Benchmarks extend losses; Nifty below 5,500 mark

Indian equity markets extended early losses as investors were taking some profits after the previous session's sharp up move. Investors were trading cautiously due to a moderate sell-off on Wall Street and the negative trend in Asian markets due to renewed worries about the financial crisis in Greece. On sectoral front Oil, metal, bank, IT and automobile stocks were mostly trading weak. Power sector was leading the rally with the step pushed by Prime Minister Manmohan Singh to provide relief to the power sector and boost investor confidence, Coal India will sign agreements for supply of fuel to power projects commissioned up to December 2011 by March end. On global front, Asian shares fell on Thursday as another delay in cementing a crucial bailout for stricken Greece underscored how far Europe is from resolving a debt crisis that threatens the stability of the financial system. Back home, the market breadth favoring the negative trend; there were 1,261 shares on the gaining side against 1,291 shares on the losing side while 109 shares remained unchanged.

The BSE Sensex has plunged by 134.53 points or 0.74% and is currently trading at 18,067.88. The index has touched a high and a low of 18,180.42 and 18,043.32 respectively. There were 13 stocks advancing against 17 declining ones on the index.

The broader indices, however, are still trading in fine contour; the BSE Mid cap and Small cap indices spurted by 0.01% and 0.34% respectively.

The top gaining sectoral indices on the BSE were, Power up by 1.45%, CG up by 0.62%, Realty up by 0.29% and FMCG up by 0.16%. While, Oil and Gas down by 1.61%, Metal down by 1.61%, CD down by 1.38%, Auto down by 1.33% and Bankex down by 1.06% were the top losers on the index.

The top gainers on the Sensex were Jindal Steel up by 3.15%, BHEL up by 2.83%, Tata Power up by 2.26%, Cipla up by 2.23% and NTPC up by 1.54%.

On the flip side, Sterlite Industries down by 4.27%, Hindalco down by 4.22%, Coal India down by 4.11%, Tata Motors down by 3.75% and Reliance down by 3.01% were the top losers on the Sensex.

Meanwhile, with only one-hand-half months left for the current financial year to end, the finance ministry admitted that government will not be able to meet the ambitious disinvestment target of Rs 40,000 crore for 2011-12. Disinvestment Secretary, Mohammad Haleem Khan said, ‘there is no need to speculate at this point of time as everybody knows that Rs 40,000 crore (target) is now almost impossible.’

By adding further he said, ‘let the next Empowered Group of Ministers meeting (EGoM) take place then I can tell you (how much we can raise this fiscal).’ The government on the other hand has managed to raise only Rs 1,145 crore via stake sale in the Power Finance Corporation (PFC). Given the recent market turbulence caused by the global uncertainty, the government had to delay stake sales of other blue-chip state-owned companies.

The government had earlier set a disinvestment target of Rs 40,000 crore for the FY’12 fiscal. However, foreign investor appetite for equities was severely impacted due to choppy markets and the euro zone sovereign debt crisis. Further, the initial public offering (IPO) of National Buildings Construction Corp could also bring around Rs 250 crore to the exchequer.

The EGoM, which met under the chairmanship of Finance Minister Pranab Mukherjee, has decided to auction 5% stake in ONGC to institutional investors. However the stake sale in BHEL was deferred given the current poor sentiment in the power sector. Several stake sale proposals such as follow-on issues by Indian Oil, SAIL and MMTC were also put on hold due to adverse market conditions, as per the Disinvestment Secretary. It was also confirmed that the auction method of SEBI guideline, would be used in the stake sale of ONGC and BHEL.

The Centre is currently looking at all options to boost its revenue collections as the fiscal deficit may be more than 5.5% of the gross domestic product (GDP), compared to the Budget target of 4.6%. There is a shortfall of nearly Rs 1.5 lakh crore due to missed divestment target, higher subsidy bill and lower than estimated revenue collections on the direct tax front.

If yesterday’s decision of 5% stake sale in ONGC is implemented in this fiscal, it could bring an additional Rs 12,000 crore to the government. All put together, the government could expect a maximum of Rs 13,395 crore in this fiscal, which in any case is less than the targeted amount of Rs 40,000 crore.

The S&P CNX Nifty is currently trading at 5,488.45, lower by 43.50 points or 0.79%.  The index has touched a high and a low of 5,522.75 and 5,483.75 respectively. There were 20 stocks advancing against 30 declining ones on the index.

The top gainers of the Nifty were Jindal Steel up by 3.04%, Cairn up by 2.68%, BHEL up by 2.63%, Cipla up by 2.29% and Tata Power up by 2.08%,.

On the flip side, Hindalco down by 4.62%, Sterlite Industries down by 4.45%, Tata Motors down by 4.36%, Coal India down by 4.28% and JP Associates down by 4.08% were the major losers on the index.

All the Asian equity indices were trading in the red; Shanghai Composite declined 0.61%, Hang Seng slid 0.71%, Jakarta Composite down by 0.53%, KLSE Composite shed 0.73%, Nikkei 225 trimmed 0.22%, Straits Times plunged 0.65%, Seoul Composite plunged 1.30% and Taiwan Weighted plummeted 1.69%.