Benchmarks continue to languish in red; broader indices stage mixed trend

Benchmark equity indices continue to trade downbeat due to sustained selling by funds amid a weak trend in other Asian markets. Further, a weak opening of European markets is also likely to add to the market pressure going further in the day. European markets resumed their recent sell-off amidst persistent concerns about a reduction in US economic stimulus. Closer home, the sentiment failed to revive even on good macro-economic data. On the macro-front, India’s services sector activity expanded in May and the pace was the fastest in three months, driven by uptick in new orders. The HSBC/Markit purchasing managers’ index for the services industry today inched up to 53.6 in May, pointing to a solid expansion in output. Meanwhile, benchmark 30-share index and 50-share index, Sensex and Nifty, trading with a cut of close to half a percent, are languishing below the crucial 19,500 and 5,900 marks respectively.

While broader indices in absence of positive trigger, are trading mixed at this point of time. Much of the pressure is being exerted from stocks of FMCG, IT and TECk counters, which witnessing maximum selling pressure are top losers of the session. However, stocks from Realty, Oil & Gas and Health Care counters are limiting the downtrend of the markets. Realty stocks have shown commendable recovery from day’s low. The stocks were trading downbeat in the morning deals on stringent penalties in the Realty Bill aimed at organizing and monitoring the sector. The Union Cabinet late Tuesday cleared the Real Estate (Regulation and Development) Bill, which is aimed to protect buyers from scheming developers and usher transparency in the sector, unregulated until now. However, Cement stocks continued to witness pressure amidst concerns over slowdown in demand following the onset of monsoon rains. ACC, Ambuja Cement and Ultratech Cement all were trading lower in the range of 0.75%-1.50%.

The overall market breadth on BSE is in favour of declines, which have outnumbered advances in the ratio of 897: 1123; while 130 shares remain unchanged.

The BSE Sensex is currently trading at 19,471.75, down by 74.03 points or 0.38%, after trading in a range of 19,564.91 and 19,441.35. There were 12 stocks advancing against 18 declines on the index.

The broader indices were trading mixed; the BSE Mid cap was trading down by 0.14% and Small cap index was trading up by 0.12%.

The top gaining sectoral indices on the BSE were, Realty up by 0.52%, Oil & Gas up by 0.37% and Health Care up by 0.36%, while FMCG down by 1.07%, IT down by 0.67%, TECk down 0.61%, Consumer Durables down by 0.45% and Bankex down by 0.46% were the top losers on the BSE.

The top gainers on the Sensex were Sun Pharma up by 1.53%, Gail India up by 1.46%, Dr Reddys Lab up by 0.70%, ONGC up by 0.52% and Hindalco Industries up by 0.49%.

On the flip side, ITC down by 1.73%, HDFC down by 1.46%, Coal India down by 1.14%, Infosys down by 1.08% and ICICI Bank down by 0.97% were the top losers on the Sensex.

Meanwhile, with an aim to provide a uniform regulatory environment to the real estate sector, the government has approved the real estate bill to set up a regulator for the sector. The law will cover any developer coming up with a project of 1,000 sq metres and above. The bill has various provisions like a jail term of up to three years for developers who make offences like putting up misleading advertisements about projects repeatedly.

The bill also intends to make it mandatory for developers to launch projects only after acquiring all statutory clearances from relevant authorities. Further, relevant clearances for real estate projects would have to be submitted to the regulator and also displayed on a website before starting the construction. The bill also makes it mandatory for builders to clarify the carpet area of the flat, which would be made uniform for the entire country.

The proposed real estate bill includes tough provisions to deter builders from using pictures of housing projects in foreign countries to lure buyers while advertising a project. They will have to use pictures reflecting the actual project, which will be delivered to home buyers. The developers will have to maintain a separate bank account for a particular project, and will not be allowed to divert the money for other projects. Failure to compliance for the first time would attract a penalty which may be up to 10 per cent of the project cost and a repeat offence could land the developer in jail up to three years.

The regulator will act only if there is a complaint of any deviation from the project details disclosed by a developer. Further, the bill also prohibits developers from collecting any money from buyers before completing all necessary permits to start construction on the project.

The CNX Nifty is currently trading at 5,893.85, down by 25.60 points or 0.43% after trading in a range of 5,921.80 and 5,883.70. There were 15 stocks advancing against 34 declines, while one stock remains unchanged on the index. 

The top gainers of the Nifty were DLF up by 2.15%, Sun Pharmaceuticals up by 2.91%, GAIL up by 2.62%, Hindalco Industries up by 0.89% and BPCL up by 0.61%.

On the flip side, Ambuja Cements down by 2.27%, ACC down by 1.84%, HCL Technologies down by 1.79%, ITC down by 1.75% and Axis Bank down by 1.74% were the major losers on the index.

All the Asian equity indices were trading in red; Shanghai Composite slipped 0.25%, Hang Seng declined 1.46%, Jakarta Composite dropped 1.01%, Nikkei 225 decreased 3.83%, KLSE Composite dipped 0.15%, Straits Times contracted 1.68%, KOSPI Composite was down by 1.52% and Taiwan Weighted was down by 0.11%.

The European markets got off to a negative start as France’s CAC 40 declined 0.47%, Germany’s DAX sank 0.48% and United Kingdom’s FTSE fell 0.70%.