Benchmarks trade lower in early deals

Indian equity benchmarks have made a sluggish start on Friday as investors booked profits after markets hit record high levels in yesterday’s trade. Weak global cues and continued unrest in the Middle East and Ukraine have dampened the sentiments of market participants. Sentiments also remained dampened after Wipro reported lower than expected Q1 FY15 numbers. Sentiments further remained down-beat after Reserve Bank of India official stated that India continues to face threats on the growth and external sector fronts. Also, there was report that indirect tax collections inched up by 4.5 percent in the April-June quarter of the current fiscal, much lower than 25 percent increase envisaged in the Budget for the full 2014-15 fiscal, due to decline in custom duty and excise duty collections.

On the global front, the US markets showed another lackluster trade and ended flat in last session, as stocks showed lack of direction throughout much of the day despite the positive news of the unexpected decrease in initial jobless claims. The Asian markets were trading mostly in the red at this point of time.

Back home, on the sectoral front, healthcare and fast moving consumer goods remained the only gainers, while software, technology, and Oil & Gas 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 811 shares on the gaining side against 959 shares on the losing side while 62 shares remain unchanged.

The BSE Sensex opened at 26257.14; around 14 point lower compared to its previous closing of 26271.85, and has touched a high and a low of 26300.17 and 26212.07 respectively. The index is currently trading at 26212.10, down by 59.75 points or 0.23%. There were 15 stocks advancing against 15 declines on the index.

The overall market breadth has made a negative start with 44.27% stocks advancing against 52.35% declines. The broader indices were trading in the red; the BSE Mid cap index was down by 0.05%, while Small cap index was down by 0.27%. 

The only gaining sectoral indices on the BSE were Healthcare up by 1.20% and FMCG up by 0.45%, while IT down by 1.22%, TECk down by 0.94%, Oil and Gas down by 0.64%, Consumer Durables down by 0.56% and Infrastructure down by 0.40%, were the major losers on the sectoral index.

The top gainers on the Sensex were Sun Pharma up by 2.53%, M&M up by 1.28%, HDFC up by 1.03%, Maruti Suzuki up by 0.97% and Cipla up by 0.84%. On the flip side, Wipro was down by 6.10%, Tata Motors was down by 1.85%, Hindalco was down by 1.65%, RIL was down by 1.03% and SSLT was down by 0.86% were the top losers on the Sensex.

Meanwhile, the cabinet has approved the hike of foreign direct investment limit to 49 percent in insurance sector from the prevailing 26 percent. The government has cleared that it would take up the Insurance Amendment Bill as soon as possible in the Parliament. The bill is likely to pass easily in Parliament as the country’s second largest party, Congress, has indicated that it will support the bill. The Insurance Amendment Bill, which has been pending in the Parliament since 2008, proposed to enhance FDI limit to 49% with full management and control through Foreign Investment Promotion Board (FIPB) route.

Presently, most of the insurance companies particularly private players are facing severe shortage of funds. If the bill gets passed in parliament, most of the insurance companies, barring the public sector insurance companies, would benefit from higher FDI cap.

An increase in the ceiling for the insurance sector will automatically translate into a similar limit for the pension business. The government expects inflows of $6-7 billion into the pension and insurance sectors, which in turn will also generate long-term funds to finance infrastructure projects as individuals invest in insurance and pension schemes with a 20-30 year horizon. Accordingly, same investment is further invested in long-term instruments such as government securities and corporate bonds with a small portion also flowing into the stock markets.

The insurance sector was opened up to the private sector in 2000. Since then, the number of private players in the insurance sector has gone up from seven to 53 as on March 31, 2014, operating in the life, non-life, and re-insurance segments.

The CNX Nifty opened at 7,828.20; about 2 point lower as compared to its previous closing of 7,830.60, and has touched a high and a low of 7,840.95 and 7,804.20 respectively. The index is currently trading at 7,804.70, down by 25.90 points or 0.33%. There were 19 stocks advancing against 31 declines on the index.

The top gainers of the Nifty were Sun Pharma up by 2.41%, HUL up by 1.18%, HDFC up by 1.15%, M&M up by 1.07% and Lupin up by 1.03%. On the flip side, Wipro down by 5.89%, Cairn down by 3.07%, Hindalco down by 2.02%, Tata Motors down by 1.80% and Jindal Steel down by 1.63% were the major losers on the index.

Asian markets were trading mostly in the red; Hang Seng slipped 12.12 points or 0.05% to 24,129.38, Straits Times declined by 8.84 points or 0.26% to 3,345.05, Jakarta Composite dropped by 19.26 points or 0.38% to 5,079.38, FTSE Bursa Malaysia KLCI tumbled by 8.09 points or 0.43% to 1,868.96 and Taiwan Weighted was down by 81.49 points or 0.86% to 9,446.05.

On the flip side, Nikkei 225 soared 86.00 points or 0.56% to 15,370.42, KOSPI Index increased by 5.85 points or 0.29% to 2,032.47 and Shanghai Composite was up by 10.47 points or 0.50% to 2,115.53.