Sensex, Nifty remain in red terrain

Indian equity benchmarks remained in red terrain in late afternoon session, despite firm opening of European markets. Sentiments remained downbeat, as India Ratings and Research (Ind-Ra) believes India’s increased dependence on foreign portfolio investment (FPI) makes the country highly vulnerable to global shocks. The surplus generated in the services trade combined with remittances is insufficient to cover India’s trade deficit.  The street took a note of reports that the executive director at Reserve Bank of India (RBI) for financial markets operations department, Rajeshwar Rao has blamed structural incentives for drawing companies to bank financing, preventing them from opting for issuing bonds.

On the global front, European markets were trading green, even though Germany's factory orders decreased more-than-expected in July. The data from Destatis revealed that factory orders decreased 2.7 percent over the previous month in July, in contrast to an increase of revised 2.7 percent seen in June. Asian markets were also trading in green.

Back home, automobile industry stocks were in watch, after Union minister Nitin Gadkari assured the crisis-hit automobile industry of all possible support from the government, including taking up the demand of GST reduction with finance minister Nirmala Sitharaman.

The BSE Sensex is currently trading at 36631.78, down by 92.96 points or 0.25% after trading in a range of 36541.88 and 36898.99. There were 20 stocks advancing against 11 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.08%, while Small cap index was up by 0.66%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 2.55%, Metal up by 2.36%, Auto up by 1.94%, PSU up by 1.94% and Utilities was up by 1.65%, while Realty down by 2.10%, Bankex down by 0.72%, IT down by 0.20% and TECK was down by 0.12% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 6.48%, Tata Motors - DVR up by 5.61%, ONGC up by 5.42%, Yes Bank up by 4.29% and NTPC was up by 2.97%. On the flip side, HDFC down by 2.63%, ICICI Bank down by 1.87%, TCS down by 1.61%, HCL Tech was down by 1.55% and Tech Mahindra down by 1.17% were the top losers.

Meanwhile, the executive director at Reserve Bank of India (RBI) for financial markets operations department, Rajeshwar Rao has blamed structural incentives for drawing companies to bank financing, preventing them from opting for issuing bonds.

Rajeshwar Rao also rued the lack of disincentives for unutilised working capital limits as one of the factors limiting corporate bond market development. He underlined that the Government, Reserve Bank and SEBI have been working on deepening the corporate bond markets, for the last two decades. The interventions delivered some successes initially, but the new issuances have plateaued in the last three years.

Rao further said that the newly formulated Insolvency and Bankruptcy Code (IBC) can also help the corporate bond market development by throwing open non-investment grade securities to the long term investors like insurance, pension and provident funds.

The CNX Nifty is currently trading at 10835.30, down by 9.35 points or 0.09% after trading in a range of 10816.00 and 10920.10. There were 35 stocks advancing against 15 stocks declining on the index.

The top gainers on Nifty were Coal India up by 6.70%, Tata Motors up by 6.35%, ONGC up by 5.42%, BPCL up by 4.84% and Yes Bank was up by 4.12%. On the flip side, HDFC down by 2.72%, ICICI Bank down by 2.04%, HCL Tech down by 1.61%, TCS down by 1.59% and Indiabulls Housing Finance was down by 1.30% were the top losers.

Asian markets were mostly trading in green; Nikkei 225 surged 436.80 points or 2.12% to 21,085.94, Taiwan Weighted strengthened 99.62 points or 0.93% to 10,756.93, Shanghai Composite gained 32.47 points or 1.1% to 2,989.88, Jakarta Composite soared 27.76 points or 0.44% to 6,297.42, KOSPI rose 16.22 points or 0.82% to 2,004.75 and Straits Times was up by 7.02 points or 0.22% to 3,137.59. On the flip side, Hang Seng was down by 167.49 points or 0.63% to 26,355.74.

European markets were trading mostly in green; CAC rose 49.49 points or 0.89% to 5,581.56 and DAX was up by 102.35 points or 0.85% to 12,127.39, while FTSE was down by 20.06 points or 0.27% to 7,291.20.