Benchmarks reverse gears; slip into negative territory in absence of positive triggers

Reversing gears, Indian equity markets have now slipped into negative territory in absence of positive triggers which could take the markets higher and sustained selling by funds and investors amid weak global cues. The sentiments were distrustful on report that foreign portfolio investors (FPIs) sold shares worth a net Rs 221.52 crore on December 10, 2014. Weak economic data announced earlier too were acting as hurdles, India's current account deficit (CAD) widened sharply to $10.1 billion in the second quarter of FY15. However, losses remained capped as Finance Minister Arun Jaitley asserted that the rise in the current account deficit (CAD) was not a cause for concern because of the comfortable foreign exchange reserve position of the country.

On global front, Asian stocks were trading mixed as data from both China and Japan pointed to continued weakness in the world's second and third-largest economies. Furthermore, US markets fell but losses were capped by a rally in energy company shares. Back home, Indian rupee depreciated by 8 paise to 61.96 against the US currency in early trade due to dollar's gains against its rivals overseas.

On the sectoral front, stocks from Power, Infrastructure and Metal counters were supporting the markets’ uptrend, while those from FMCG, Auto and IT counters were adding to the underlying cautious undertone. In scrip specific development, Shares of HCL Tech surged on signing pact with Washington Gas to modernize customer service. Furthermore, shares of Bharti Airtel surged on reports that the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) has set aside a penalty of Rs 650 crore imposed on the company by Department of Telecommunication (DOT) in a roaming case.

The market breadth on BSE was positive, out of 2216 stocks traded, 1256 stocks advanced, while 864 stocks declined on the BSE.

The BSE Sensex is currently trading at 27784.13 down by 12.88 points or 0.05% after trading in a range of 27875.29 and 27710.03. There were 11 stocks advancing against 19 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.48%, while Small cap index up by 0.55%.

The gaining sectoral indices on the BSE were Power up by 0.94%, INFRA up by 0.89%, Metal up by 0.88%, Realty up by 0.72% and Consumer Durables up by 0.69% while, FMCG down by 0.73%, Auto down by 0.26% and IT down by 0.16% were the losing indices on BSE.

The top gainers on the Sensex were Tata Power up by 2.05%, Sesa Sterlite up by 1.72%, ONGC up by 1.35%, Hindalco up by 1.13% and Hero MotoCorp up by 1.13%. On the flip side, Sun Pharma down by 1.97%, ITC down by 0.98%, Bajaj Auto down by 0.91%, Hindustan Unilever down by 0.87% and TCS down by 0.61% were the top losers.

Meanwhile, amid rising concerns over the widening current account deficit (CAD), Finance Minister Arun Jaitley has asserted that the rise in the current account deficit (CAD) was not a cause for concern because of the comfortable foreign exchange reserve position of the country. Finance Minister further added that the government would consider tightening measures only in extreme cases, as over-regulation of gold imports could push the yellow metal into the grey market.

India's Current Account Deficit (CAD) for the second quarter of the current financial year widened to $10.1 billion or 2.1% of GDP against 1.2% of GDP in the same quarter the previous year. The CAD in Q2FY15 increased on account of the higher trade deficit contributed by the deceleration in export growth and increase in imports mainly gold. CAD is a major macro-economic problem which creates volatility in currency and the domestic equity markets. Despite the expansion, CAD is well within RBI's comfort zone of 2.5% of GDP.

Recently, the government removed restrictions on gold imports abolishing the 80:20 import rule under which 20 per cent of all imported gold had to be mandatorily exported before any new shipments could be brought in. The move is expected to cut smuggling and raise legal shipments into the world’s second-biggest consumer of the yellow metal after China.  The CNX Nifty is currently trading at 8330.70 down by 10.00 points or 0.12% after trading in a range of 8361.80 and 8317.00. There were 27 stocks advancing against 23 declining on the index.

The top gainers on Nifty were Jindal Steel & Power up by 3.03%, Tata Power up by 2.05%, Sesa Sterlite up by 1.54%, IDFC up by 1.50% and ONGC up by 1.35%. On the flip side, NMDC down by 1.96%, Asian Paints down by 1.95%, Sun Pharma down by 1.93%, Tech Mahindra down by 1.38% and BPCL down by 1.36% were the top losers.

The Asian markets were showing mixed trend, Straits Times gained 0.23%, Shanghai Composite was up by 0.39%, FTSE Bursa Malaysia KLCI was higher by 0.92% and Jakarta Composite was up by 0.31%. On the other hand, Nikkei 225 declined by 2.67%, Taiwan Weighted lost 1.11%, Hang Seng was down by 0.17% and KOSPI Index decreased by 1.08%.