Benchmarks pare losses; trade marginally in green

The benchmarks pared early morning losses and pulled back in the green in late morning session despite of their languishing global peers that were trading weakly in the red. On the global front, Most of Asian equity indices were trading in red with the regional benchmark index poised for the biggest weekly drop in a year, as the yen’s rise against dollar weighed on Japanese shares and investors awaited a key US employment report. Back home, the traders were seen piling up positions in Realty, IT and Health Care while selling was seen in FMCG, Bankex and Auto sector. 

In scrip development, banking stocks also remained lower after the Finance Minister asked banks to lower interest rates in an effort to drive growth and pass on rate-cut benefits to retail and corporate borrowers. Additionally, telecom stocks like, Reliance Communication, Bharti Airtel and Idea Cellular edged lower on reports that there will be another round of spectrum auction in August.

In scrip specific actions, Wipro traded higher as the IT major is exploring the opportunity to set up a data centre in the ASEAN region, joining the array of Indian firms increasing data centre presence and capacity. Tata Power rose after the company won an estimated $1.8 billion (around Rs. 10,240 crore) contract to develop two 660 megawatts (MW) coal-fired thermal power plants in south Vietnam against competition from South Korean and Russian companies. Fortis Healthcare surged after the company said it has raised Rs 186.62 crore by allotting 1.8 crore shares to International Finance Corporation on a preferential basis. RPG Life Sciences surged  after the RPG Group firm that manufactures and markets pharmaceutical products sold the leasehold rights of a piece of land in Navi Mumbai to Maruti Suzuki India  for Rs 76.91 crore. Maruti Suzuki dropped after the country's biggest carmaker by sales said it would shut production for a day at both of its plants on Friday to adjust inventory levels in response to falling sales. Coal India   slipped as the Prime Minister's Office may approve the proposed 10% stake sale in Coal India with the finance ministry having responded to all concerns raised by the workers of the state-run coal monopoly.

Meanwhile, the NSE Nifty and BSE Sensex were trading just above their psychological 5,800 and 19,000 levels respectively. The market breadth on BSE was showing positive trend with advances to declines in ratio of 895:649. The BSE Sensex is currently trading at 19515.43, down by 4.06 points or 0.02% after trading in a range of 19522.31 and 19424.97. There were 15 stocks advancing against 15 declines on the index. The broader indices were trading in green; the BSE Mid cap index was up by 0.53% and Small cap index was up by 0.57%.

The top gaining sectoral indices on the BSE were, Realty up by 0.90%, IT up by 0.62%, Health Care up by 0.40%, TECK up by 0.31% and Oil & Gas up by 0.28% while, FMCG down by 0.25%, Bankex down by 0.22%, Auto down by 0.10% and  Metal down by 0.04% were the top losers on the BSE.

The top gainers on the Sensex were Dr Reddys Lab up by 1.82%, Hero MotoCorp up by 1.17%, TCS up by 0.62%, Tata Power up by 0.85% and Wipro up by 0.58%. On the flip side, Maruti Suzuki was down by 2.15%, Cipla was down by 0.89% , NTPC was down by 0.89%, ICICI Bank was down by 0.58% and  ITC was down by 0.57% were the top losers on the Sensex.

Meanwhile, Clarifying rules for entry to the Indian retail sector, the Department of Industrial Policy and Promotion (DIPP) has said that global retailers planning to enter India in the multi-brand retail sector will have to make fresh investments in back-end infrastructure and acquisition of supply chain or back-end assets from existing entities would not be allowed.

Earlier, global retailers have sought clarifications from the DIPP on various issues, ranging from sourcing to investment in back-end infrastructure. As per the DIPP, the entity has to completely separate the back-end facilities and the front-end retail and will not be permitted to undertake any wholesale activity. Further, the front-end stores set up by the multi-brand retail trading unit will thus have to be company owned and company operated. While back end investment in non-FDI approved states will be counted, it added.

Referring to the back-end investment in multiple infrastructure companies, DIPP said that the back-end entity may be 100% owned by the foreign entity as long as the condition of 50% of the total FDI brought has been utilized in the back-end as an additionality. Addressing concerns over the 30% sourcing clause, DIPP clarified that the sourcing clause from ‘small industries' would apply only to manufactured and processed products, keeping procurement of fresh produce out of the ambit.

Foreign supermarkets mandated to source a minimum of 30% of inputs from 'small industries' with a maximum investment in plant and machinery at $1 million and sourcing would be considered only with reference to the front-end store and no other form of distribution would be permitted.

Meanwhile, DIPP said that it is still considering issues related to sourcing restriction amongst group companies, requirement of 50% investment in back-end infrastructure within three years of the first tranche of FDI and whether sourcing from such 'small industry' can be allowed towards fulfilling this condition, if it outgrows, and if so, until what period.  

The CNX Nifty is currently trading at 5,912.85 down by 8.55 points or 0.14% after trading in a range of 5,914.30 and 5,886.60. There were 21 stocks advancing against 29 declines on the index.

The top gainers of the Nifty were Lupin up by 1.65%, Dr Reddy's Laboratories up by 1.52%, TCS up by 1.31%, Reliance Infrastructure up by 1.28% and BPCL up by 1.25%.  On the flip side, Maruti Suzuki down by 2.02%, UltraTech Cement down by 1.55%, JP Associaties down by 1.42%, Ambuja Cements down by 1.17% and ACC down by 0.94%, were the major losers on the index.

Most of the Asian equity indices were trading in red; Shanghai Composite declined 17.37 points or 0.77% to 2,224.74, Hang Seng tumbled 269.47 points or 1.23% to 21,568.96, Jakarta Composite crumbled 95.60 points or 1.91% to 4,905.62, Nikkei 225 dropped 77.01 points or 0.60% to 12,827.01, Straits Times dipped 6.79 points or 0.21% to 3,186.72, KOSPI Composite contracted 24.43 points or 1.25% to 1,934.76.

On the flip side, KLSE Composite was up by 3.24 points or 0.18% to 1,772.84 and Taiwan Weighted was up by 6.11 points or 0.08% to 8,102.25.