Markets continue to trade lower; sharp fall in RIL weighs

The losses on the Dalal Street have intensified as there is no respite looking in the fore, neither from the domestic, nor from the global markets. The European indices have made a soft start and the major indices are trading lower by about half a percent. Though flash PMI of France came in better than expected at 46.1 against 44.8 in May but was unable to give any support to the markets in the region as there is expectation that preliminary report may show European services and manufacturing contracted at the fastest pace in three years. Back home, the weakening rupee is weighing down the sentiments of the investors. On the sectoral front Capital Goods is leading the pack on the BSE, followed by power and realty, while oil & gas continue to remain the laggard down by over a percent along with the IT index. Though the international crude prices have been coming down continuously but side-by-side the rupee has been depreciating, that is hurting the Indian oil companies. The sharp decline in market heavyweight Reliance Industries has pressured the markets today, the scrip of the company are down by over 3% after its Canadian partner Niko Resources reported that total proved plus probable natural gas reserves at the company’s KG D6 block in India have slumped by almost 51% to 377 billion cubic feet equivalent (bcfe). In other development, in an effort to exit loss-making businesses, the company has decided to sell its oldest business, textiles, along with its iconic brand ‘Only Vimal’.

The BSE Sensex is currently trading at 16,833.53, down by 63.10 points or 0.37%. The index has touched a high 16,888.34 and low 16,811.42 of respectively. There were 14 stocks advancing against 16 declines on the index. The market breadth on BSE was positive in the ratio of 1190:1112 while 124 scrips remained unchanged.

The broader indices were trading on a positive note; the BSE Mid-cap index was up by 0.08%, while Small-cap index was up by 0.26%.

The top gaining sectoral indices on the BSE were CG up 1.21%, Power up 0.61%, Realty up 0.55%, FMCG up 0.40% and PSU up 0.33%. While, Oil &Gas down 1.32%, IT down 0.99%, TECk down 0.78%, Auto down 0.53% and Metal down by 0.53% were the losers on the index.

The top gainers on the Sensex were BHEL up 2.56%, Tata Power up 1.41%, ONGC up 1.23%, Hero Moto Corp up 1.10% and L&T up 0.99%. On the flip side, RIL down 3.34%, TCS down 2.48%, Hindalco Industries down 1.47%, Mahindra & Mahindra down 1.34% and Maruti Suzuki down 1.06% remained the top losers on the Sensex.

Meanwhile, in an effort to spread ATM’s network in the country, the Reserve Bank of India (RBI) has offered the non banking entities with a minimum capital of Rs 100 crore to set up and operate ATM’s on behalf of the bank. In its notification, the RBI said non-banking entities ATM’s will be known as white label ATM’s (WLAs). The services offered by these ATM’s will be same as that of regular ones and customers of all banks can use the new ATM’s.

Till now only banks were allowed to set up dispensing machines in the country, which is close to 90,000 ATMs. Non-bank entities, which are planning to set up their ATM’s need to approach the RBI for specific authorization within four months from the date of issuance of these guidelines. To be eligible for the scheme, they should have a minimum net worth of Rs 100 crore as per the latest financial year's audited balance sheet. This is mainly done to expand the reach of dispensing machines in Tier III to VI cities, though there have been a 23-25% growth in ATM’s, but their deployment have been predominately to Tier I & II cities.

As per the notification, the WLA operator is entitled to receive a fee from the banks for the use of their ATM resources by the banks customers, so they won’t be permitted to charge bank customer directly for the use of WLAs. But they will be permitted to earn extra revenue through advertisement and value added services as laid down by the regulatory framework by RBI, IRDA, SEBI, and PFRDA. WLA operator is permitted to have more than one sponsor bank and all the transactions of WLAs serviced by this sponsor bank would be settled through it.

The cash would be owned by the WLA operator, however, the responsibility of ensuring the quality and genuineness of cash loaded at such WLAs would be that of the sponsor bank and at no situation the WLA operator or his agents shall have access to the cash. Further, the RBI has also made three schemes for the implementation, in which the operator has to set up a minimum of 1,000 WLAs in the first year while in the second year it should be twice the number installed in first year and finally in the third year it should be three times the number of WLAs installed in second year.

For every 3 WLAs installed in Tier III to VI centres and one WLA can be installed in Tier I to II centres and out of the 3 WLAs installed in Tier III to VI centres, a minimum of 10% should be installed in Tier V and VI cities.

The S&P CNX Nifty is currently trading at 5,103.00, down by 17.55 points or 0.34%. The index has touched a high and low of 5,122.80 and 5,094.60 respectively. There were 20 stocks advancing against 29 declines while 1 stock remained unchanged on the index.

The top gainers of the Nifty were BHEL up 2.58%, JP Associates up 1.96%, DLF up 1.53%, ONGC up 1.50%, and Siemens up 1.39%. On the flip side, Reliance down 3.34%, ACC down 2.66%, TCS down 2.62%, Ambuja Cement down 2.05% and Cairn down 2.02% were the major losers on the index.

The Asian equity indices were trading in the red ; Jakarta Composite down  0.93%,   KOSPI Composite Index down 0.79%, Taiwan Weighted down 0.76%, Straits Times Index  down 0.66%, Hang Seng Index down  0.82%, Shanghai Composite down by 1.40 and KLSE Composite  was down  0.17% were the losers

On the flip side, Nikkei 225 up 0.82% was the only gainer

The European markets were trading in the red, France’s CAC 40 dropped 0.42%, Germany’s DAX descended 0.37% and the United Kingdom’s FTSE 100 descended 0.38%.