Benchmarks witness consolidation ahead of Jan F&O expiry

Indian equity benchmarks witnessed consolidation on Wednesday as investors opted to book some profits off the table after eight straight sessions of gains ahead of the expiry of January derivative contracts tomorrow. Investors also remained on sidelines ahead of the Reserve Bank of India’s policy review on February 2 and the federal budget on February 28. Earlier, markets hit their record highs in noon deals but profit booking in blue-chips drag benchmarks lower. However, key gauges somehow managed to end the session near their neutral lines as 29,500 and 8,900 proved to be the strong support levels for Sensex and Nifty, respectively. Some support came with Finance Minister Arun Jaitley, ahead of the Budget, underlining the need for tax reforms and quick decision making to ensure stability in policy regime. He has also expressed confidence that the fiscal deficit target of 4.1 percent of the GDP for the current fiscal would be met.

On the global front, European markets were trading flat in early deals on Wednesday,with Greek stocks extending their sell-off sparked by the victory of leftwing Syriza party in Sunday’s election. Asian markets ended mixed with the Chinese market extending their declining trend for the second straight session.

Back home, appreciation in Indian rupee supported the sentiments. The partially convertible rupee was trading at 61.37 per dollar at the time of equity market closing against the Tuesday’s close of 61.39 on the Interbank Foreign Exchange. Meanwhile, foreign institutional investors were net buyers in Indian equities worth Rs 953.50 crore on January 27, 2015, as per provisional stock exchange data. 

Meanwhile, select stocks related to services sector companies edged higher on report that the government is planning to give incentives to the services sector in the upcoming foreign trade policy and Budget in order to enhance the contribution from the sector. Stocks of some of defence manufacturing companies too traded with traction, as a panel has said that India has to raise the foreign direct investment cap in Defence manufacturing to 51 per cent to get US companies to think seriously about investing in the country and share technology.

The NSE’s 50-share broadly followed index Nifty rose by marginally and ended above the psychological 8,900 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex declined by over ten points but managed to end above the psychological 29,550 mark. Broader markets struggled to get any traction and ended mixed. The market breadth remained in favor of decliners, as there were 1,124 shares on the gaining side against 1,738 shares on the losing side while 109 shares remain unchanged.

Finally, the BSE Sensex lost 11.86 points or 0.04%, to 29559.18, while the CNX Nifty added 3.80 points or 0.04% to 8,914.30.

The BSE Sensex touched a high and a low of 29786.32 and 29417.67, respectively. The BSE Mid cap index was up by 0.26%, while the Small cap index was down by 0.48%.

The top gainers on the Sensex were HDFC up by 2.21%, Reliance Industries up by 1.92%, Wipro up by 1.48%, SBI up by 1.41% and TCS up by 1.27%. On the flip side, Bharti Airtel down by 4.99%, Sesa Sterlite down by 2.90%, Tata Motors down by 2.64%, Larsen & Toubro down by 2.51% and Tata Steel down by 1.80% were the top losers.

On the BSE Sectoral front Consumer Durables up by 4.60%, Realty up by 1.69%, Oil & Gas up by 1.48%, IT up by 1.00% and PSU up by 0.73% were the top gainers, while Capital Goods down by 1.45%, Metal down by 1.43%, Auto down by 0.72%, Bankex down by 0.31% and Power down by 0.23% were the top losing indices on BSE.

Meanwhile, spectrum auction in 800, 900, 2100 and 1800 MHz band, originally slated to start from February 25 has been deferred by a week to March 4 by the Department of Telecommunications (DoT). The mock auction will now start on March 2-3, instead of February 23-24.

While the government has finalised the base rates for the 900 MHz, 1,800 MHz and 800 MHz bands, it has not yet decided the price for the 2,100-MHz band and the Cabinet is expected to take a final call on the reserve price for the same in its meeting scheduled on Wednesday. The Telecom Commission has recommended a base price of Rs 3,705 crore per MHz for airwaves under this band.

The government has fixed a reserve price of Rs 3,646 crore pan-India per MHz in 800 MHz; Rs 3,980 crore for 900 MHz band pan-India, excluding Delhi, Mumbai, Kolkata, and Jammu & Kashmir; and Rs 2,191 crore pan-India (excluding Maharashtra and West Bengal) in the 1800 MHz band. The government plans to sell 380.75 MHz in three bands and expects to earn between Rs 80,000 crore and Rs 1 lakh-crore from the auction.

The CNX Nifty touched a high and low of 8,985.05 and 8,874.05 respectively.

The top gainers on Nifty were DLF up by 2.85%, HCL Technologies up by 2.63%, HDFC up by 2.22%, Tech Mahindra up by 2.18% and Wipro up by 2.17%. On the flip side, Bharti Airtel down by 4.69%, Sesa Sterlite down by 3.28%, Jindal Steel & Power down by 2.89%, Tata Motors down by 2.73% and Larsen & Toubro down by 2.68% were the top losers.

European Markets were trading in the red; France's CAC was down by 0.83%, Germany's DAX was down by 0.69% and UK's FTSE 100 was down by 0.49%.

The Asian equity benchmarks ended mixed on Wednesday, with Hong Kong closing in green, reversing morning losses as investors brushed off a heavy sell-off on Wall Street that was fueled by weak US data and disappointing corporate reports. Japanese Prime Minister Shinzo Abe stated that the government will strive to achieve both economic revival and fiscal reform. Abe added that the country is saddled with a huge public debt and its fiscal situation is very severe. Japan’s trade balance rose to a seasonally adjusted -0.71T, from -0.83T in the preceding month whose figure was revised up from -0.93T. The central bank expects Indonesia’s economic growth to accelerate this year despite challenges ranging from lower commodity prices to higher interest rates. Bank Indonesia Governor Agus Martowardojo stated that the domestic economy may expand by 5.8% this year, an increase from the bank’s estimate of last year’s growth of between 5.1% and 5.5%. Indonesia’s Finance Minister Bambang Brodjonegoro stated that the rupiah’s current level supports exports and helps narrow the country’s current account deficit, signaling the government is comfortable with the currency’s 3% drop since October.