slipped 110.78 points or 0.52% to 21,018.94, Hang Seng decreased 171.01 points or 0.63% to 27,137.45, Jakarta Composite lost 13.70 points or 0.22% to 6,262.48, Taiwan Weighted dropped 51.22 points or 0.48% to 10,564.44 and Straits Times was down by 6.22 points or 0.19% to 3,201.52. On the other hand, Shanghai Composite was up by 1.75 points or 0.06% to 2,911.13.