Indian equities continue weak trade below neutral line

Indian equities trimmed losses but continued its trade on a weak note below neutral line in the late afternoon session. The market trimmed its losses led by Power, Realty and Capital Goods stocks. However, the sell-off continued in Oil & Gas, Auto and FMCG stocks. Investors are setting their eyes on a handful of economic readings coupled with third quarter earnings of domestic companies like Infosys and HDFC which will further determine the direction of stock markets. Infosys will kick off the earning season for the December quarter on Thursday January 12, 2012. Industry heavyweight RIL is trading weak in red putting pressure on the market. Also, BPCL, Cairn India and ONGC from Oil & Gas sector were too trading in red pulling the markets down. Bajaj Auto, Tata Motors, M&M and Hero MotoCorp from Auto sector were down driving the markets lower. HUL and ITC from FMCG sector were trading in red exerting pressure on the markets.

However, BHEL and L&T from Capital Goods space were seen trading firm in green helping the markets edge higher. Reliance Power, Tata Power and Power Grid from Power sector were trading firm giving the much needed support. DLF and JP Associates from Realty space were in green helping prevent any further downfall. On the global front, all Asian markets traded on a negative note barring Shanghai Composite and Hang Seng while the European markets were trading in green on optimistic note. The leaders of Germany and France are holding their first meeting of the year as the Eurozone’s weaker countries worries about high borrowing costs and Europe works to hammer out a treaty enshrining tougher budget rules. Back home, the NSE Nifty and BSE Sensex were trading above their psychological 4,700 and 15,800 levels, respectively.

The BSE Sensex is currently trading at 15,803.97 down by 44.83 points or 0.28% after trading as high as 15,843.06 and as low as 15,678.30. There were 15 stocks advancing against 15 declines on the index.

The broader indices were trading on a positive note; the BSE Mid cap index added 0.56% while Small cap surged 1.24%.

On the BSE sectoral space, Power up 1.31%, Realty up 1.31%, Capital Goods up 0.95%, HealthCare up 0.62% and Consumer Durables up 0.18%, and were the major gainers while Oil & Gas down 0.79%, Auto down 0.75%, FMCG down 0.48% and TECk down 0.29% were the only losers in the space.

BHEL up 2.69%, Jindal Steel up 2.13%, Maruti up 1.70%, Cipla up 1.43%, and Tata Power up 1.14% were the major gainers on the Sensex, while Bharti Airtel down 2.46%, HUL down 1.72%, Bajaj Auto down 1.66%, Coal India down 1.63% and SBI down 1.49% were the major losers in the index.

Meanwhile, foreign institutional investors (FIIs) have invested nearly Rs 6,500 crore into the Indian market, including stocks and bonds, in the first week of the January 2012. According to information available with market regulator SEBI, FIIs have purchased equities and debt securities worth a gross amount of Rs 15,168 crore. On the other hand, they have sold shares and bonds worth Rs 8,674 crore in the same period, making a net investment of Rs 6,494 crore for the period.

Experts are of the view that optimistic global cues along with declining food inflation number have helped to enhance investor confidence in the market during the week. In the first week, FIIs were more bullish on the debt market, translating into a net investment of Rs 5,488 crore during the period, whereas their investment in stocks stood at Rs 1,006 crore.

The government on January 1 had announced a new scheme, under which qualified foreign investors (QFI), including overseas individuals were allowed to invest directly in Indian stock markets. This was done with the intention to widen the profile of investors and attract more foreign funds in the wake of FII money being taken-out from the markets.

Further, the move is also expected to trim down market volatility and deepen the Indian stock markets. Earlier, QFIs were permitted to invest only in mutual fund schemes. The foreign investors could earlier invest into Indian markets through opening accounts with SEBI registered FIIs or through participatory notes.

In 2011, FIIs purchased stocks and bonds worth Rs 8 lakh crore, but sold securities worth Rs 7.9 lakh crore, resulting into an investment of Rs 1,7480 crore for the year. On the other hand, investors have gathered towards the debt market and made an investment of Rs 20,293 in the year 2011, while at the same time they stayed away from equity market and pulled out Rs 2,812 crore.

The S&P CNX Nifty is currently trading at 4,744.65, lower by 2.25 points or 0.05% after trading as high as 4,749.20 and as low as 4,695.45. There were 29 stocks advancing against 21 declines on the index.

The top gainers on the Nifty were BHEL up 2.87%, Reliance Power up 2.72%, IDFC up 2.40%, Cipla up 1.85% and Siemens up 1.85%.

Bharti Airtel down 2.72%, Bajaj Auto down 1.90%, Coal India down 1.66%, Sesa Goa down 1.60% and BPCL down 1.56% were the major losers on the index.

Asian markets traded on a negative note; Jakarta Composite eased 0.25%, Straits Times plunged 0.43%, Seoul Composite sank 0.90% and Taiwan Weighted declined 0.39%. On the flipside, Shanghai Composite surged 2.89% and Hang Seng ascended 1.47%.

Stock markets in Japan remained closed on Monday for a public holiday.

The European markets were trading in green with, France’s CAC 40 advanced 0.51%, Germany’s DAX climbed 0.27% and Britain’s FTSE 100 advanced 0.43%.