Markets slip into negative territory; Nifty down by 11 points

Following a firm opening, Indian equity markets slipped into negative territory as select blue chips retreated on facing some resistance at higher levels. Investors decided to stay away from making any strong positions  on lack of positive cues from global and domestic front, ahead of month’s derivatives contracts expiring this Thursday and some crucial economic data due later this week. The Sensex was down by 15.88 points, while the Nifty down by 11 points. Meanwhile, local markets capped some losses with the Reserve Bank of India’s curbs against gold purchases to rein in a record current account deficit. In currency market, rupee depreciated against greenback amid increasing month end dollar demand from oil refiners looking to meet month-end import commitments. On the sectoral front, PSU, oil, power and metal stocks were finding some support, while automobile, bank, information technology and capital goods stocks were mostly lower.

On the global front, most Asian equities inched up in early trade while Japanese stocks overcoming their shakiness, after the previous day's volatile trade that forced the Nikkei to shed over 3%. Back home, the market breadth was favoring negative trend; there were 944 shares on the gaining side against 981 shares on the losing side, while 126 shares remain unchanged.

The BSE Sensex is currently trading at 20,014.89, down by 15.88 points or 0.08% after trading in a range of 20,139.28 and 19,963.23. There were 14 stocks advancing against 16 declines on the index.

The broader indices too pared off some gains; the BSE Mid cap and Small cap index were trading up by 0.34% and 0.34% respectively.

The top gaining sectoral indices on the BSE were, PSU up by 0.99%, Realty up by 0.75%, Oil & Gas up by 0.63%, Power up by 0.57% and Metal up by 0.27%, while Auto down 0.50%, Capital Goods down by 0.42%, Bankex down 0.39%, Health Care down 0.29% and IT down by 0.09% were the top losers on the sectoral index.

The top gainers on the Sensex were Coal India up by 3.32%, Bharti Airtel up by 1.99%, Gail India up by 1.93%, ONGC up by 1.41% and Hero MotoCorp up by 1.21%. On the flip side, Sun Pharma down by 1.85%, Sterlite Industries down by 1.72%, Mahindra & Mahindra down by 1.33%, HDFC was down by 1.23% and SBI down by 1.16% were the top losers on the Sensex.

Meanwhile, in a move to curb gold demand, the Reserve Bank of India (RBI) has imposed restrictions on banks and NBFCs for providing loans against gold coins as well as units of gold Exchange Traded Funds (ETFs) and Mutual Funds (MFs). The central bank in its notification said, ‘while granting advance against the security of specially minted gold coins sold by them, banks should ensure that the weight of the coin does not exceed 50 grams per customer’. 

The RBI has also asked the banks to ensure that the amount of loan to any customer against gold ornaments, gold jewellery and gold coins (weighing up to 50 grams) should be within the board approved limit. The central bank further said that banks cannot give advances against gold ETFs and units of gold MFs. As specially minted gold coins sold by banks may not be in the nature of bullion or primary gold, there would be no objection to the bank granting loans against these coins, it added.

Currently, banks are permitted to grant advances against jewellery, gold ornaments and against specially minted gold coins sold by banks. However, no advances can be granted by banks and NBFCs for purchase of gold in any form, including primary gold, gold bullion, gold jewellery, gold coins, units of gold exchange traded funds and units of gold mutual funds.

To curb the inbound shipments of gold, the government has also taken several steps recently, including raising import duty. The central bank too had put restrictions on banks on gold imports, which has led to forex outflow and widening of the Current Account Deficit (CAD). In April, gold import jumped by 138 percent to $7.5 billion the highest so far this year, pushing up the CAD to $17.7 billion. 

The CNX Nifty is currently trading at 6,072.15, down by 11.00 points or 0.18% after trading in a range of 6,111.35 and 6,055.40. There were 18 stocks advancing against 32 declines on the index.

The top gainers of the Nifty were Coal India up by 3.25%, JP Associate up by 2.83%, GAIL up by 2.40%, Bharti Airtel up by 1.88% and Hero MotoCorp up by 1.66%. On the flip side, UltraTech Cement down by 2.01%, Sun Pharma down by 1.99%, Kotak Mahindra Bank down by 1.82%, Sesa Goa down by 1.71% and Grasim down by 1.53% were the major losers on the index.

Most of the Asian equity indices were trading in green; Shanghai Composite rose 0.82%, Hang Seng increased 0.28%, Jakarta Composite surged 1.21%, KLSE Composite added 0.48%, Nikkei 225 soared 1.20%, Straits Times jumped 0.26% and KOSPI Composite was up by 0.32%.

On the flip side, Taiwan Weighted was down by 0.21%.