Feeble global cues drag benchmarks lower in early deals

Pressurized by feeble global cues, Indian equity benchmarks have made a gap-down start and are trading with a cut of around a percentage point. The US markets ended lower in last session, extending previous session losses although the US manufacturing output recorded its largest increase in nine months in November on the back of across the board expansion of production. The Asian markets were trading mostly in the red at this point of time on weaker crude. However, Chinese market was bucking the trend despite a preliminary index of Chinese purchasing managers index signaling contraction.

Back home, sentiments remained dampened after India’s trade deficit widened to the highest in 18 months in November to $16.86 billion, compared with $9.57 billion a year earlier and $13.35 billion in October, due to increased gold imports. Though Finance Minister Arun Jaitley said that India has the potential to grow at a higher rate even at a time when the world economy is going through a critical phase. Sentiments also remained down-beat as the rupee weakened to its lowest level in 13 months on Tuesday as markets in the region tumbled after a sharp rate hike in Russia further raised concerns about the global economy at a time when India's trade deficit is already widening.

On the sectoral front, software and technology witnessed the maximum gain in trade, while banking, metal and fast moving consumer goods remained the top losers on the BSE sectoral space. The broader indices too were reeling with traction, while the market breadth on the BSE was negative; there were 459 shares on the gaining side against 1357 shares on the losing side while 54 shares remained unchanged.

The BSE Sensex is currently trading at 27084.07, down by 235.49 points or 0.86% after trading in a range of 27046.23 and 27199.37. There were 10 stocks advancing against 20 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.81%, while Small cap index down by 1.13%.

The only gaining sectoral indices on the BSE were IT up by 1.28% and TECK up by 0.75% while, Bankex down by 1.55%, Metal down by 1.49%, FMCG down by 1.47%, Realty down by 1.16% and Consumer Durables down by 1.14% were the losing indices on BSE.

The top gainers on the Sensex were TCS up by 1.56%, BHEL up by 1.31%, Infosys up by 0.78%, Coal India up by 0.64% and Wipro up by 0.58%. On the flip side, Hindalco down by 4.43%, Sesa Sterlite down by 2.78%, ICICI Bank down by 2.69%, ITC down by 2.24% and HDFC down by 1.83% were the top losers.

Meanwhile, in order to meet the set disinvestment target, the government has planned to speed up the stake sales programme in public sector units in the next three months. Concerns over the government’s disinvestment programme and its ability to meet the Rs 63,425 crore target for current fiscal from stake sales in PSUs such as Coal India, ONGC and NHPC among others have begun mounting.

At present, the government shareholding in the Coal India is 89.65 percent and will disinvest 10 percent stake worth around Rs 23,000 crore. Government stake in ONGC stands at 68.94 percent and will disinvest 5 percent stake worth Rs 16,000 crore. Besides these two, 11.36 percent disinvestment in hydro power generator NHPC has also been approved. The government holds 85.96 percent stake in company and expects to garner worth Rs 2,800 crore. The government is also trying to get clarity on the residual stake sales in Hindustan Zinc and Balco that are estimated to raise at least Rs 15,000 crore.

With tax collections registering low growth, proceeds from stake sales are crucial to meet the fiscal deficit target at 4.1 percent of GDP in FY15. Furthermore, the government is likely to take advantage of robust state of domestic stock markets helped by heavy inflow of funds from the foreign institutional investors (FIIs).

The government has been missing its disinvestment target for past five consecutive financial years. In the previous fiscal, the government was able to disinvest only around Rs 16,000 crore as against the set target of Rs 40,000 crore mainly on account of subdued economic and markets conditions. During FY11 and FY12, the government had raised Rs 22,144 crore and Rs 13,894 crore through disinvestment, against the budgeted target of Rs 40,000 crore in each year. In FY13, it had raised Rs 23,956 crore, as against the target of Rs 30,000 crore. 

The CNX Nifty is currently trading at 8158.90, down by 60.70 points or 0.74% after trading in a range of 8142.50 and 8189.35. There were 13 stocks advancing against 37 stocks declining on the index.

The top gainers on Nifty were HCL Tech up by 3.55%, Tech Mahindra up by 2.37%, BPCL up by 1.86%, TCS up by 1.75% and BHEL up by 1.57%. On the flip side, Hindalco down by 3.95%, ICICI Bank down by 2.65%, ACC down by 2.58%, Sesa Sterlite down by 2.57% and ITC down by 2.05% were the top losers.

The Asian markets were trading mostly in the red, Nikkei 225 tumbled 373.44 points or 2.18% to 16,725.96, Hang Seng declined 325.37 points or 1.41% to 22,702.48, Jakarta Composite decreased 96.17 points or 1.88% to 5,012.26, Straits Times dropped 65.77 points or 2% to 3,228.37, KOSPI Index shed 14.14 points or 0.74% to 1,906.22 and FTSE Bursa Malaysia KLCI was down by 7.23 points or 0.43% to 1,690.08. On the flip side, Taiwan Weighted increased 8.83 points or 0.1% to 8,994.46 and Shanghai Composite was up by 21.95 points or 0.74% to 2,975.37.