Markets remain in red in late morning deals

Key equity indices remained in red in late morning deals owing to selling in Titan, Tech Mahindra and Ultratech Cement stocks. Weak cues from global markets weighed on domestic sentiments. Traders were cautious as the dollar surged and U.S. Treasury yields hit their highest in nearly nine months on worries about U.S. fiscal position. However, broader indices on the BSE were trading higher in the range of 0.30-0.45%. Traders took a note of private report that cabinet secretary Rajiv Gauba is expected to review the progress of the production linked incentive scheme (PLI) for all the 14 sectors. The meeting assumed significance as the government disbursed only Rs 2,900 crore till March 2023 out of Rs 3,400 crore claims received under the scheme.

On the global front, Asian markets were trading mixed tracking US markets’ sell-off after ratings agency Fitch downgraded the United States’ long-term credit rating from AAA to AA+.  Back home, on the BSE sectoral front, traders were seen pilling up position in Healthcare, Utilities, Power, Industrials and Capital Good, while selling was witnessed in Realty, Metal, Consumer Durables, Bankex and Oil & Gas. In the stock specific development, Ambuja Cements gained after the company announced acquisition of Sanghi Industries (SIL) at an enterprise value of Rs 5,000 crore. The company will acquire 56.74 per cent shares of SIL from its existing promoter group. The acquisition will be fully funded through internal accruals.

The BSE Sensex is currently trading at 65641.64, down by 141.14 points or 0.21% after trading in a range of 65482.79 and 65820.82. There were 11 stocks advancing against 19 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.31%, while Small cap index up by 0.43%.

The top gaining sectoral indices on the BSE were Healthcare up by 1.15%, Utilities up by 0.65%, Power up by 0.45%, Industrials up by 0.43% and Capital Goods up by 0.33%, while Realty down by 1.21%, Metal down by 0.88%, Consumer Durables down by 0.66%, Bankex down by 0.48% and Oil & Gas down by 0.37% were the top losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 2.00%, NTPC up by 1.53%, Larsen & Toubro up by 0.64%, Mahindra & Mahindra up by 0.45% and ITC up by 0.43%. On the flip side, Titan down by 2.03%, Tech Mahindra down by 1.08%, Ultratech Cement down by 1.08%, ICICI Bank down by 1.07% and TCS down by 1.05% were the top losers.

Meanwhile, as India and the UK are close to concluding negotiations for a proposed free trade agreement (FTA), chief negotiators of both countries will hold the 12th round of talks from August 7, 2023. Both sides are looking at concluding the talks before the end of the year. The main issues which could come up for discussions in this round include investment treaty, reduction of duties on auto and whiskey and matters pertaining to services. 

The 11th round of talks was concluded in the month of July, 2023. For that round, Commerce and Industry Minister Piyush Goyal and Commerce Secretary Sunil Barthwal visited London and took stock of the negotiations. Out of the total 26 chapters in the FTA, 19 have been closed. Investment is being negotiated as a separate agreement (bilateral investment treaty) between India and the UK and it would be concluded simultaneously with the free trade agreement.

In the rules of origin chapters, product specific rules are being negotiated which include value-addition norms for each product category, change in chapter heading, and certification. The ‘rules of origin’ provision prescribes minimal processing that should happen in an FTA country so that the final manufactured product may be called originating goods in that country. Under this provision, a country that has inked an FTA with India cannot dump goods from some third country in the Indian market by just putting a label on it. It has to undertake a prescribed value addition in that product to export to India. Rules of origin norms help contain dumping of goods. The Indian industry is demanding greater access for its skilled professionals from sectors like IT, and healthcare in the UK market, besides market access for several goods at nil customs duties.

On the other hand, the UK is seeking a significant cut in import duties on goods such as scotch whiskey, automobiles, lamb meat, and certain confectionary items. Britain is also looking for more opportunities for UK services into Indian markets in segments such as telecommunications, legal and financial services like banking.

The CNX Nifty is currently trading at 19491.90, down by 34.65 points or 0.18% after trading in a range of 19439.05 and 19537.65. There were 21 stocks advancing against 29 stocks declining on the index.

The top gainers on Nifty were Sun Pharma up by 1.98%, Adani Enterprises up by 1.70%, NTPC up by 1.62%, Eicher Motors up by 1.37% and Divi's Lab up by 1.12%. On the flip side, UPL down by 2.53%, Titan down by 2.04%, HDFC Life Insurance down by 1.40%, ONGC down by 1.19% and Ultratech Cement down by 1.15% were the top losers.

Asian markets were trading mixed; KOSPI dropped 16.55 points or 0.63% to 2,599.92, Straits Times fell 1.91 points or 0.06% to 3,323.11 and Nikkei 225 slipped 531 points or 1.62% to 32,176.69. However, Hang Seng advanced 90.34 points or 0.46% to 19,607.72, Shanghai Composite strengthened 18.13 points or 0.56% to 3,279.82 and Jakarta Composite gained 43.88 points or 0.64% to 6,898.39.