Local bourses regain their southbound journey; broader indices get clobbered out of shape

After getting a muted start, benchmark equity indices have now shaved off all their gains. Benchmark indices catching up with their previous session’s southbound journey, have slipped into negative terrain. High beta Realty and Metal stocks, combined with rate sensitive Auto stocks have dragged the 30 share index of Bombay Stock Exchange (BSE)-Sensex- sub 18100 psychological level. However, stocks from Oil & Gas and Defensive fast Moving Consumer goods are exhibiting resilience. The widely followed 50 share index of National Stock Exchange - Nifty - too was seen trading sub 5500 mark. However, the broader indices, were the worst hit of the day as small cap and mid cap index were clobbered out of shape as they suffered a cut of over a percent each.

Choppiness of Indian equity markets could be accredited to last day of February F&O series, while lack of significant cues from global front, too are clouding the picture at Dalal Street. After weak close of Wall Street overnight, Asian stocks too were trading lower as investors fretted over the details of a deal to save Greece from financial collapse and preserve its place among nations that use the euro. However, Japan bucked the trend as the weakened yen, boosted exporter shares. The US future indices too were exhibiting mixed trend.

The BSE Sensex is currently trading at 18,094.68, down by 50.57 points or 0.28%. The index has touched a high and a low of 18,209.56 and 18,075.61 respectively.  There were 9 stocks advancing against 21 declines on the index.

The broader indices slipped deep and fast in red; the BSE Mid cap and Small cap indices declined by 1.21% and 1.27% respectively.

The top gaining sectoral indices on the BSE were Oil and Gas up by 0.84%, FMCG up by 0.72%. While, Realty down by 3.78%, Metal down by 1.57%, Capital Goods down by 1.17%, Auto down by 1.06% and Power down by 0.89% were the top losers on the index.

The top gainers on the Sensex were SBI up by 1.89%, RIL up by 1.20%, HUL up by 1.14%, ITC up by 0.48% and ONGC up by 0.26%.

On the flip side, Sterlite Industries down by 4.63%, DLF down by 2.66%, L&T down by 1.85%, Bharti Airtel down by 1.84% and Hindalco Industries down by 1.72% were the top losers on the Sensex.

Meanwhile, there seems to be finally a sigh of relief for the cash-strapped airlines who will now be allowed to import fuel directly on actual user basis against licences issued by DGFT. All licenses will come with a validity period and will become invalid if an airline is not able to import within the prescribed period. Commerce Secretary Rahul Khullar was reported to have said that the government will only allow actual users to import ATF against licences. Traders who want to import to sell it to other customers will not be allowed.

The airlines have asked the DGFT to allow them to import aviation turbine fuel (ATF) directly instead of canalising it through a state trading enterprise or STE, as through this medium the airlines were ending up paying huge local taxes that varied between states ranging from 4% to 30%. After intense lobbying by private airlines, an empowered group of ministers recommended to the Cabinet that all domestic carriers should be allowed to directly import the fuel to cut their losses. ATF contributes to about 40% of an airline's operational costs. Now all the carriers who are interested to avail the opportunity to import ATF directly without going through STE route may apply to the DGFT.

Meanwhile, the state owned oil marketing companies (OMC’s) who were till now supplying the ATF to the airlines have argued that any move to allow airlines to directly import ATF would upset production of diesel and petrol too. OMC's have further stated that currently the country is self-sufficient in the production of ATF and they produce enough to take care of the domestic demand.

However, the government will have to consider the infrastructure factors before announcing this ostensible benefit to airlines. ATF is a very quality-sensitive product and there is lack of infrastructure for bringing in ATF cargo, along with many other issues.

The S&P CNX Nifty is currently trading at 5,487.65, lower by 17.70 points or 0.32%. The index has touched a high and a low of 5519.55 and 5481.55 respectively. There were 14 stocks advancing against 16 declines on the index.

The top gainers of the Nifty were BPCL up by 3.98%, SBI up by 1.98%, PowerGrid Corporation of India up by 1.36%, Reliance Industries up by 1.22% and HUL up by 1.18%.

On the flip side, JP Associate down by 4.81%, Sterlite Industries down by 4.43%, Reliance Infra down by 3.63%, DLF down by 2.71% and Reliance Power down by 2.49%, were the major losers on the index.

Most of the Asian equity indices were trading in the red; Shanghai Composite declined 0.16%, Hang Seng slid 0.98%, Jakarta Composite plunged 0.57%, KLSE Composite inched lower by 0.07%, Straits Times plunged 1%, Seoul Composite plummeted 1.05% and Taiwan Weighted descended 0.74%.

On the flip side, Nikkei 225 up by 0.32% was the lone gainer amongst Asian pack.