Benchmarks extend previous session’s downfall in early deals

Pressurized by soft global cues, Indian equity benchmarks have extended their southward journey and are trading in the red terrain with a cut of over half a percent in Wednesday’s morning deals. Global sentiment was hit as Fed Bank of Chicago President Charles Evans had said yesterday that the improvement in the labour market could lead to winding down of the $85-billion a month bond purchase programme. Overnight, the US markets ended lower on renewed concern about the outlook for the Federal Reserve’s stimulus program after the trade deficit narrowed by much more than expected in the month of June. Moreover, Asian markets too were trading mostly lower with Japanese Nikkei tumbling near three percent to a one-week low as exporters were hammered after the dollar fell to a six-week low against the yen

Back home, sentiments got clobbered out of shape as Indian rupee today depreciated by 50 paise to 61.27 against the US dollar in early trade on the Interbank Foreign Exchange due to heavy demand for the US currency from importers amid a lower opening in the equity market. Bucking the trend, buying was witnessed in software and technology counters after the global IT major Cognizant, beating street expectations and surpassing its own guidance reported a profit of $300 million for the June quarter, up 5.7% sequentially and 19.2% compared to the year-ago quarter. The revenues stood at $2.16 billion, up 7% quarter-on-quarter and 20.4% compared to the same quarter a year ago.

On the sectoral front, realty witnessed the maximum gain in trade followed by public sector undertaking and oil and gas, while fast moving consumer goods, auto and capital goods remained the top losers on the BSE sectoral space. The broader indices too were struggling to get some traction, while the market breadth on the BSE was positive; there were 532 shares on the gaining side against 637 shares on the losing side while 58 shares remain unchanged.

The BSE Sensex opened at 18758.53; about 25 points higher compared to its previous closing of 18733.04, and has touched a high and a low of 18771.77 and 18578.95 respectively. The index is currently trading at 18648.08, down by 84.96 points or 0.45%. There were 12 stocks advancing against 18 declines on the index.

The overall market breadth has made a strong start with 48.70% stocks advancing against 47.28% declines. The broader indices were trading mixed; the BSE Mid cap index down by 0.13% and Small cap index was up by 0.05%. 

The few gaining sectoral indices on the BSE were, Realty up by 1.63%, PSU up by 0.87%, Oil & Gas up by 0.64%, Bankex up by 0.50% and Power up by 0.50%, while FMCG down by 1.89%, Auto down by 1.44%, Capital Goods down by 0.83%, Metal down by 0.79% and Health Care down by 0.31% were the top losers on the sectoral index.

The top gainers on the Sensex were BHEL up by 2.39%, Wipro up by 1.92%, SBI up by 1.85%, ONGC up by 1.64% and HDFC Bank up by 1.03%. On the flip side, Tata Motors was down by 2.71%, ITC was down by 2.57%, L&T was down by 1.92%,  Hindalco Industries was down by 1.64% and Jindal Steel was down by 1.31% were the top losers on the Sensex.

Meanwhile, ruling out relaxation in new bank licences norms, the Reserve Bank of India (RBI) deputy governor Anand Sinha said that the central bank has started the scrutiny of applications; while, the process will take some time because we are deeply examine the corporate groups. The central bank has received 26 applications from various large corporates including Tata Group, Reliance Capital and L&T Finance among others. 

By adding further, Anand Sinha said that banking licence applicants have been given a transition period and we expect all applicants to comply with RBI’s requirements. The RBI will set up an external scrutiny panel after the internal scrutiny is over, he added.

Earlier in February, the RBI issued final guidelines that would govern the new set of proposed banks. As per the RBI guidelines, new banks should have a minimum equity capital of around Rs 5 billion and will not have foreign ownership of more than 49% for the first five years of operation. The rules also require that one out of every four branches opened by the new banks should be located in the rural areas.

The CNX Nifty opened at 5,549.30; about 7 points higher as compared to its previous closing of 5,542.25, and has touched a high and a low of 5,553.90 and 5,492.60 respectively.

The index is currently trading at 5,508.15, down by 34.10 points or 0.62 %. There were 23 stocks advancing against 27 declines on the index.

The top gainers of the Nifty were DLF up by 4.34%, BPCL up by 3.04%, PNB up by 2.45%, BHEL up by 2.44% and ONGC up by 2.04%. On the flip side, Asian Paints down by 4.54%, Tata Motors down by 3.39%, Grasim down by 3.25%, ITC down by 2.85% and Axis Bank down by 2.65% were the major losers on the index.

Most of the Asian equity indices were trading in red; Hang Seng dipped 62.40 points or 0.28% to 21,861.30, KLSE Composite decreased 5.19 points or 0.29% to 1,779.45, Nikkei 225 tumbled 426.68 points or 2.96% to 13,974.38, Seoul Composite declined 19.19 points or 1.01% to 1,887.43 and Taiwan Weighted was down by 87.84 points or 1.09% to 7,951.07.

On the flip side, Shanghai Composite surged 7.06 points or 0.34% to 2,067.56 and Straits Times was up by 9.71 or 0.30% to 3,234.60.

Indonesia’s Jakarta Composite is closed for a week till August 9 on account of Public Holiday ‘Id-ul-Fitr’.