Benchmarks consolidate ahead of F&O expiry; end flat with negative bias

After witnessing gains of over a percent in previous session, Indian equity indices went through consolidation on Wednesday as investors remained on sidelines on the penultimate day of F&O expiry. Benchmark indices moved in a narrow range throughout the session with bouts of volatility witnessed during the trade. Investors remained cautious after United Nations Conference on Trade and Development (UNCTAD) in its latest World Investment Report said that India’s macroeconomic uncertainties remain a major concern for investors even as the country saw a 17% increase in foreign direct investment (FDI) to $28 billion in 2013.

However, losses remained capped as some support came as the government proposed relaxing certain provisions for private companies in the new Companies Act. Meanwhile, finance secretary Arvind Mayaram, in an effort to boost the morale of investors has said that government's maiden budget will be ‘growth-oriented’ with some ‘major changes’ in policies to lift the economy to a higher growth orbit from the less than 5% expansion seen in the last two years.

Global cues too remained subdued with European counters viz. CAC, DAX and FTSE were trading lower in early deals as data showed German business sentiment fell more than expected. The Asian markets ended in the red, taking cues from the US markets and as the demand for riskier assets dimmed on escalating violence in the Middle East.

Back home, selling in Oil & Gas space too dampened the sentiments on account of escalating tensions in Iraq, which threatened to push up Brent crude price. Stocks from the sector edged lower ahead of outcome of oil minister Dharmendra’s meeting with cabinet amid speculation that country could raise gas prices from July 1, 2014. Scrips related to Railway sector too declined on profit-booking after reports suggested of government partially rolling back steep railway fare hike announced last week after protests from allies, highlighting the political realities facing the new prime minister in his push to cut the country's massive subsidy bill.

On the flip side, auto stocks firmed up in late trades on reports that the lower excise duty on auto and capital goods has been extended till December. Additionally, shares of finance companies, which provide loans against gold rallied after the Reserve Bank of India (RBI) allowed banks to engage non-deposit-taking non-banking finance companies as banking correspondents for financial inclusion.

NSE’s 50-share broadly followed index, Nifty declined by ten points but managed to hold the psychological 7,550 support level, while Bombay Stock Exchange’s Sensitive Index – Sensex slipped by over fifty points to end below its psychological 25,350 mark. Broader markets, however, outperformed benchmarks and ended the session with a gain of around half a percent. The market breadth remained in favour of advances, as there were 1,681 shares on the gaining side against 1,350 shares on the losing side while 111 shares remain unchanged.

Finally, the BSE Sensex declined by 55.16 points or 0.22%, to 25313.74, while the CNX Nifty lost 10.95 points or 0.14%, to 7,569.25.

The BSE Sensex touched a high and a low of 25427.80 and 25274.39, respectively. The BSE Mid cap index was up by 0.52%, while Small cap index gained 0.35%.

The top gainers on the Sensex were Bajaj Auto up by 2.63%, Maruti Suzuki up by 2.56%, Gail India up by 1.69%, Coal India up by 1.56% and SBI up by 1.21%. On the flip side, the key losers were ONGC down by 1.42%, ITC down by 1.36%, Bharti Airtel down by 1.35%, ICICI Bank down by 1.30% and L&T down by 1.19%.

On the BSE Sectoral front, Realty up by 0.87%, Consumer Durables up by 0.87%, Healthcare up by 0.84%, Auto up by 0.76% and Power down by 0.38% were the top gainers in the space, while Oil & Gas down by 0.79%, Capital Goods down by 0.70%, Bankex down by 0.43%, FMCG down by 0.37% and Metal down by 0.09% were the top losers in the space.

Meanwhile, in order to boost sagging sentiments in steel and mining sectors, the government would set up a single-window mechanism to fast-track clearances for various projects to boost steel, coal and power production in the country. The decision was taken in an inter-ministerial coordination meeting attended by Coal and Power Minister Piyush Goyal, Coal and Power Minister Piyush Goyal and environment minister Prakash Javadekar.

Coal and Power Minister Piyush Goyal has stated that environment ministry would come out with a draft on coal mines located in areas designated as ‘inviolate’ by August this year. At present, 44 coal projects, both opencast and underground, and at least six steel projects are awaiting environmental and forest clearances.

By adding further, Piyush Goyal stated that some coal blocks can be auctioned specifically for the steel companies, while steel PSUs can continue to enjoy allocations through the government dispensation route. It is estimated that over Rs 4.4 lakh crore of investments are in the pipeline in the steel sector in Jharkhand, Orissa and Chhattisgarh and single-window mechanism is likely to translate these investments on the ground. The ministries also highlighted that, like special economic zones (SEZs), certain big mineral bearing areas can be demarcated as special mining zones exclusively for meeting the demands of the iron-ore starved plants.

The CNX Nifty touched a high and low of 7,589.25 and 7,557.05 respectively.

The major gainers of the Nifty were Bajaj Auto up by 2.78%, Maruti Suzuki India up by 2.05%, Lupin up by 1.76%, Hindustan Unilever up by 1.63% and Hero MotoCorp up by 1.63%. On the flip side, the key losers were ITC down by 1.53%, IDFC down by 1.50%, ICICI Bank down by 1.47%, ONGC down by 1.41% and DLF down by 1.41%.

The European markets were trading in red France's CAC 40 was down by 0.70%, Germany's DAX was down by 0.43% and United Kingdom's FTSE 100 was down by 0.66%.

The Asian markets concluded Wednesday’s trade in red, as escalating violence in the Middle East sapped demand for riskier assets. Japan’s Prime Minister Shinzo Abe stated that the deflation that wiped out much of Japan’s growth the past 15 years and so stunted the economy that it slipped to number three behind China, has ended and will be thwarted by new government policies designed to encourage business expansion. The government plans corporate-tax cuts, trade liberalization, reduced barriers for agricultural land consolidation, special zones of lighter regulation and the study of casinos as a way of spurring record numbers of tourists. The steps are part of Abe’s strategy to restore Japan’s influence in a region where China is the dominant power. Japan’s corporate services price index (CSPI) rose to a seasonally adjusted annual rate of 3.6%, from 3.4% in the preceding month. South Korean Consumer Confidence rose to 107, from 105 in the preceding month.