Markets make a cautious start ahead of the Rail Budget

Markets made a cautious start of the important day with two mega events lined up for the day, first the Railway Budget followed by the expiry of the volatile February F&O series. Markets though made a positive start but slipped into red immediately, trading near the neutral line tailing weakness in the Chinese market which has slumped over three percent, although the US markets ended higher overnight and the Japanese and some other major Asian markets too are trading in green after oil prices moved higher. Traders are eyeing the Railway Budget, where the Railway Minister Suresh Prabhu faces a stiff dilemma on whether to raise fares and freight rates in his second Rail Budget as railway finances come under tremendous strain. The Railway Budget is expected to focus on massive capacity creation in the rail sector with an increased plan outlay of about Rs 1.25 lakh crore. There was some concern in the solar power sector, after WTO in a matter in which the US had filed a complaint before the global trade body alleging discrimination against American firms, ruled against India. WTO panel agreed with the United States that India's ‘localization’ measures discriminate against US manufacturers and are against WTO rules.

Companies related to railways business are in focus today, mostly trading in red as Railway Minister Suresh Prabhu will present the rail budget later in the day. Titagarh Wagon was trading down by about a percent, Texmaco Rail & Engineering, Kalindee Rail Nirman, were down by around 2% and Sanghvi Movers was trading flat with a negative bias.

The BSE Sensex is currently trading at 23053.45, down by 35.48 points or 0.15% after trading in a range of 23029.89 and 23127.59. There were 11 stocks advancing against 18 stocks declining on the index.

The broader indices too were trading marginally in red; the BSE Mid cap index was down by 0.33%, while Small cap index was lower by 0.06%.

The lone gaining sectoral index on the BSE was Metal up by 0.05%, while Oil & Gas down by 0.80%, Power down by 0.63%, TECK down by 0.49%, IT down by 0.39%, PSU down by 0.26% were the losing indices on BSE.

The top gainers on the Sensex were Lupin up by 1.73%, Sun Pharma Inds. up by 1.69%, Mahindra & Mahindra up by 0.78%, Tata Motors up by 0.75% and ONGC up by 0.69%. On the flip side, Adani Ports &Special down by 1.82%, GAIL India down by 1.75%, Wipro down by 1.52%, Bharti Airtel down by 1.47% and NTPC down by 1.22% were the top losers.

Meanwhile, India got a setback with the World Trade Organisation (WTO) hearing a matter in which the US had filed a complaint before the global trade body alleging discrimination against American firms, has ruled against India saying that the government's power purchase agreements with solar firms were 'inconsistent' with international norms. The WTO’s Dispute Settlement Panel has ruled that “the DCR measures are inconsistent” with relevant provisions of TRIMs (Trade Related Investment Measures) Agreement and with the articles of the erstwhile GATT (General Agreement of Trade and Tariffs). The panel also found that the DCR measures accorded “less favourable treatment” to the American companies and were 'not justified' under the general exceptions in GATT rules.

Though, India can challenge this ruling before the appellate body of the WTO, but the findings of the panel said that DCR measures are not distinguishable in any relevant respect from the domestic content requirements previously examined under this provision by the Appellate Body in Canada Renewable Energy / Feed-In Tariff Programme and the electricity purchased by the government is not in a 'competitive relationship' with the solar cells and modules subject to discrimination under the DCR measures.

The panel asked India to 'bring its measures into conformity with its obligations under the TRIMs Agreement and the GATT 1994', the panel said that 'in cases where there is an infringement of the obligations assumed under a covered agreement, the action is considered prima facie to constitute a case of nullification or impairment'.

The dispute relates to the domestic content requirements imposed by India for the National Solar Mission, including in the Guidelines and Request for Selection documents, the model power purchase agreement, and the individually executed power purchase agreements between Indian government agencies and solar power developers. On January 11, 2010, India had launched its national solar policy, named Jawaharlal Nehru National Solar Mission. The country has an ambitious target of generating 20,000 Mega Watts of solar power by 2022.

The CNX Nifty is currently trading at 7004.60, down by 14.10 points or 0.20% after trading in a range of 6997.80 and 7034.20. There were 19 stocks advancing against 31 stocks declining on the index.

The top gainers on Nifty were Sun Pharma Inds. up by 1.79%, Lupin up by 1.77%, Hindalco up by 0.98%, Tata Motors up by 0.93% and Mahindra & Mahindra up by 0.92%. On the flip side, BPCL down by 2.78%, Power Grid Corpn. down by 2.58%, Tech Mahindra down by 1.74%, Adani Ports &Special down by 1.72% and Yes Bank down by 1.61% were the top losers.

Asian markets were still showing mixed trend, FTSE Bursa Malaysia KLCI was tad higher by 0.75 points or 0.05% to 1,664.92, Jakarta Composite gained 1.74 points or 0.04% to 4,659.46, Taiwan Weighted was up by 72.33 points or 0.87% to 8,355.19, Nikkei 225 increased by 105.63 points or 0.66% to 16,021.42.

On the other hand, Hang Seng declined by 235.79 points or 1.23% to 18,956.66, Shanghai Composite was lower by 105.83 points or 3.61% to 2,823.06 and KOSPI Index was down by 3.28 points or 0.17% to 1,909.25.