Indian equities trim gains; trade continues in green

Indian equity benchmark - BSE Sensex and NSE Nifty pared gains but continued to remain above neutral line in the late afternoon session. Investors have started taking a cautious approach while picking stock amid a slew of earnings announcements by heavyweight companies. Traders were seen piling up the positions in Banking, Consumer Durables and Realty sector while selling was witnessed in FMCG and HealthCare sector. Interest rate sensitive realty, auto and banking stocks extended yesterday's gains triggered by expectations that the Reserve Bank of India will start cutting interest rates in the coming months to prop up slowing economy. ITC from FMCG sector was trading in red due to profit booking after reporting Q3 results. Coal India was trading under pressure on reports that the coal minister had indicated that the company's new pricing mechanism will be reviewed today. All the eyes are set on index heavyweight Reliance Industries ahead of its board meeting which is scheduled later today, to consider a proposal for buyback of equity shares along with Q3 December 2011 earnings. On the global front, Asian markets traded in green barring Jakarta Composite while the European markets were on pessimistic note. The European markets yesterday successfully concluded debt sale by Spain and France. Also, investors were optimistic on the outcome as the Greek government heads into a second day of talks with private creditors on a crucial bond swap deal. Back home, the NSE Nifty and BSE Sensex were trading above their psychological 5,000 and 16,700 levels respectively. The market breadth on BSE was in favor of advances in the ratio of 1455:1239 while 120 scrips remained unchanged.

The BSE Sensex is currently trading at 16,712.74 up by 69.00 points or 0.41% after trading as high as 16,777.67 and as low as 16,684.85. There were 16 stocks advancing against 13 declines while 1 stock remained unchanged on the index.

The broader indices were trading on a positive note; the BSE Mid cap index climbed 0.64% while Small cap advanced 0.54%.

On the BSE sectoral space, Bankex up 3.21%, Consumer Durables up 2.67%, Realty up 0.99%, Power up 0.77% and Auto up 0.65% were the major gainers while FMCG down 1.80% and Health Care down 0.49% were the only losers in the space.

ICICI Bank up 6.54%, Bajaj Auto up 6.35%, Jindal Steel up 3.38%, Hero MotoCorp up 3.25% and SBI up 2.33% were the major gainers on the Sensex, while ITC down 3.33%, Coal India down 3.08%, M&M down 2.96%, Maruti down 2.45% and Hindalco Industries down 1.67% were the major losers in the index.

Meanwhile, a move, which could help the domestic power equipment makers who have for long lobbied for imposition of customs duty on imported Chinese tools to offset some of the high costs they incur at home, the Power Minister Sushilkumar Shinde has requested the finance ministry to impose customs duties on the import of transmission and distribution equipment into the country. Their key complaint against Chinese imports has been that their producers enjoy lower interest rates and an undervalued currency, giving them an edge in pricing over Indian equipments. 

Their stance has been supported by the power minister who feels that Indian companies can now be protected with this move. Sushilkumar Shinde said that it was not possible to do so earlier as most of the foreign companies had set shops in India on the assurance that they would be protected. But now the scenario had changed and India had enough capacity to meet domestic demand. Hence some protection could definitely be provided in the 12th Plan. The minister further observed that the transmission and distribution (T&D) segment has progressed fast and once domestic demand was met, Indian firms would be in a position to export high end T&D equipment. That some Indian firms had already received orders from abroad, he stated.

Currently, projects under 1,000 MW attract 5% import duty while other projects benefit from duty-free import of equipment. Further, the government is reportedly looking at two options; first, bringing all the power projects at par, which is, levying a uniform duty on all power generation equipment, regardless of the project size. In such a situation, the duty may be levied at the current rate of 5%. Second, imposing a basic import duty at 5%, besides an extra levy of 5% and 4% countervailing duty (imposed in lieu of excise duty for domestic producers), making it a total of 14%. The move is likely to benefit local equipment manufacturers such as BHEL, L&T and Bharat Forge and on the other hand, power producers will be affected, as they import machinery, mainly from China.  Earlier, a panel headed by Planning Commission member Arun Maira had recommended an imposition of 10% basic customs duty and 4% special additional duty. The contention was that imposition of duty would create a level playing field between domestic and Chinese manufacturers and ensure that local companies are not rendered uncompetitive. The proposal, however, was opposed by the power ministry.

The S&P CNX Nifty is currently trading at 5,031.35, higher by 12.95 points or 0.26% after trading as high as 5,054.60 and as low as 5,025.30. There were 28 stocks advancing against 22 declines on the index.

The top gainers on the Nifty were Bajaj Auto up 6.60%, ICICI Bank up 6.34%, Axis Bank up 4.14%, Jindal Steel up 3.22% and Hero MotoCorp up 3.11%.

Dr Reddy’s down 3.60%, ITC down 3.49%, M&M down 3.25%, Coal India down 2.97% and Maruti  down 2.82% were the major losers on the index.

Asian markets were largely trading on a positive note; Shanghai Composite surged 1.00%, Hang Seng advanced 0.84%, Nikkei 225 jumped 1.47%, Straits Times soared 1.20%, Seoul Composite garnered 1.82%. On the flipside only Jakarta Composite slipped 0.53%.

Stock markets in Taiwan remained shut on Thursday in observance of a public holiday.

The European markets were trading in red with, France’s CAC 40 descended 0.61%, Germany’s DAX dropped 0.34% and Britain’s FTSE 100 shed 0.10%.