Indian equities extend losses in the late afternoon session

Indian equities extend losses to continue their weak trade in the late afternoon session on back of selling in frontline indices. Traders were seen selling in Realty, Bankex and Power sector. Meanwhile, amid the depreciating rupee and spiking international crude oil prices, the resurfacing inflation concerns have multiplied the worries of investors as the hike in excise duty and service tax announced in the budget, will add to upward trajectory of the inflation. DLF from Realty counter was trading weak pulling the markets down. Axis Bank, ICICI Bank, PNB, SBI and HDFC Bank from Banking sector were seen trading in negative territory pushing the markets down. Tata Power, NTPC, Reliance Power and Power Grid from power pack were trading in the red zone. Industry heavyweight RIL was trading lower by around more than one percent exerting pressure on the market. In the scrip specific movement, Kingfisher Airlines dropped as the company awaits its performance report from the Directorate General of Civil Aviation today. Shares of Mumbai-focused real estate developers like Godrej Properties, Indiabulls Real Estate, Oberoi Realty, HDIL, Peninsula Land, Hubtown, D B Realty and Phoenix Mills nosedived on reports that Maharashtra government has proposed a steep hike by 160 times in stamp duty for leave-and-licence agreements for residential and commercial properties. EIH Associated Hotels rose following news that the company will consider a proposal of rights issue as well as merging of the company's wholly owned subsidiary Island Hotel Maharaja with itself. Shares of some tea plantation firms like Williamson Magor, Goodricke Group, Harrisons Malayalam and Jay Shree Tea, rose on reports of higher tea prices this year.

On the global front, Asian and European markets were trading on a mix note. On the home turf, the NSE Nifty and BSE Sensex were trading below their psychological 5,250 and 17,200 levels respectively. The market breadth on BSE was in favor of declines in the ratio of 1868:831 while 112 scrips remained unchanged.

The BSE Sensex is currently trading at 17,105.15 down by 256.59 points or 1.48% after trading as high as 17,377.59 and as low as 17,066.07. There were just 2 stocks advancing against 28 declines on the index.

The broader indices were trading on a weak note; the BSE Mid cap index slipped 1.17% while Small cap was down 1.00%.

On the BSE sectoral space, there were no gainers, while Realty down 3.18%, Bankex down 2.16%, Power down 2.13%, PSU down 1.55% and Metal down 1.50% were the major losers in the space.

Wipro up 0.27% and HUL up 0.14% were the major gainers on the Sensex, while ICICI Bank down 3.85%, Tata Power down 3.82%, DLF down 3.49%, NTPC down 3.29% and Cipla down 2.94% were the major losers in the index.

Meanwhile, with crude oil prices touching $125 per barrel, the Finance Minister has stated that the government may have to take certain tough decisions in the coming months. The comments are being seen as a signal from the FM towards hiking of fuel prices including diesel and LPG.

Given the government’s large fiscal deficit of around 5.9% of GDP, it is widely expected that it may have to increase fuel prices to cut down its burden of subsidies. Oil prices have been rising consistently in the last year and the world could see a further shortage due to the sanctions imposed on Iran. In such a scenario it may be difficult for the government to contain the fiscal deficit unless fuel prices are hiked.

The FM further clarified his stand of not raising fuel prices in the budget by stating that there are other methods of going about policy changes and a mere announcement would have served no purpose if it could not be implemented on ground.

Mukherjee has also hinted at an interest rate cut by the RBI given the declining trend of inflation in the past 3 months.  Thus, he expects will boost investor sentiments. The government had set an ambitious fiscal deficit target of 4.6% of GDP for the current fiscal. However the FM, in the budget, stated that it would actually be around 5.9%.

A target of 5.1% has been set for the FY ’13 which has been termed as pragmatic yet ambitious by economists if the food security bill is implemented and crude oil prices continue rising. Hence slashing subsidies would probably be the only option left for the government.

The S&P CNX Nifty is currently trading at 5,207.25, lower by 70.95 points or 1.34% after trading as high as 5,274.95 and as low as 5,186.40. There were 5 stocks advancing against 45 declines on the index.

The top gainers on the Nifty were JP Associates up 2.96%, Kotak Bank up 2.10%, Wipro up 0.40%, HUL up 0.22% and ITC up 0.13%.

IDFC down 4.03%, Axis Bank down 3.84%, ICICI Bank down 3.79%, Tata Power down 3.66% and DLF down 3.57% were the major losers on the index.

In the Asian space, Jakarta Composite declined 0.61%, Straits Times fell 0.10%, Seoul Composite slipped 0.38%, KLSE Composite shed 0.05% and Taiwan Weighted plummeted 1.35%. On the other hand, Nikkei 225 added 0.07%, Shanghai Composite inched up 0.05% and Hang Seng gain 0.01%.

The European markets were trading on a mix note with, France’s CAC 40 dropped 0.42%, Germany’s DAX descended 0.17% while Britain’s FTSE 100 gained 0.14%.