Indian benchmarks trade around key technical levels in noon trades

Stock markets in India are trading in a narrow range in Wednesday afternoon trades as the benchmarks equity indices continue to hover around the important psychological 5,200 (Nifty) and 17,200 (Sensex) levels with moderate cuts of less than half a percent. The markets witnessed choppiness in afternoon trades, ahead of Thursday's futures and options (F&O) expiry. Sentiments remained sluggish in the session as market participants searched for fresh catalysts to take further bets in the markets. Meanwhile, government announced its borrowing calendar in which union government has planned to raise Rs 3.7 trillion through bond sales during April-September, 65% of the government's gross borrowing target of Rs 5.7 trillion for 2012/13. Despite the borrowings being largely in line with broad expectations, marketmen lacked conviction to open fresh positions amid fears of spiking bond yields which have already gone up 8.62% and are not likely to move below the 8.5-9% range in the first half of FY13. On the global front, the Asian markets retreated in the session as the euphoria over Fed Chairman’s comments gave way to profit booking as largely in line US consumer confidence data along with home price reports failed to persuade market participants to open fresh positions. Chinese benchmark remained the top laggard in the space with around two and half a percent cut. On the other hand, the European counterparts too have started on a sedate note as risk-averse investors awaited the release of US economic reports amid renewed concerns over the debt crisis on Europe's periphery. Back home, on the sectoral front, the rate sensitive counters like Realty and Bankex continued to do bulk of the damage as they plunged over a percent each. On the other hand, investors continued to show buying interests for defensive bets like FMCG and Healthcare which traded on a positive note with about half a percent gains. Meanwhile, around a percent gains in heavyweight L&T helped the Capital Goods index to trade in green terrain.

Moreover, the broader markets too traded on a pessimistic note with moderate cuts in tandem than their larger peers. The bourses dropped on extremely large volumes of over Rs 1 lakh crore while market breadth on BSE was in favor of declines in the ratio of 1656:953 while 122 scrips remained unchanged.

The BSE Sensex is currently trading at 17,189.15 down by 68.21 points or 0.40% after trading as high as 17,245.82 and as low as 17,135.76. There were 10 stocks advancing against 20 declines on the index.

The broader indices were trading on a weak note; the BSE Mid cap index slipped 0.32% and Small cap sank 0.48%.

On the BSE sectoral space, Healthcare up 0.53%, FMCG up 0.49% and Capital Goods up 0.47% were the only gainer, while Consumer Durables down 2.95%, Realty down 1.20%, Bankex down 1.10%, Metal down 0.80% and TECk down 0.67% were the major losers in the space.

Gail India up 1.23%, Tata Steel up 1.19%, Tata Power up 1.04%, L&T up 1% and ITC up 0.49% were the major gainers on the Sensex, while Sterlite down 1.92%, Hindalco down 1.90%, ICICI Bank down 1.45%, NTPC down 1.25% and Jindal Steel down 1.24% were the major losers in the index.

Meanwhile, the power distribution companies (discoms) have suffered losses to the tune of whopping Rs 80,000 crore in current fiscal, excluding the government subsidies. The total book losses will reduce to around Rs 38,000 crore, with the subsidies inclusion, stated a report by ICRA. Of the total losses, about 70% has come from six states namely Uttar Pradesh, Tamil Nadu, Madhya Pradesh, Rajasthan, Punjab and Haryana.

The companies have so far been compensating these losses by either borrowings from the banks or stretched payments to power creditors, especially state-run generating companies. Nonetheless their credit quality has been questioned which has led to lesser number of banks willing to give them credit. As a result payments to power and fuel suppliers as well as debt repayments have been delayed.

The main reasons for these huge losses are the low tariffs and high Aggregate Technical and Commercial losses. Recently, the Appellate Tribunal of Electricity (ATE) asked state regulators to ensure time and cost-reflective tariff determination. Even though tariff increases have taken place in many states recently, the quantum of hikes is well below these discoms requirement to fully recover the costs, as per ICRA.

There are about 73 entities in the power distribution segment in the country. In December last year, the high-level Shunglu Committee’s report on Financial Position of Distribution Utilities came up with a raft of suggestions, including setting of a Special Purpose Vehicle to absorb the losses of discoms. It also said that net loss of 15 discoms - which account for over 90 per cent of country's power consumption and after subsidies, was at Rs 27,000 crore for the year ended March 31, 2010.

The S&P CNX Nifty is currently trading at 5,223.05, lower by 20.10 points or 0.38% after trading as high as 5,236.55 and as low as 5,201.70. There were 19 stocks advancing against 31 declines on the index.

The top gainers on the Nifty were Dr Reddy’s up 2.14%, GAIL up 1.71%, Tata Power up 1.14%, L&T up 1.08% and Tata Steel up 1.05%.

JP Associates down 3.26%, Cairn 2.93%, Sesa Goa down 1.94%, Hindalco down 1.94% and Jindal Steel down 1.57% were the major losers on the index.

In the Asian space, Shanghai Composite got butchered 2.75%, Hang Seng plunged 1.13%, Jakarta Composite eased 0.09%, KLSE Composite dropped 0.21%, Nikkei 225 declined 0.71%, Straits Times fell 0.53% and Seoul Composite slipped 0.39%.

On the other hand only Taiwan Weighted gained 0.11%.

The European markets were trading in red as France’s CAC 40 eased 0.30%, Germany’s DAX fell 0.30% and Britain’s FTSE 100 dropped 0.23%.