Indian equities trim losses to trade in green

Indian equities pare off losses to continue its trade in green in the late afternoon session on account of buying emerging on street in the frontline blue chip counters. The benchmark indices, which suffered severe pounding in previous session, was finding hard to regain the lost ground and enter the positive terrain. Traders were seen piling up position in FMCG and Auto sector while selling was witnessed in IT, Metal and Capital Goods sector. Besides, market men are eyeing Q4 March 2012 and year ending March 2012 (FY 2012) earnings for future market movement. Further, the next major trigger for the market will also be judged by the inflation numbers. On Friday, April 13, 2012, the government will unveil data on inflation based on the wholesale price index (WPI) for March 2012. ITC and HUL from FMCG sector was seen trading firm in green with gain of around more than two percent pulling the markets higher. Tata Motors, M&M and Bajaj Auto from Auto pack were seen trading in green driving the markets higher. In the scrip specific development, gas stocks like Indraprastha Gas, GAIL India, Gujarat Gas and Petronet LNG were seen trading under pressure with a deep cut after Petroleum and Natural Gas Regulatory Board (PNGRB) slashed network tariff and compression charges for CNG. Thomas Cook (India) was trading firm in green on reports that the parent Thomas Cook Group was looking to sell a stake at a significant premium.

On the global front, Asian markets were trading on a mix note while the European markets were trading in red on pessimistic note. On the home turf, the NSE Nifty and BSE Sensex were trading below their psychological 5,250 and 17,300 levels respectively. The market breadth on BSE was in favor of declines in the ratio of 1193:1416 while 144 scrips remained unchanged.

The BSE Sensex is currently trading at 17,222.25 up by 0.11 points after trading as high as 17,274.69 and as low as 17,135.76. There were 12 stocks advancing against 18 declines on the index.

The broader indices were trading on a weak note; the BSE Mid cap index lost 0.38% while Small cap shed 0.31%.

On the BSE sectoral space, FMCG up 1.97% and Auto up 0.65% were the only gainers, while IT down 1.00%, Metal down 0.90%, Capital Goods down 0.88%, TECk down 0.69% and PSU down 0.63% were the major laggards in the space.

Tata Power up 2.54%, Tata Motors up 2.45%, HUL up 2.41%, ITC up 2.25% and Wipro up 1.92% were the major gainers on the Sensex, while Gail India down 2.97%, BHEL down 2.15%, Infosys down 1.92%, Sterlite Industries down 1.32% and Tata Steel down 1.28% were the major losers in the index.

Meanwhile, industry woes are due to the government’s large fiscal deficit and lowering the same can genuinely bring down the interest rates, as per the Chairman of the Planning Commission Montek Singh Ahluwalia.

While conceding that the high interest rate regime is affecting businesses in India, Ahluwalia pointed out that the main reason for this is not the inflation but the high fiscal deficit. This is because high fiscal deficit leads to increased government borrowings and saps the liquidity of economy. If the deficit is brought down, it leads to a genuine lowering of interest rates and benefits everyone.

Fiscal deficit is the gap between government's total expenditure and total income. When fiscal deficit rises, the government resorts to borrowing which reduces the availability of credit for the private sector.

The high interest rate in India has affected the industry output and the growth of the Index of Industrial Production during the April-January 2011-12 has slowed to 4% as against 8.3% in year ago period. The government’s fiscal deficit for the last financial year is expected to be a whopping 5.9% against the targeted 4.6%. The government has proposed to bring it down to 5.1% of gross domestic product (GDP) in the current financial year.

The S&P CNX Nifty is currently trading at 5,235.30, higher by 0.90 points or 0.02% after trading as high as 5,255.80 and as low as 5,211.85. There were 18 stocks advancing against 32 declines on the index.

The top gainers on the Nifty were Tata Power up 3.04%, Reliance Communications up 2.71%, ITC up 2.45%, HUL up 2.42% and Tata Motors up 2.27%.

GAIL India down 3.07%, JP Associates down 2.43%, Sesa Goa down 2.09%, Reliance Infrastructure down 2.05% and Infosys down 2.05% were the major losers on the index.

In the Asian space, Shanghai Composite climbed 0.88%, Jakarta Composite added 0.02%, KLSE Composite advanced 0.42%, Straits Times amassed 0.58% and Taiwan Weighted rose 0.52%. On the flipside, Hang Seng plunged 1.15%, Nikkei 225 eased 0.09% and Seoul Composite shed 0.13%.

The European markets were trading in red as France’s CAC 40 plunged 0.97%, Germany’s DAX plummeted 0.87% and Britain’s FTSE 100 sank 0.86%.