After opening the day on a flat note, the Indian share markets have continued to be in the red. Sectoral indices are trading on a mixed note with stocks in the Banking sector and Metal sector witnessing maximum selling pressure. IT stocks are trading in the green.

The BSE Sensex is trading down 88 points (down 0.3%) and the NSE Nifty is trading down 26 points (down 0.3%). Meanwhile, the BSE Mid Cap index is trading down by 1%, while the BSE Small Cap index is trading down 0.6%. The rupee is trading at 67.90 to the US$.

The Employees’ Provident Fund Organisation (EPFO) has lowered the interest rates on provident fund deposits to 8.65% for 2016-17, a 15 bps cut from 8.8% it paid last year.

The Central Board of Trustees (CBT) of the EPFO, in its meeting said the decision was taken in light of low surplus and the finance ministry’s aim of lowering interest rates on other saving schemes.

EPFO’s financial audit and investment committee (FIAC) had recommended a similar cut in interest rate as the body’s surplus was not enough to pay an interest rate of 8.8 per cent as demanded by the trade unions.

In 2015-16, EPFO’s income included a surplus from the previous year of Rs 16 billion. However, according to EPFO income projections, retaining 8.8% rate of interest for the current fiscal year would have left it with a deficit of Rs 3.8 billion. However, at the rate currently announced, there would be a surplus of about Rs 693 million.

FIAC preliminary estimates show that EPFO’s total income from its corpus will stand at around Rs 390 billion for 2016-17. However, trade union members argued that FIAC has not taken into consideration the interest it will earn from the investment in equities. In September, EPFO hiked its exposure to equities to 10% of total corpus from the previous 5%.

Last year the retirement fund body invested over Rs 70 billion in equities and earned a 13% return on it. However, the appreciation in equity investments is not included as income since it will only accrue once the stock is sold.