Benchmarks trim losses; trade continues in red

Indian equity markets trim losses but continue to trade in red in the late afternoon session on account of selling in front line counters and taking cues from European counterparts. The sentiments continued to remain subdued in absence of any positive trigger and amidst prevailing caution on whether RBI will take more steps to support the currency. Traders were seen piling position in Realty, Oil & Gas and Power stocks while selling was witnessed in Auto, FMCG and Capital Goods sector stocks. In scrip specific development, Housing Development Finance Corporation (HDFC) was trading under pressure after foreign brokerage firm Morgan Stanley cut weight of the company in its Asian model portfolio. Oil and Natural Gas Corporation (ONGC) was trading in green after Barclays and Credit Suisse upgraded the state-run refiner, citing valuations and upside to earnings. SpiceJet was trading firm on news of its being in active discussions with Singapore-based budget carrier Tiger Air for a possible stake sale.

On the global front, all the Asian markets were trading in red while the European markets were too trading on pessimistic note. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 5,550 and 18,800 levels respectively. The market breadth on BSE was positive in the ratio of 1085:1009, while 145 scrips remain unchanged. 

The BSE Sensex is currently trading at 18704.88, down by 28.16 points or 0.15% after trading in a range of 18,771.77 and 18,551.35. There were 16 stocks advancing against 13 declines while 1 stock remained unchanged on the index.

The broader indices were trading in green; the BSE Mid cap and Small cap indices were trading up by 0.52% and 0.83% respectively.

The top gaining sectoral indices on the BSE were, Realty up by 5.15%, Oil & Gas up by 2.54%, Power up by 2.35%, Metal up by 2.10% and PSU up by 2.03%. While, Auto down by 1.16%, FMCG down by 1.06%, Capital Goods down by 0.69%, Health Care down by 0.61% and IT down by 0.55% were the top losers indices on the BSE.

The top gainers on the Sensex were Tata Power up by 3.85%, Sterlite Industries up by 3.71%, SBI up by 3.37%, RIL up by 3.36%, Tata Steel up by 2.74%. On the flip side, HDFC down by 3.19%, Sun Pharma down by 2.90%, Bajaj Auto down by 2.23%, Tata Motors down by 2.07% and ITC down by 1.91% were the top losers on the Sensex.

Meanwhile, in order to boost capital inflows into the country and to help prop up the rupee value, the government is all set to relax norms for external commercial borrowings (ECB) to enable debt- starved Indian firms tap overseas markets. A high-level committee on ECBs is likely to take a host of decisions soon, including allowing Indian arms of multinational companies to raise funds from parents for working capital. The move, apart from helping domestic companies to raise overseas debt would also help the government tide over forex problems.

The panel is expected to allow companies to raise up to $300 million by way of external debt with tenure less than three years compared with the current limit of $20 million. The quantum of ECB under automatic route is set to be doubled to $1.5 billion from $750 million now for debt with maturity up to five years. Further, it may also allow state-run banks to raise tier-1 capital (equity plus free reserves) from overseas markets under the ECB window. Moreover, ECB panel is likely to allow repayment of rupee loans from ECB proceeds, a move that was restricted to certain sectors. At present, funds raised through ECB can be used to refinance rupee loans for infrastructure sector up to the extent of 25% of fresh ECBs and in case of the power sector, refinancing is permitted to the extent of 40%. 

Earlier, Indian companies, both in the private and public sector, have approached the finance ministry seeking relaxation in the ECB norms to make them easier to borrow from overseas markets. The ECB borrowing is considered safe and is a better source of funding for the current account deficit (CAD) gap as it is long-term finance. Currently, widening CAD has become a major reason for the domestic currency weakness. Rupee value depreciated over 13 percent since April-end and has touched a new record low of 61.80 to a dollar on August 6.

The CNX Nifty is currently trading at 5,524.70, down by 17.55 points or 0.32% after trading in a range of 5,553.90 and 5,486.85. There were 26 stocks advancing against 24 declines on the index.

The top gainers of the Nifty were DLF up by 7.24%, BPCL up by 6.02, JP Associate up by 5.89%, Reliance Infrastructure up by 4.36% and Tata Power up by 3.78%. On the flip side, Lupin down by 6.26%, Asian Paints down by 4.20%, HDFC down by 3.25%, Sun Pharma down by 3.07% and Grasim Industries down by 2.53% were the major losers on the index.

The Asian equity indices were trading in red; Shanghai Composite down by 0.67%, Nikkei 225 was plunged 4%, Hang Seng down by 1.53%, Taiwan Weighted down by 1.46%, KLSE Composite down by 0.30%, Seoul Composite down by 1.48% and Straits Times was down by 0.05%. Indonesia's Jakarta Composite is closed for a week till August 9 on account of Public Holiday 'Id-ul-Fitr'.

The European markets were trading in red; France’s CAC 40 was down 0.35%, Germany’s DAX lost 0.56% and the United Kingdom’s FTSE 100 slipped 0.36%.