Markets turn volatile; slip into red in late morning session

Markets are showing a volatile trend in the late morning session and after a recovery attempt have once again slipped into red, led mainly by the IT sector stocks. The global worries too are weighing down the sentiments with the worsening situation in Ukraine where Russia has reportedly positioned its forces along the border, indicative of a possible invasion. On the domestic front, the traders are not finding any reason to move higher and continuing to witness selling pressure, offsetting some of the government’s measures. The cabinet approved a plan to raise the amount of foreign direct investment in defence and railways industries, in an effort to attract more foreign cash and revive the economy. Meanwhile IT stocks were putting pressure on the markets after the global technology major Cognizant Technology Solutions despite posting in line with expectations June quarter earnings, scaled down its annual revenue growth estimate to be at least 14 per cent, against the earlier estimate of 16.5 per cent. On the sectoral front some resistance is coming from oil & gas and metal sector stocks, otherwise most of the sectoral indices on the BSE were either trading in red or flat.

The BSE Sensex is currently trading at 25641.12, down by 24.15 points or 0.09% after trading in a range of 25594.25 and 25715.36. There were 16 stocks advancing against 14 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.23%, while Small cap index was lower by 0.13%.

The gaining sectoral indices on the BSE were Metal up by 0.57%, Oil & Gas up by 0.49%, PSU up by 0.21%, Capital Goods up by 0.15%, Bankex up by 0.03%, while IT down by 1.38%, TECK down by 1.21%, Realty down by 0.62%, Infra down by 0.42%, Consumer Durables down by 0.36% were the losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 1.84%, Coal India up by 0.74%, HDFC Bank up by 0.59%, BHEL up by 0.50% and Reliance Industries up by 0.48%. On the flip side, TCS down by 1.65%, Infosys down by 1.49%, Wipro down by 1.12%,Sun Pharma Inds down by 1.09% and Hindustan Unilever down by 0.58% were the top losers.

Meanwhile, with an aim to enhance foreign investments in order to boost economic growth and create jobs, the government has approved the long-delayed proposal for raising the foreign direct investment limit (FDI) in the sensitive defence sector to 49% from 26% and opened up the railway infrastructure segment to foreign firms. The decision to hike FDI was taken in a cabinet meeting which was headed by Prime Minister Narendra Modi.

To expand the domestic industrial base in defensive sector, the cabinet hiked FDI ceiling to 49 percent ensuring control in Indian hands, for boosting country’s defence sector which imports up to 70 percent of its military hardware. Further, the cabinet also decided that FDI beyond 49% will be allowed in state-of-the art defence equipment manufacturing, with technology transfer under Indian control and management.

Further, in order to fast-track modernization of the state-run transporter, the cabinet allowed 100% foreign participation in crucial infrastructure segments of the Railways. Foreign investors can now invest in setting up of high-speed corridors, suburban rail networks, signaling projects, logistic hubs and in creating links to industrial parks. Currently, there is a complete restriction on any kind of FDI in the Railways sector except mass rapid transport systems. The move is likely to help in modernisation and expansion of the Railways which is facing a cash-crunch of around Rs 26,000 crore. However, FDI is not allowed in train operations and safety.

FDI is considered crucial for economic development of a country and to attract maximum FDI into the country, the government has been liberalizing the foreign investment policy. It has relaxed FDI norms in around 12 sectors which include telecom, tea, pension and petroleum and natural gas among others. Recently, the government has enhanced FDI in insurance sector from 26 percent to 49 percent.

The CNX Nifty is currently trading at 7662.45, down by 9.60 points or 0.13% after trading in a range of 7649.50 and 7686.70. There were 25 stocks advancing against 25 declining ones on the index.

The top gainers on Nifty were Jindal Steel & Power up by 3.68%, Tata Steel up by 1.82%, Power Grid Corpn up by 0.97%, ACC up by 0.86% and BPCL up by 0.81%. On the flip side, HCL Tech down by 2.00%, TCS down by 1.63%, Infosys down by 1.45%, Asian Paints down by 1.21% and Bank Of Baroda down by 1.20% were the top losers.

Asian markets were largely in red except Japanese Nikkei 225, which was just managing to hold in green, up 2.6 points or 0.02% to 15,162.39.On the other hand, Hang Seng slumped by 119.46 points or 0.49% to 24,464.67, Taiwan Weighted was down by 27.98 points or 0.31% to 9,115.99, Straits Times lost 13.54 points or 0.41% to 3,306.69, Shanghai Composite decreased by 11.53 points or 0.52% to 2,205.94, Jakarta Composite was lower by 10.79 points or 0.21% to 5,047.43, KOSPI declined by 8.89 points or 0.43% to 2,051.84 and FTSE Bursa Malaysia KLCI was down by 1.82 points or 0.1% to 1,868.10