Sensex shows feeble movement in noon trades ahead of F&O expiry

Stock markets in India are showing lackadaisical movements in the Thursday afternoon session as investors lacked conviction to open fresh positions on the April series futures and options contract expiry day. The frontline equity indices traded in an extremely tight range hardly budging from the psychological 5,200 (Nifty) and 17,150 (Sensex) levels. The benchmarks exhibited sideways kind of movement since the start of trade and are currently trading with a negative bias amid uncertain market conditions. Market participants chose to consolidate their positions around previous closing levels a day after rating agencies like S&P’s and Moody’s voiced their concerns over India’s economic outlook, citing problems like policy paralysis, slow progress on its fiscal situation, as well as deteriorating economic indicators. On the global front though, the overnight US markets rallied on the back of unexpectedly strong quarterly earnings announcement from Apple Inc and US Federal Reserve’s FOMC meeting outcome. Asian markets showcased mixed trends after Fed statement highlighted that the world’s largest economy is likely to expand at a slightly higher rate than forecasted in January while the Fed also remained entirely prepared to take further quantitative easing steps if the US economic recovery falters. The European markets too failed to give any direction to local markets as they opened on a mixed note ahead of a slew of quarterly earnings announcement from European majors like Deutsche Bank, Barclays and Bayer. Back home, investors were seen covering short positions in the badly beaten down IT and TECk counters which gained over half a percent each and supported the frontline gauges by capping their losses. However, the rate sensitive Automobile, Realty and Bankex pockets were among the prominent losers in the sectoral space which along with the PSU and Power counters capped the upside chances for domestic bourses.

Moreover, the broader markets too traded on a flat note with a negative bias in tandem with their larger peers. The bourses consolidated on extremely large volumes of over Rs 1.1 lakh core, on the day of April series F&O contract expiry. While the market breadth on BSE was in favor of declines in the ratio of 1339:1024 while 123 scrips remained unchanged.

The BSE Sensex is currently trading at 17,146.40 down by 4.89 points or 0.03% after trading as high as 17,193.25 and as low as 17,101.73. There were 11 stocks advancing against 19 declines on the index.

The broader indices were trading on a negative note; the BSE Mid cap index eased 0.23% and Small cap shed 0.08%.

On the BSE sectoral space, IT up 0.63%, TECk up 0.60%, Metal up 0.52% and Consumer Durables up 0.37% were the only gainers, while PSU down 0.76%, Auto down 0.60%, Realty down 0.53%, Power down 0.43% and Bankex down 0.32% were the major laggards in the space.

Jindal Steel up 3.08%, Infosys up 0.99%, Tata Steel up 0.96%, TCS up 0.88% and M&M up 0.55% were the major gainers on the Sensex, while GAIL India down 3.03%, Hero Moto down 2.63%, Bajaj Auto down 2.18%, DLF down 1.78% and Hindustan Unilever down 1.22% were the major losers in the index.

Meanwhile, reacting to Standard & Poor’s (S&P) negative outlook on the Indian economy, the Finance Minister Pranab Mukherjee has stated that it is a timely warning but there is no need to get panic as the government is committed to economic reforms. He further reassured the country that the economy will grow around the 7% mark this year and the fiscal deficit shall be controlled to 5.1% of the GDP.

The government will take note of S&P’s decision and work to push economic reforms for greater growth. Also the process of reforms and the administrative decisions required to ensure that the fiscal deficit is retained at projected level would be taken.

The FM has admitted to the fact that there has been a delay in passing certain financial sector reforms but they will definitely be taken up in the next session of Parliament. The government will also discuss the Direct Taxes Code (DTC) Bill and other legislations that have received the approval of the standing committee.

Prime Minister’s Economic Advisory Council Chairman C Rangarajan has also stated that the S&P action is just one perception. It is just a downgrade in outlook and things might change if India can prove to the world that its economy can grow at 7% plus and can contain its fiscal deficit.

The credit ratings agency, S&P revised India’s economic outlook to negative. The reason cited for the downgrade was the large fiscal deficit, low expectations of economic reforms and a slowing down of GDP growth. S&P has gone a step ahead and said that there is at least one-in-three likelihood of a ratings downgrade if the external position continues to deteriorate, growth prospects diminish, or progress on fiscal reforms remains slow in a weakened political setting (in the next two years).

The S&P CNX Nifty is currently trading at 5,193.65, lower by 8.35 points or 0.16% after trading as high as 5,215.60 and as low as 5,183.65. There were 16 stocks advancing against 34 declines on the index.

The top gainers on the Nifty were Jindal Steel up 2.51%, Ambuja Cement up 1.43%, Grasim up 1.27%, Kotak Bank up 1.21% and Tata Steel up 1.03%.

GAIL down 2.92%, Hero Moto down 2.92%, JP Associates down 2.65%, Bajaj Auto down 2.29% and PNB down 2.23% were the major losers on the index.

In the Asian space, Hang Seng advanced 0.35%, Jakarta Composite climbed 0.75%, Nikkei 225 added 0.01%, Straits Times rose 0.05% and Seoul Composite gained 0.10%.

On the other hand, Shanghai Composite eased 0.12%, KLSE Composite shed 0.07% and Taiwan Weighted fell 0.55%.

The European markets got off to a mixed start as France’s CAC 40 eased 0.23%, Germany’s DAX fell 0.25% and Britain’s FTSE 100 gained 0.18%.