Benchmarks continue to trade in red; Nifty below 7400 mark

After making a flat but negative start, benchmark equity indices try to cover their losses in early trades but failed and were trading lower with the Sensex losing over 90 points and Nifty falling below the 7400 level, weighed down by Auto, Banks and Oil & Gas stocks. However, healthy buying was observed in metal, capital goods and consumer durables stocks. Blue-chips fall as profit-taking continues for a second day after indexes hit a record closing high on Tuesday.  Besides, a weakening trend on Asian bourses also influenced the sentiment.

Banks stocks, which have been attracting good buying interest over the past few weeks on hopes of improving NPA scenario, also saw profit-taking in early trades. On the other hand, Stocks of insurance companies such as Reliance Capital and Bajaj Finserv continued to rise on increased buying activity mostly on reports that government is contemplating raising FDI cap in the sector. Moreover, Fertilizer companies were trading higher on hopes that the new government will soon clear its FY14 outstanding subsidy payments for the sector. In scrip specific development, Reliance Industries was tumbled on reports the government may not implement the delayed increase in price of natural gas with retrospective effect from April 1, while Titan Company was gained after the firm indicated that its proposed retail joint venture with Netherlands-based writing instruments manufacturer Montblanc Services BV will take off by early next year.

On the global front, Asian stocks edged lower as investors await a European Central Bank policy decision later in the day. Overnight, U.S. stocks edged up on Wednesday with the S&P 500 ending at a new record high as traders brushed off weaker-than-expected labor market data and focused on acceleration in services-sector growth. Back home, the market breadth on BSE was positive, out of 2382 stocks traded, 1545 stocks advanced, while 746 stocks declined on the BSE.

The BSE Sensex is currently trading at 24713.50 down by 92.33 points or 0.09% after trading in a range of 24831.79 and 24644.88. There were 13 stocks advancing against 17 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.83%, while Small cap index up by 0.68%.

The gaining sectoral indices on the BSE were Metal up by 2.08%, Power up by 1.08%, India Infrastructure Index up by 0.86%, Consumer Durables up by 0.81% and PSU up by 0.48%. While, Auto down by 0.66%, Bankex down by 0.63%, Oil & Gas down by 0.24%, FMCG down by 0.13%  and IT down by 0.13% were the losing indices on BSE.   

The top gainers on the Sensex were SSLT up by 4.76%, Hindalco up by 4.02%, Hindustan Unilever up by 1.76%, Tata Steel up by 1.75% and Gail India up by 1.29%. On the flip side, Mahindra & Mahindra down by 1.81%, ICICI Bank down by 1.63%, HDFC Bank down by 1.47%, ONGC down by 1.08% and Hero MotoCorp down by 1.06%.

Meanwhile, in order to make Indian retail market more competitive, the government is likely to ease FDI norms in e-commerce in July to allow foreign online retailers such as Amazon.com Inc to sell their own products in Indian retail market. 

The government is of the view that a more robust online retail sector would spur manufacturing and consumption, helping revive an Indian economy which has been growing a sub 5 percent over the past two fiscal years. The move will allow global onlilne retailers to partner with local manufacturers to source products not carried by other sellers on the marketplace, giving Indian consumers unique and wider choices at lower prices. Further, this initiative is likely to help small traders to grow their business, expand and reach out to a larger market.

Present market size of Indian retail sector stands at around $500 billion. E-commerce is expected to contribute around up to 4 percent to India’s economy by 2020 from under 1 percent now. On the other hand, retailers body CAIT is opposing the decision, saying that the government should not allow FDI in e-commerce retail as it would grant back-door entry to foreign players in the multi-brand retail. Further CAIT stated that permitting FDI in e-commerce retailing would be detrimental to the interests of more than six crore small shop-owners across the country. Currently, India's FDI policy restricts e-commerce companies from offering services directly to retail consumers. Though, India has allowed 100 percent FDI in business-to-business (B2B) e-commerce in the country, foreign investment is not allowed in retail trading. Global players like Amazon and eBay operate in India through the marketplace model but do not have their own warehouses or retail operations.

The CNX Nifty is currently trading at 7,382.05 down by 20.20 points or 0.27% after trading in a range of 7,414.95 and 7,360.50360. There were 26 stocks advancing against 24 declining on the index.

The top gainers of the Nifty were SSLT up by 4.69%, Hindalco up by 4.01%, Power Grid up by 2.49%, BPCL up by 2.48% and Jindal Steel up by 2.26%. On the flip side, M&M down by 2.01%, ICICI Bank down by 1.73%, HDFC Bank down by 1.56%, Hero MotoCorp down by 1.08% and ONGC down by 1.07% were the major losers on the index.

Most of the Asian equity indices were trading in red; Hang Seng dropped by 0.23%, Jakarta Composite declined 0.35%, Nikkei 225 tumbled by 0.15%, Straits Times declined 0.17% and Seoul Composite dipped 0.85%. On the flip side, Shanghai Composite up by 0.02%, Taiwan Weighted up by 0.08% and KLSE Composite was up by 0.12%.