Benchmarks pare early losses amid gains in FMCG, metal stocks

Indian bourses pared all early losses and were trading near neutral line in afternoon session as buying appeared in frontline blue chip stocks amid weak Asian cues. Investors were seen piling up positions in infra, power and metal stocks and most of the major sectoral indices on BSE were trading in green. Sentiments got some support as Finance Minister Arun Jaitley asserted that the rise in CAD was not a cause for concern because of the comfortable foreign exchange reserve position of the country.  However, selling witnessed in IT, FMCG and auto stocks restrained the market gains. Broader indices outperformed the major indices with high margin as both mid cap and small cap indices were trading up by over 0.50%. Sector wise, metal stocks were trading higher as the World Trade Organisation (WTO) ruled against the US which had imposed high duty on imports of certain steel products from India. Shares of jewellery makers such as Gitanjali Gems, PC Jeweller, Rajesh Exports and Titan Company were trading higher by up to 7% on reports that the government may change gold-import rules for trading houses.

Shares of  JSW Steel was up nearly 2% at Rs 1,127 after the company announced 3% production growth at 11.07 lakh tonnes for November. Shares in SKS Microfinance has rallied around 4% to Rs 363 after global brokerage  raised the price target of stock at Rs 500.

On global front, most of the Asian markets were trading mixed with Shanghai Composite up by 0.57% and Nikkei 225 down 2.52%. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 8,400 and 28,000 levels respectively. The market breadth on BSE was positive, out of 2,482 stocks traded, 1,376 stocks advanced, while 1,017 stocks declined on the BSE.

The BSE Sensex is currently trading at 27788.25, down by 8.76 points or 0.03% after trading in a range of 27710.03 and 27875.29. There were 18 stocks advancing against 12 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.67%, while Small cap index up by 0.55%.

The gaining sectoral indices on the BSE were INFRA up by 1.00%, Power up by 0.86%, Metal up by 0.74%, PSU up by 0.68% and Consumer Durables up by 0.67%. On the flip side, FMCG down by 0.84%, Auto down by 0.20%, IT down by 0.04% and Capital Goods down by 0.02% were the losing indices on BSE.

The top gainers on the Sensex were Tata Power up by 2.22%, ONGC up by 1.82%, Sesa Sterlite up by 1.54%, Hindalco up by 1.17% and SBI up by 1.14%. On the flip side, Bajaj Auto down by 1.47%, Sun Pharma Inds. down by 1.40%, ITC down by 1.33%, Hindustan Unilever down by 0.81% and Maruti Suzuki down by 0.65% 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 8346.15, up by 5.45 points or 0.07% after trading in a range of 8317.00 and 8361.80. There were 32 stocks advancing against 18 stocks declining on the index.

The top gainers on Nifty were Jindal Steel & Power up by 3.17%, Tata Power up by 2.40%, IDFC up by 2.15%, PNB up by 2.12% and ONGC up by 2.06%. On the flip side, NMDC down by 2.29%, Asian Paints down by 1.71%, Bajaj Auto down by 1.68%, BPCL down by 1.22% and ITC down by 1.22% were the top losers.

Most of the Asian markets were trading mixed, Straits Times up by 9.59 points or 0.29% to 3,329.43,Jakarta Composite up by 14.61 points or 0.29% to 5,136.92, Hang Seng up by 14.82 points or 0.06% to 23,500.65, FTSE Bursa Malaysia KLCI up by 15.91 points or 0.92% to 1,754.01 and Shanghai Composite up by 16.4 points or 0.57% to 2,872.67. While, Nikkei 225 down 448.85 points or 2.52% to 17,364.53, Taiwan Weighted down 96.74 points or 1.06% to 9,032.16 and KOSPI Index down 25.39 points or 1.29% to 1,945.56.