Indian equities trim gains; Sensex below 17,000 mark

Indian equities trimmed gains to continue its weak trade in red hovering near the lowest point of the day in the late afternoon session. Traders were seen piling up position in FMCG, Power and IT sector while selling was witnessed in Auto, Oil & Gas and Bankex sector. The stock market may remain volatile as traders may roll over positions from the near-month June 2012 series to July 2012 series. The June 2012 derivatives contracts will expire today i.e. June 28, 2012. In the scrip specific development, Tata Motors, India's biggest auto maker was trading under pressure in red after the company stated that, to avoid piling up stocks amid lukewarm demand it will stop production of medium and heavy trucks at its Jamshedpur unit for 3 days from June 28-30, 2012. Tyre stocks have also lost momentum on the buzz of CCI imposing fine on five leading companies, which control over 95% of market. Rolta India and JSW Steel were seen trading firm in green after the companies redeemed foreign currency convertible bonds worth $134.7 million and $274.4 million respectively.

On the global front, the Asian markets were trading on a mixed note while the European markets were trading in red on pessimistic note. From today i.e. June 28, 2012, a key two-day summit of the European Union to discuss the ongoing European debt crisis will begin. The pressure on European leaders has intensified as Spain slides closer to a bailout as the recession deepens and government faces unsustainable cost of debt refinancing. On the home turf, the NSE Nifty and BSE Sensex were trading below their psychological 5,150 and 17,000 levels respectively. The market breadth on BSE was negative in the ratio of 1287:1301 while 128 scrips remained unchanged.

The BSE Sensex is currently trading at 16,954.07, down by 13.69 points or 0.08% after trading as high as 17,029.20 and as low as 16,948.19. There were 8 stocks advancing against 22 declines on the index.

The broader indices were trading on a mix note; the BSE Mid cap index was down 0.02% while Small cap indices were trading up by 0.19%.

On the BSE sectoral space, FMCG up 0.59%, Power up 0.32%, IT up 0.25%, Capital Goods up 0.14% and TECk up 0.05% were the only gainers, while Auto down by 1.08%, Oil & Gas down by 0.51%, Bankex down by 0.45%, Realty down by 0.37% and Metal down by 0.20% were the top losers on the sectoral space.

ITC up by 1.21%, Tata Power up 0.97%, Infosys up by 0.84%, BHEL up 0.59% and Coal India up 0.58% were the major gainers on the Sensex, while Gail India down 2.88%, Tata Motors down 2.41%, SBI down 1.49%, Sun Pharma down by 1.44% and Hindalco Industries down 1.28% were the major losers on the index.

Meanwhile, on the backdrop of leading corporates making investment commitments in India, Commerce and Industry Minister Anand Sharma has expressed his confidence on policy initiatives that the government has taken to revive the Indian economy.

Recently, global majors like Coca-Cola and IKEA have announced their multi-billion investment plans for Indian market. Further, the UK-based premium footwear firm Pavers England has also submitted an application for investment. Coca-Cola had announced an investment of Rs 28,500 crore by 2020 in various activities, while IKEA has assured an investment capital of Rs 10,500 crore to set up 25 stores in the country.

Sharma opined that the entry of retail giant, IKEA will aid in empowering small and medium enterprises (SMEs) as single brand FDI policy enforces global retailers to source 30% of their requirement from SMEs which have a total investment in plant and machinery not exceeding $1 million. The Swedish home-ware giant has been sourcing from India since long and about 30% of IKEA’s textile accounts from India. However, IKEA has asked the government to relax norms regarding mandatory sourcing from small units for operating 100 percent controlled single-brand retail business in India.

The central government has been facing criticism from various sides, including rating agencies and a section of the corporate sector, for failing to carry out policy reforms, decline in foreign investments and overall economic slowdown. The country's foreign direct investment (FDI) has declined by 41% to $1.85 billion in April as compared to the same period in the previous year.

The S&P CNX Nifty is currently trading at 5,136.95, lower by 4.95 points or 0.10% after trading as high as 5,159.00 and as low as 5,134.45. There were 25 stocks advancing against 25 declines on the index.

The top gainers on the Nifty were JP Associates up by 1.44%, Ambuja Cement up by 1.41%, Siemens up 1.36%, ITC up by 1.19% and Kotak Bank up 1.16%.

Tata Motors down 2.51%, Axis Bank down 2.44%, Gail India down 2.21%, HCL Technologies down by 2.13% and Reliance Infrastructure down 2.09% were the major losers on the index.

In the Asian space, Nikkei 225 surged 1.65%, Straits Times Index climbed 0.14% and KOSPI Composite Index inched up 0.08%. On the other hand, Hang Seng dropped 0.79%, Shanghai Composite eased 0.95%, Jakarta Composite shed 0.88%, KLSE Composite fell 0.53% and Taiwan Weighted down 0.19%.

The European markets were trading in red with, DAX lost 1.39%, FTSE 100 down 0.78% and CAC40 decline 1.06%.