Benchmarks trade lower in early deals

Indian equity benchmarks are trading lower in early deals on Wednesday as investors remained on sidelines ahead of the Union Budget to be released tomorrow. The traders will also be eying Economic Survey for 2013-14 to be released later in the day. Meanwhile, global ratings agency Fitch has said that the regular increase in diesel price to align it with market will lead to a 25 percent fall in fuel under-recoveries this fiscal. Railway-related stocks continued to trade under pressure for the second straight day falling by over 30% in two days on the BSE, following Railway Minister Sadananda Gowda unveiling his maiden Budget.

On the global front, the US markets suffered sharp cuts in last session on trepidation ahead of the start of earnings season and on concerns about the outlook for monetary policy with speculation that the Federal Reserve will begin raising interest rates sooner than anticipated. The Asian markets were trading mostly in the red at this point of time tailing the weaknesses in the US markets amid concern valuations are too high. Chinese market too was marginally in red, though consumer-price inflation in the country slowed last month.

On the sectoral front, fast moving consumer goods and oil and gas witnessed the maximum gain in trade, while auto, power 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 463 shares on the gaining side against 1,542 shares on the losing side while 46 shares remain unchanged.

The BSE Sensex opened at 25615.28; around 33 point higher compared to its previous closing of 25582.11, and has touched a high and a low of 25683.97 and 25369.21 respectively. The index is currently trading at 25535.40, down by 46.71 points or 0.18%. There were 14 stocks advancing against 16 declines on the index.

The overall market breadth has made a weak start with 22.57% stocks advancing against 75.18% declines. The broader indices too were trading in the red; the BSE Mid cap and Small cap indices up by 1.31% and 2.11% respectively. 

The only gaining sectoral indices on the BSE were, FMCG up by 0.52% and Oil and Gas up by 0.34%, while Auto down by 1.81%, Power down by 1.44%, Realty down by 1.33%, Healthcare down by 1.06% and Infrastructure was down by 1.05% were the top losers on the sectoral index.

The top gainers on the Sensex were GAIL up by 1.71%, Hindalco up by 1.45%, Tata Steel up by 1.28%, ITC up by 1.09% and SBI up by 1.01%. On the flip side, Hero MotoCorp was down by 1.98%, Tata Motors was down by 1.89%, Tata Power was down by 1.85%, Bajaj Auto was down by 1.82% and M&M was down by 1.56% were the top losers on the Sensex.

Meanwhile, the government has proposed to hike foreign direct investment (FDI) limit in insurance sector to 49 percent from the current 26 percent. The Department of Financial Services has amended the Insurance Laws Bill, 2008 with a rider that voting right of overseas partner will remain capped at 26 percent.

Further, the department has cleared that the chief executive officer (CEO) of the insurance company will be appointed by Indian shareholders subject to approval of a competent authority and a majority of the company's directors will have to be Indians. The department’s proposal sought increase in foreign investment in both general as well as life insurance segments of the insurance sector. Earlier proposal was that the higher FDI limit would be allowed only for health insurers. The official amendment will incorporate suitable safeguards on foreign equity investment in the insurance sector while enhancing the overall cap to 49 percent.

An increase in FDI limit to 49 percent would bring in around $1 billion (around Rs 6,000 crore) of foreign investment in Indian insurance sector. Insurance in India is mainly of two types namely ‘life insurance’ and ‘general insurance’. At present, there are fifty-two insurance companies operating in India of which twenty-four are in the life insurance business. During 2008-09 and 2013-14, insurance penetration has fallen from 4.6 percent to 3.9 percent, reflecting need to develop the insurance sector. 

The CNX Nifty opened at 7,637.95; about 14 points higher as compared to its previous closing of 7,623.20, and has touched a high and a low of 7,646.25 and 7,551.65 respectively. The index is currently trading at 7,591.85, down by 31.35 points or 0.41%. There were 13 stocks advancing against 37 declines on the index.

The top gainers of the Nifty were BPCL up by 1.36%, ITC up by 1.24%, Hindalco up by 0.98%, Tata Steel up by 0.80% and GAIL up by 0.70%. On the flip side, Tata Power down by 3.21%, Cairn down by 2.80%, Tata Motors down by 2.55%, Jindal Steel down by 2.16% and M&M down by 2.11% were the major losers on the index.

Asian markets were trading mostly in the red; Nikkei 225 dropped by 58.39 points or 0.38% to 15,256.02, Hang Seng slipped 300.59 points or 1.28% to 23,240.79, KOSPI Index contracted by 9.79 points or 0.49% to 1,996.87, Straits Times declined by 13.40 points or 0.41% to 3,269.94, Shanghai Composite dipped 7.13 points or 0.35% to 2,056.89, FTSE Bursa Malaysia KLCI decreased by 2.75 points or 0.15% to 1,889.90 and Taiwan Weighted was down by 34.22 points or 0.36% to 9,496.76.

On the flip side, Jakarta Composite was up by 35.68 points or 0.72% to 5,024.71.