Benchmarks turn red after a positive start

After making a positive start, Indian equity benchmarks have erased their momentary gains and entered into red terrain in early deals as investors turn cautious and book profits at higher levels ahead of Railway Budget. However, losses remained capped as some support came from report that foreign portfolio investors (FPIs) bought shares worth a net Rs 198.57 crore on July 7, 2014, as per provisional data from the stock exchanges. The US markets coming out of a long weekend, gave up some ground in last session and ended lower mainly on profit booking with worries about the outlook for interest rates also weighing on the sentiments. The Asian markets too were trading mostly in the red at this point of time as the yen extended gains.

Back home, on the sectoral front, healthcare and fast moving consumer goods witnessed the maximum gain in trade, while power, metal and realty remained the top losers on the BSE sectoral space. The broader indices too were reeling under pressure, while the market breadth on the BSE was negative; there were 778 shares on the gaining side against 1,186 shares on the losing side while 50 shares remain unchanged.

The BSE Sensex opened at 26166.92; around 66 point higher compared to its previous closing of 26100.08, and has touched a high and a low of 26190.44 and 26008.15 respectively. The index is currently trading at 26014.17, down by 85.91 points or 0.33%. There were 5 stocks advancing against 25 declines on the index.

The overall market breadth has made a weak start with 38.63% stocks advancing against 58.89% declines. The broader indices too were trading in the red; the BSE Mid cap and Small cap indices up by 0.50% and 0.69% respectively. 

The only gaining sectoral indices on the BSE were, Healthcare up by 0.68% and FMCG up by 0.12%, while Power down by 1.11%, Metal down by 1.09%, Realty down by 1.05%, Auto down by 0.83% and Infrastructure was down by 0.80% were the top losers on the sectoral index.

The top gainers on the Sensex were Sun Pharma up by 2.01%, Cipla up by 1.29%, HDFC up by 0.93%, GAIL up by 0.73% and HUL up by 0.61%. On the flip side, SSLT was down by 1.82%, Coal India was down by 1.21%, M&M was down by 1.10%, Wipro was down by 1.08% and NTPC was down by 0.99% were the top losers on the Sensex.

Meanwhile, Home Ministry has raised objections in allowing Foreign Direct Investment (FDI) in highly- sensitive areas of the Railways sector, citing that such a move may compromise security of the country's largest transportation network. The red flag was raised by the home ministry after Commerce and Industry Ministry circulated a draft cabinet note for inter-ministerial consultations proposing 100% FDI in areas such as high-speed train systems and dedicated freight lines.

The proposal of allowing 100% FDI in Railways sector was originally mooted by Department of Industrial Policy and Promotion (DIPP) under the Commerce and Industry Ministry, which believed that such a move would definitely help the cash starved railways sector to grow.

According to Commerce Ministry, Railways sector is an imperative sector for driving India’s economic growth and has potential of lifting the GDP by over a percent. But, as per Home Ministry, FDI should not be allowed in highly sensitive parts of the railways as managing passengers and freight traffic and operations of trains is considered to be the most sensitive parts of the Indian Railways and by allowing FDI the country will be comprising on the security of its largest transportation network.

NDA’s maiden Rail Budget to be presented on July 8 will aim at a complete revamp and to improve the health of the cash-strapped Indian Railways, the largest mode of mass transport in the country. After the bitter pill of 14.2 per cent increase in the passenger fair last month, the budget is expected to focus on innovation, modernization, efficiency, punctuality, cleanliness, increased role of private sector and services features.

The CNX Nifty opened at 7,804.05; about 17 points higher as compared to its previous closing of 7,787.15, and has touched a high and a low of 7,808.85 and 7,751.05 respectively. The index is currently trading at 7,758.70, down by 28.45 points or 0.37%. There were 13 stocks advancing against 37 declines on the index.

The top gainers of the Nifty were Sun Pharma up by 1.60%, Kotak Bank up by 1.50%, Cipla up by 1.41%, Indusind Bank up by 0.80% and Ambuja Cement up by 0.78%. On the flip side, Power Grid down by 2.46%, DLF down by 1.86%, HCL Tech down by 0.75%, Tech Mahindra down by 1.74% and SSLT down by 1.71% were the major losers on the index.

Asian markets were trading mostly in the red; Nikkei 225 tumbled by 16.33 points or 0.11% to 15,363.11, Hang Seng dropped 34.30 points or 0.15% to 23,506.62, KOSPI Index decreased by 3.45 points or 0.17% to 2,001.67, Straits Times shed by 8.81 points or 0.27% to 3,282.76 and Shanghai Composite was down by 3.09 points or 0.15% to 2,056.84.

On the flip side, Jakarta Composite gained 46.14 points or 0.92% to 5,035.17, FTSE Bursa Malaysia KLCI improved by 0.92 points or 0.05% to 1,893.42 and Taiwan Weighted was up by 10.16 points or 0.11% to 9,530.36.