Market trades in range; PSU OMCs advance

Key indices continued hovering in a narrow range near flat line in early afternoon trade. The Nifty held above the crucial 11,900 mark. At 12:23 IST, the barometer index, the S&P BSE Sensex, was up 19.11 points or 0.05% at 39,835.59. The Nifty 50 index was up 2.75 points or 0.02% at 11,913.05.

Gains were capped as negative Asian shares spoiled trading sentiment. Investors are keenly awaiting the Union Budget, which will be presented by Finance Minister Nirmala Sitharaman on Friday, 5 July 2019. The government is likely to amend several policies and schemes for delivering growth to the biggest drivers of the economy, including farmers, middle class, and the corporate sector.

The S&P BSE Mid-Cap index was up 0.07%. The S&P BSE Small-Cap index was up 0.24%. Both these indices outperformed the Sensex.

The market breadth, indicating the overall health of the market, was positive. On the BSE, 1143 shares rose and 973 shares fell. A total of 125 shares were unchanged.

MTNL was up 6.69% to Rs 9.09 after media reports stated that the government is considering an Rs 74,000-crore bailout plan to rescue ailing state-owned telecom companies BSNL and MTNL.

Metal stocks were mixed. NMDC (up 3.64%), Hindalco Industries (up 0.68%), National Aluminium Company (up 0.6%), Jindal Steel & Power (up 0.57%) and Hindustan Copper (up 0.13%) gained. Vedanta (down 2.06%), Hindustan Zinc (down 1.3%), Steel Authority of India (down 0.58%) and Tata Steel (down 0.15%) declined.

Shares of most public sector oil marketing companies (PSU OMCs) gained as Brent crude oil price declined. Hindustan Petroleum Corporation (up 0.89%), Indian Oil Corporation (up 0.78%) and Bharat Petroleum Corporation (up 0.85%) edged higher.

In the commodities market, Brent crude for September 2019 settlement was up 41 cents at $62.81 a barrel. The contract tumbled $2.66 per barrel or 4.26% to settle at $62.40 a barrel in the previous trading session.

The NSE's India VIX, a gauge of market's expectation of volatility over the near term, fell 0.11% at 14.1400.

On the options front, Nifty option chain for 25 July 2019 expiry showed a maximum call open interest (OI) of 16.24 lakh contracts at the 12,000 strike price. Maximum put OI of 17.10 lakh contracts was seen at 11,500 strike price. Options data suggested a trading range for Nifty will be between 11,500 and 12,000.

On the macro front, economic conditions in the service sector weakened, as broadly stagnant sales caused the first drop in business activity in over a year. The IHS Markit India Services Business Activity Index was at 49.6 in June, down from 50.2 in May. The index contracted for the first time since May 2018. A reading above 50 indicating an overall increase compared to the previous month, and below 50 an overall decrease. According to the survey, weak sales, competitive pressures and unfavourable taxation all hampered output

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