Benchmarks witness dead cat bounce in morning deals

Indian equity markets have witnessed a bout of volatility in early deals as benchmarks, after a negative opening, turned slightly in the green supported by buying in metal and mining counter on back of strong China’s manufacturing data. Sentiments remained down-beat after rupee fell to a yet another life-low of 65 against US dollar. Sentiments also got dampened after minutes from the Federal Reserve's July policy meeting showed it was still on track to start tapering stimulus as early as next month, sending Treasury yields to two-year highs.

Global cues too remained subdued with the US markets closing lower in the last trading session after the minutes of the Federal Open Market Committee meeting held in late July, to confirm expectations that the Fed will begin tapering its asset purchase program at its next meeting in mid-September. Asian markets too were trading mostly in the red with Malaysia’s benchmark KLSE Composite declining over one and half percent as the nation’s current account surplus plunged in the second quarter on weakening exports, overshadowing a slight acceleration in economic growth.

Back home, on the sectoral front, metal witnessed the maximum gain in trade followed by public sector undertaking and oil and gas, while realty and FMCG remained the only losers on the BSE sectoral space. The broader indices were trading slightly in the green, while the market breadth on the BSE was positive; there were 599 shares on the gaining side against 527 shares on the losing side while 59 shares remain unchanged.

The BSE Sensex opened at 17896.84; about 9 points lower compared to its previous closing of 17905.91, and has touched a high and a low of 18007.27 and 17759.59 respectively.

The index is currently trading at 17961.71, up by 55.80 points or 0.31%. There were 21 stocks advancing against 9 declines on the index.

The overall market breadth has made a strong start with 50.59% stocks advancing against 44.20% declines. The broader indices were trading mixed; the BSE Mid cap up by 0.29% and Small cap indices down by 0.04%. 

The top gaining sectoral indices on the BSE were, Metal up by 2.90%, PSU up by 0.98%, Oil & Gas up by 0.86%, Health Care up by 0.79% and Consumer Durables up by 0.60%, while Realty down by 1.66% and FMCG down by 0.86% were the top loser on the sectoral index.

The top gainers on the Sensex were Tata Steel up by 4.07%, ONGC up by 3.31%, Sterlite Inds up by 3.03%, Jindal Steel up by 2.61% and Bharti Airtel up by 2.51%. On the flip side, Mahindra & Mahindra was down by 2.21%, ITC was down by 2.13%, Hero MotoCorp was down by 1.01%, SBI was down by 0.85% and Maruti Suzuki was down by 0.72% were the top losers on the Sensex.

Meanwhile, following the debacle at the NSEL and rising concerns over its inability for paying dues, the Forward Markets Commission (FMC), presently regulated by the consumer affairs ministry, has drawn much dissension. The government may consider plans to bring the FMC under the purview of the finance ministry, which already oversees the operations of several regulators, including SEBI, IRDA and PFRDA. Bringing FMC under the purview of finance ministry will ensure better co-ordination of regulators.

Earlier this month, NSEL had shut down its operation following the government direction in the wake of violation of certain rules and has given seven-month period to investors to settle their Rs 5,600 crore. However, the exchange could settle only Rs 92.12 crore out of the scheduled of Rs 174.72 crore payment it had committed to FMC.

Concerned over payment crisis at NSEL, the Forward Markets Commission on August 20 has ordered NSE to disclose the party-wise amount deposited in the escrow account maintained with Axis Bank on a daily basis. It also ordered NSE to reconcile the amount of pay-in and pay-out to be made to various members of the exchange. FMC also came down on NSEL for incorrect data and raised doubts on the seriousness of the exchange’s management to resolve the crisis. Meanwhile, the government is also planning to conduct an audit of NSEL’s physical stocks lying in warehouses by own agencies as it fears defaults in payment by buyers.

The CNX Nifty opened at 5,282.80; about 20 points lower as compared to its previous closing of 5,302.55, and has touched a high and a low of 5,333.20 and 5,254.05 respectively.

The index is currently trading at 5,317.75, up by 15.20 points or 0.29%. There were 37 stocks advancing against 13 declines on the index.

The top gainers of the Nifty were Sesa Goaup by 4.11%, Tata Steel up by 4.03%, ONGC up by 3.69%, BPCL up by 3.15% and Tata Motors up by 2.70%. On the flip side, DLF down by 4.12%, ITC down by 2.44%, M&M down by 1.95%, Hero MotoCorp down by 1.12% and NTPC down by 0.92% were the major losers on the index.

Most of the Asian equity indices were trading in red; Hang Seng declined 147.85 points or 0.68% to 21,669.88, Jakarta Composite tumbled 107.56 points or 2.55% to 4,110.89, KLSE Composite crumbled 30.11 points or 1.73% to 1,714.74, Nikkei 225 shed 76.62 points or 0.57% to 13,347.71, Straits Times dropped 38.62 points or 1.24% to 3,070.37, Seoul Composite decreased 17.82 points or 0.95% to 1,849.64 and Taiwan Weighted was down by 38.37 points or 0.49% to 7,794.28.

On the flip side, Shanghai Composite was up by 1.82 points or 0.09% to 2,074.78.