Benchmarks end choppy trade slightly in red

Indian equity benchmarks ended the choppy day of trade slightly in the red on Wednesday as traders remained concern over falling crude oil prices and political uncertainty in Greece. Sentiments also remained dampened on reports that foreign institutional investors were net sellers in Indian equities worth Rs 1,570.76 crore on January 6, 2015, as per provisional stock exchange data. Investors also remained on sidelines ahead of Infosys December-quarter result on Friday. India’s second largest information technology services company is likely to lower its revenue growth guidance for FY15, as persistent cross-currency headwinds coupled with the seasonal weakness are seeing weighing on the company’s performance.

However, losses remained capped as some respite came with Finance Minister Arun Jaitley saying that infrastructure sectors such as coal, power and cement have been recording double digit growth in the last few months while growth in the manufacturing sector is still patchy and reviving manufacturing, diversifying its base and equipping it for robust long-term expansion is one of the major challenges before the Centre. Meanwhile, in a customary pre-budget consultation with finance minister Arun Jaitley, India Inc has pitched for reduction in corporate tax rate, aggressive disinvestment of government stake in public sector units, higher personal income tax exemption limits and a massive increase in public expenditure to boost growth.

On the global front, European counters were trading higher in early deals, after Asian equity indices managed to hold up in positive territory, but nervousness ran deep through all financial markets ahead of euro zone inflation data due later Wednesday. The euro hit a nine-year trough on Wednesday as collapsing oil prices and worries about the world economy drove skittish investors into the arms of safe-haven sovereign debt.

Back home, the Indian rupee was appreciated at 63.24 per dollar level at the time of equity markets closing as compared to the previous close of 63.57 per dollar. Meanwhile, selling witnessed in banking space for third straight day in the absence of any significant reform centric announcements during the two-day banking conclave which was held in Pune and attended by Prime Minister, RBI Governor and top officials from the banking and insurance sector. On the flip side, paint makers and PSU oil marketing companies edged higher as oil prices extend losses. Additionally, Telecom stocks edged higher after a day of drubbing when Union Cabinet approved the largest ever telecom spectrum auction that is targeted to fetch the exchequer at least Rs 64,840 crore, much higher than the target of Rs 43065 crore set in the Union Budget for 2014-15.

The NSE’s 50-share broadly followed index Nifty declined by over twenty points but managed to hold the psychological 8,100 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex declined by around eighty points to end below its crucial 26,950 mark. Broader markets too struggled to get any traction during the trade and ended the session mixed. The market breadth remained in favor of decliners, as there were 1339 shares on the gaining side against 1506 shares on the losing side while 107 shares remain unchanged.

Finally, the BSE Sensex dropped by 78.64 points or 0.29%, to 26908.82, while the CNX Nifty declined by 25.25 points or 0.31% to 8,102.10.

The BSE Sensex touched a high and a low of 27051.60 and 26776.12, respectively. The BSE Mid cap index was down by 0.01%, while the Small cap index was up by 0.03%.

The top gainers on the Sensex were Hindustan Unilever up by 3.48%, Reliance Industries up by 2.31%, NTPC up by 2.19%, ONGC up by 1.70% and Maruti Suzuki up by 1.25%. On the flip side, Hindalco down by 2.80%, ICICI Bank down by 2.63%, GAIL India down by 2.61%, BHEL down by 2.47% and ITC down by 1.96% were the top losers.

On the BSE Sectoral front Oil & Gas up by 1.39%, Consumer Durables up by 0.27%, PSU up by 0.07%, Capital Goods up by 0.05% and Power up by 0.03% were the top gainers, while Metal down by 1.42%, Bankex down by 0.65%, IT down by 0.49%, TECK down by 0.36% and INFRA down by 0.33% were top losers in the space. 

Meanwhile, car manufacturers in India, which just got an ugly shock with withdrawal of excise duty exemptions, may have something to hinge on in the new fiscal year since the centre is examining the possibility of extending incentives for export of cars to all markets, including large ones such as the European Union (EU) in view of dwindling exports for the industry.

The Heavy Industry Ministry has proposed to the Commerce Ministry to include car exports in the 'focus product' scheme so that shipments to major markets could be incentivized. Under the Focus Product scheme, an incentive of up to 5% of the export value is for exports of specific products to all markets. Under the present Foreign Trade Policy, an incentive of 2 per cent of export value is given to cars shipped from India to markets where the country has an insignificant presence, such as Bangladesh, Kenya, Kuwait, Pakistan, Russia, Singapore and Ukraine. China and Japan, too were included.

Notably, India's car exports declined 8.3% to 2.68 lakh units in the April-September 2014-15 period, according to data from the Society of Indian Automotive Manufacturers (SIAM).

However, this is not for the first time that Heavy Ministry was proposing something of this sort. The Ministry in the 'Make in India' workshop as well, pitched for inclusion of cars in the Focus Product scheme, where it argued that such a sop would encourage manufacturing in India. The CNX Nifty touched a high and low of 8,151.20 and 8,065.45 respectively.

The top gainers on Nifty were Hindustan Unilever up by 3.20 %, NTPC up by 2.69%, Reliance Industries up by 2.62%, Asian Paints up by 2.19% and Power Grid Corporation of India up by 1.99%. On the flip side, Hindalco Industries down by 2.97%, NMDC down by 2.82%, BHEL down by 2.40%, HCL Technologies down by 2.35% and GAIL (India) down by 2.25% were the top losers.

European Markets were trading in the green; UK's FTSE 100 was up by 0.77%, France's CAC was up by 0.76% and Germany's DAX was up by 0.67%.

The Asian equity benchmarks ended mostly in green on Wednesday, with China’s Shanghai Composite Index climbing for a fourth day. China’s annual economic growth likely slowed to 7.2% in the fourth quarter, the weakest since the depths of the global crisis, a poll showed, which would keep pressure on policymakers to head off a sharper slowdown this year. The expected slowdown in growth of the world’s second-largest economy, from 7.3% in the June-September quarter, means full-year would undershoot the government’s 7.5% target and mark the weakest expansion in 24 years. Malaysian Trade Balance rose to 11.13B, from 1.20B in the preceding month.

Japanese Prime Minister Shinzo Abe informed that he may be able to declare that the country has broken free from a long phase of deflation if companies continue to raise wages. Abe hopes that by improving the economy Japan will be able to contribute to global growth. Japan’s budget for next fiscal year will forecast 24-year high tax revenues of $460 billion as corporate profits surge under the economic growth policies of Prime Minister Shinzo Abe. The budget for the year from April expected to top 96 trillion yen ($800 billion) and to be approved by Abe’s cabinet on January 14, will forecast tax revenues of 54.5 trillion yen, the highest since 1991.