Indian equities pare losses; weak trade continues

Indian equities pare losses but continued its weak trade in red in the late afternoon session in absence of buying due to lack of any significant upside triggers coupled with weak opening in European counterparts. The sentiments remained on subdued note due to disappointing results by IT bellwether Infosys along with prevailing dim global economic climate, despite reporting encouraging May industrial output data, which showed better than expected growth. Traders were seen piling up position in Oil & Gas, FMCG and PSU sector while selling was witnessed in IT, TECk and Consumer Durables sector. Infosys, Wipro, HCL Technologies and TCS from IT counter were seen trading weak in red pulling the markets lower. Industry heavyweight RIL was seen trading with a cut of around half percent exerting pressure on the market.

On the global front, the Asian markets were trading in red barring Shanghai Composite while the European markets were too trading in red on pessimistic note. The Italian government will test sentiment in debt markets with a bond sale, which is scheduled for July 13, 2012. Besides, Spanish Prime Minister Mariano Rajoy stated that the government will take more measures amounting to 65 billion euros ($79.9 billion) to shore up the budget. The prime minister announced cuts in jobless benefits and public wages, signaled reductions in pensions and raised sales taxes as part of a 65 billion-euro ($80 billion) package of deficit cuts, risking a deeper recession. 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 negative in the ratio of 959:1642 while 122 scrips remained unchanged.

The BSE Sensex is currently trading at 17,285.56, down by 203.58 points or 1.16% after trading as high as 17,329.46 and as low as 17,181.17. There were 10 stocks advancing against 19 declining ones while 1 stock remained unchanged on the index.

The broader indices were trading weak; the BSE Mid cap index was down 0.66% while Small cap index declined 0.89%.

On the BSE sectoral space, Oil &Gas up by 0.38%, Fast Moving Consumer Goods up by 0.25% and PSU up 0.08% were the only gainers  while, Information Technology down by 5.15%, TECk down by 4.37%, Consumer Durable down by 1.63%, Realty down by 0.97%  and Capital Goods down by 0.88% were the top losers on the index.

Gail India up by 0.95%, ONGC up by 0.95%, Hero MotoCorp up by 0.85%, Hindustan Unilever up by 0.84% and SBI up by 0.68% and were the major gainers on the Sensex, while Infosys down by 8.57%, Wipro down by 3.31%, Bharti Airtel down by 2.82%, TCS down by 1.69% and Mahindra & Mahindra down by 1.67% were the major losers on the index.

Meanwhile, foreign direct investment (FDI) in multi-brand retail will boost a good amount of investment in the back-end supply chain of farm commodities, as per the joint report by ASSOCHAM-Yes Bank. The report pointed that a good revival in farm sector can be attained if government kick starts various agricultural reforms, including streamlining of policy norms to promote private sector investments in agriculture.

Likewise, the agricultural productivity can be accelerated, while building strong forward and backward linkages across the entire agri-value chain, and thus the agriculture sector can be empowered to meet the rising demand of food products. It also says public-private partnerships (PPP) with institutional and policy support is needed to revive the farm sector.

Further, the report also suggested the government that the investments in agri-supply chain can be encouraged by providing some incentives to corporates who engage in agricultural investments. And the private players who enter the sector through PPP mode with the government can bring a vast change in the unorganized Indian agricultural industry and the complex agi-supply chain.

The S&P CNX Nifty is currently trading at 5,244.40, down by 61.90 points or 1.17% after trading as high as 5,261.75 and as low as 5,217.70. There were 15 stocks advancing against 35 declines on the index on the index.

The top gainers on the Nifty were GAIL India up by 1.58%, Asian Paint up by 1.35%, BPCL up by 1.18%, ONGC up by 1.10% and Hero MotoCorp up by 0.99%. On the flip side, Infosys down by 8.54%, Wipro down by 3.49%, Bharti Airtel down by 2.77%, HCL Tech down by 2.45% and IDFC down by 2.14% was the major losers on the index.

Most of the Asian equity indices were trading in the red; Hang Seng index plunged 2.03%, Nikkei 225 declined 1.48%, Kospi Composite Index plummeted 2.24%, Taiwan Weighted plunged 1.75%, Strait Times surrendered 0.36%, Jakarta Composite lost 1.02%. On the flip side, Shanghai Composite up 0.46% was the lone gainer on the index.

The European markets were trading in red with, France’s CAC 40 dropped 0.16%, Germany’s DAX descended 0.33% and the United Kingdom’s FTSE 100 declined 0.50%.