Benchmarks trim gains; trade gyrates near neutral line

Indian equity benchmarks trimmed gains and started gyrating near neutral line in the late afternoon session on account of buying in frontline blue chip counters. Investors remained cautious ahead of the major macro economic data such as Indian Industrial Production (IIP) and Consumer Price Index (CPI) numbers scheduled to be announced later in the day. Traders were seen piling up positions in Consumer Durables, Auto and FMCG, while selling was witnessed in Power, Capital Goods and Metal sector stocks. In scrip specific development, Sun Pharmaceutical Industries and Ranbaxy Laboratories were trading in red extending their previous day’s fall on reports of drug regulator, US Food and Drug Administration (USFDA) conducting a surprise inspection of the Sun Pharma’s manufacturing plant at Halol in Gujarat. JP Associates was trading in red after foreign brokerage firm downgraded the stock to neutral from buy earlier.

On the global front, the Asian markets were trading mostly in green, while the European markets traded on pessimistic note. Back home, the NSE Nifty and BSE Sensex were trading above psychological 8,050 and 26,900 levels respectively. The market breadth on BSE was positive in the ratio of 1631:1289 while 99 scrips remained unchanged.

The BSE Sensex is currently trading at 26996.16, up by 0.29 points after trading in a range of 26965.91 and 27065.02. There were 13 stocks advancing against 17 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.20%, while Small cap index up by 0.62%.

The gaining sectoral indices on the BSE were Consumer Durables up by 0.94%, Auto up by 0.48%, FMCG up by 0.37%, INFRA up by 0.01% while, Power down by 1.16%, Capital Goods down by 0.59%, Metal down by 0.50%, Oil & Gas down by 0.35%, PSU down by 0.29% were the losing indices on BSE.

The top gainers on the Sensex were Cipla up by 3.73%, Maruti Suzuki up by 1.56%, HDFC up by 1.22%, ITC up by 1.01% and Hero MotoCorp up by 0.89%. On the flip side, Hindalco down by 2.58%, Sun Pharma Industries down by 1.91%, NTPC down by 1.46%, Coal India down by 1.29% and Tata Power down by 1.10% were the top losers.

Meanwhile, as the developed nations raised concerns over India for not disclosing agri subsidies over the long period, the government has claimed that India's farm subsidies are well below the World Trade Organisation's (WTO) cap of 10 percent and the developed world should move ahead with finding a permanent solution for stock piling of grains for food security purposes.

India had not notified its farm subsidies to the WTO since 2003-04 and thus the US and other developed countries had alleged that India has breached the 10 percent cap. India has now filed the notification for seven years (2004-2005 to 2010-2011) to the WTO and the new updated information would ascertain the developed nations that India has complied with the WTO requirements. According to the filed notification, India’s aggregate measurement of support (AMS) for rice, or subsidy for procurement of rice, has been calculated at $2.3 billion in 2010-11. India has cleared to the WTO that its subsidy for rice is within the prescribed limit. However, India’s subsidies for wheat remained in the negative, against the prescribed limit of 10 percent. India’s input subsidies including fertiliser and electricity subsidies almost tripled during the notification period to $29.1 billion in 2010-11 from $10.3 billion in 2004-05.

With regular increase in minimum support price (MSP) every year in India, the market-distorting subsidy keeps increasing too, threatening to breach the 10 percent cap set by WTO. According to WTO rules, the domestic price support is calculated as the difference between the MSP provided by the Indian government and fixed external reference price prevailing between 1986-88. Developing countries including India argue that the reference period of 1986-88 is outdated and that they need to be given flexibility to stock enough grains for the food security of millions of their poor.  In December 2013 at Bali, developed countries agreed to find a permanent solution to this issue by 2017.

The CNX Nifty is currently trading at 8083.45, down by 2.25 points or 0.03% after trading in a range of 8071.60 and 8102.95. There were 22 stocks advancing against 28 stocks declining on the index.

The top gainers on Nifty were Cipla up by 3.97% and Lupin up by 2.27% and Asian Paints up by 1.74% and Maruti Suzuki up by 1.57% and HDFC up by 1.21%. On the flip side, Hindalco down by 2.83%, Power Grid Corporation down by 2.10%, Cairn India down by 1.89%, Sun Pharma down by 1.78% and Ultratech Cement down by 1.71% were the top losers.

The Asian markets were trading mostly in green; Straits Times increased 3.91 points or 0.12% to 3,351.19, KOSPI Index increased 7.7 points or 0.38% to 2,041.86, Shanghai Composite increased 20.27 points or 0.88% to 2,331.95, Jakarta Composite increased 21.64 points or 0.42% to 5,154.67 and Nikkei 225 increased 39.09 points or 0.25% to 15,948.29.

On the flip side, Taiwan Weighted decreased 99.77 points or 1.07% to 9,223.18, Hang Seng decreased 67.32 points or 0.27% to 24,595.32 and FTSE Bursa Malaysia KLCI decreased 4.28 points or 0.23% to 1,861.83.

The European markets were trading mostly in red; Germany’s DAX decreased 21.31 points or 0.22% to 9,669.97, France’s CAC decreased 8.45 points or 0.19% to 4,432.45 while, UK’s FTSE 100 increased 14.73 points or 0.22% to 6,814.35.