Benchmarks trade lower; Sensex below 38,000 mark

Indian equity benchmarks made cautious start and are trading marginally lower in early deals on Tuesday amid selling pressure by foreign institutional investors. Foreign portfolio investors (FPIs) were net sellers of domestic stocks to the tune of Rs 1,916.91 crore on Monday. Losses in the markets led by private sector banks including Yes Bank and HDFC Bank after Reserve Bank of India (RBI) governor said it is seeing signs of fragility in some lenders. The RBI is monitoring non-banking finance companies amid signs of stress to prevent another potential surge in soured debt. Traders turned cautious with report that investments through participatory notes (P-notes) in the capital market slipped to Rs 81,913 crore in June after posting growth for the previous four months. Traders took note of report that the Economic Advisory Council to the Prime Minister (EAC-PM) member Rathin Roy has urged the government to issue a white paper on medium-term fiscal framework, arguing that it would be difficult to meet the budgetary tax collection target for 2019-20. He also expressed his reservations over the government’s decision to start raising a part of its gross borrowing programme from external markets in foreign currencies.

On the global front, Asian markets were trading mostly in green, tracking gains on Wall Street with confidence given a boost by a positive earnings season and speculation top US and Chinese negotiators will hold face-to-face trade talks soon. The US markets had closed higher on Monday. Back home, in scrip specific development, Kotak Mahindra Bank gained over 2% after it reported a 33% increase in net profit in the June quarter, paced by healthy loan growth and treasury gains that boosted other income. VA Tech Wabag jumped on securing Rs 1,187 crore worth order from Bihar Urban Infrastructure Development Corporation (BUIDCO). However, YES Bank witnessed selling pressure as promoter Rana Kapoor pledged 10 crore shares accounting for 4.31% of total share capital for security. The pledge was made as security provided to the holders of debentures issued by Morgan Credits (MCPL).

The BSE Sensex is currently trading at 37952.65, down by 78.48 points or 0.21% after trading in a range of 37917.52 and 38148.63. There were 17 stocks advancing against 14 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index declined 0.22%, while Small cap index was down by 0.07%.

The top gaining sectoral indices on the BSE were IT up by 0.91%, TECK up by 0.75%, Power up by 0.58%, Utilities up by 0.56% and Realty was up by 0.44%, while Auto down by 0.46%, Industrials down by 0.38%, Capital Goods down by 0.31%, Bankex down by 0.25% and Healthcare was down by 0.23% were the losing indices on BSE.

The top gainers on the Sensex were Infosys up by 1.68%, Kotak Mahindra Bank up by 1.65%, Power Grid Corporation of India up by 1.18%, Axis Bank up by 1.13% and Hero MotoCorp up by 0.54%. On the flip side, Yes Bank down by 2.19%, HDFC Bank down by 2.01%, HDFC down by 2.00%, Bajaj Auto down by 1.31% and Mahindra & Mahindra down by 0.83% were the top losers.

Meanwhile, after posting growth for the previous four months, the share of foreign portfolio investments (FPI) in domestic capital markets through participatory notes (P-notes) has slipped to Rs 81,913 crore at June-end. In the previous four months, cumulative investment of Rs 73,428 crore was made till the end of February, Rs 78,110 crore till March-end, Rs 81,220 crore till April-end and Rs 82,619 till May-end.

According to the latest data from the Securities and Exchange Board of India (SEBI), the total value of P-note investments in the Indian markets - equity, debt, and derivatives - fell to Rs 81,913 crore at June-end. Of the total investments made till the end of June, Rs 56,664 crore was invested in the equities segment, Rs 24,428 crore in debt and Rs 821 crore in the derivatives market. There is a decline of 0.85% in the total value of P-notes investment from the previous month when the total investment stood at Rs 82,619 crore.

P-notes are issued by registered foreign portfolio investors (FPIs) to overseas investors who wish to be part of the Indian stock market without registering themselves directly after going through a due diligence process. In July 2017, SEBI had notified stricter norms stipulating a fee of $1,000 on each instrument to check any misuse for channelising black money. It had also prohibited FPIs from issuing such notes where the underlying asset is a derivative, except those that are used for hedging purposes.

The CNX Nifty is currently trading at 11323.10, down by 23.10 points or 0.20% after trading in a range of 11315.95 and 11373.30. There were 23 stocks advancing against 27 stocks declining on the index.

The top gainers on Nifty were Infosys up by 1.71%, Kotak Mahindra Bank up by 1.52%, Power Grid Corporation of India up by 1.30%, Axis Bank up by 1.11% and Wipro up by 1.10%. On the flip side, Yes Bank down by 2.63%, HDFC Bank down by 2.24%, HDFC down by 1.98%, Bharti Infratel down by 1.74% and Bajaj Auto down by 1.52% were the top losers.

Asian markets were trading mostly in green; Nikkei 225 surged 253.17 points or 1.18% to 21,669.96, Straits Times strengthened 8.67 points or 0.26% to 3,365.89, Hang Seng gained 30.90 points or 0.11% to 28,402.16, Kospi advanced 11.62 points or 0.56% to 2,104.96 and Shanghai Composite soared 1.96 points or 0.07% to 2,888.93. On the flip side, Taiwan Weighted tumbled 5.38 points or 0.05% to10, 939.15 and Jakarta Composite was down by 20.41 points or 0.32% to 6,413.14.