Key gauges trade with minor cut in morning deals

Indian equity benchmarks erased initial gains and were now trading marginally in red in morning deals, dragged by Oil & Gas, Utilities and Power stocks. Traders took a note of Care Ratings’ report that notwithstanding the Rs 10,000-crore liquidity infusion through the G-Sap route by the RBI last week and fewer states tapping the bond markets, their cost of borrowing has been heading north, as the coupon hit the highest level since mid-March at 7 percent. At 7 percent, the weighted average yield of state debt has risen by a whopping 44 bps since the first auction of the fiscal on April 8. However, losses remain capped as traders found some support with SBI’s economists stating that Indian companies' market capitalization has grown at the fastest pace last year among major economies despite contraction in GDP. Further, economists said retail investors have shown higher interest in markets and their numbers have increased by 1.42 crore in FY21 and another 44 lakh in April and May, wondering if this will be a lasting behavioural change or is transitory.

On the global front, Asian markets were trading in green after Fed Chair Jerome Powell reiterated that inflation pressures will be temporary and stressed that the Fed will do everything to support the economy for as long as it takes to complete the recovery. Back home, on the sectoral front, there was some reaction in oil & gas sector stocks with the government data showing that India's crude oil output fell 6.3 per cent in May after state-owned ONGC produced nearly a tenth less due to cyclone Tauktae.

The BSE Sensex is currently trading at 52504.33, down by 84.38 points or 0.16% after trading in a range of 52434.70 and 52912.35. There were 11 stocks advancing against 19 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index fell 0.27%, while Small cap index was down by 0.09%.

The top gaining sectoral indices on the BSE were Auto up by 0.62%, Metal up by 0.51%, Consumer Durables up by 0.31%, Consumer Discretionary up by 0.23% and Healthcare up by 0.05%, while Oil & Gas down by 0.92%, Utilities down by 0.89%, Power down by 0.81%, TECK down by 0.43% and Capital Goods down by 0.42% were the top losing indices on BSE.

The top gainers on the Sensex were Maruti Suzuki up by 1.41%, Bajaj Finance up by 1.16%, Sun Pharma up by 0.73%, Mahindra & Mahindra up by 0.65% and Indusind Bank up by 0.39%. On the flip side, Tech Mahindra down by 1.25%, Kotak Mahindra Bank down by 1.02%, Ultratech Cement down by 0.92%, TCS down by 0.68% and HCL Technologies down by 0.67% were the top losers.

Meanwhile, Care Ratings in its latest report has said that notwithstanding the Rs 10,000-crore liquidity infusion through the G-Sap route by the RBI last week and fewer states tapping the bond markets, their cost of borrowing has been heading north, as the coupon hit the highest level since mid-March at 7 percent. At 7 percent, the weighted average yield of state debt has risen by a whopping 44 bps since the first auction of the fiscal on April 8.

According to the report, the borrowing cost across the states and maturities rose to the highest level since mid-March, reversing the decline seen at last week's auction at 7 percent in today's auctions of state government securities, which is a full 24 bps higher than last week. Ahead of the Rs 10,000-crore secondary market purchase of state debt on June 17 under the G-Sap (government securities acquisition programme), the average cost had fallen 20 bps to 6.75 per cent at the auction on June 15. This was the sharpest fall in months.

The report attribute the increase in yields to concerns over the inflation trajectory as crude is trading over a two-year high now. It also said firming inflation raises concerns over the RBI's ability to maintain the accommodative monetary policy stance.

The CNX Nifty is currently trading at 15750.00, down by 22.75 points or 0.14% after trading in a range of 15726.60 and 15862.95. There were 22 stocks advancing against 28 stocks declining on the index.

The top gainers on Nifty were Hero MotoCorp up by 2.40%, Hindalco up by 1.92%, Maruti Suzuki up by 1.36%, Bajaj Finance up by 1.12% and Sun Pharma up by 0.75%. On the flip side, Adani Ports &SEZ down by 1.82%, Wipro down by 1.44%, Tech Mahindra down by 1.36%, Shree Cement down by 1.19% and Ultratech Cement down by 0.96% were the top losers.

Asian markets were trading in green; Hang Seng increased 198.59 points or 0.7% to 28,508.35, Taiwan Weighted strengthened 161.15 points or 0.94% to 17,236.70, KOSPI rose 9.23 points or 0.28% to 3,273.11, Nikkei 225 surged 26.03 points or 0.09% to 28,910.16, Straits Times advanced 6.31 points or 0.2% to 3,115.51, Jakarta Composite soared 12.24 points or 0.2% to 6,100.08 and Shanghai Composite gained 2.37 points or 0.07% to 3,559.78.