Markets near day’s low on global woes

Indian equity markets pared early losses and currently trading near low point of the day, following a firm start and a subsequent rise to higher levels. Investors were trading cautiously on worries about the global economic outlook amid latest rating downgrade on Italy, domestic inflation and lack of initiatives from the government to boost growth. In currency market, rupee appreciated against dollar on the back of dollar selling. On sectoral front banking, tech, oil and PSU stocks were trading in green, while metal and consumer durables were trading in red. In global markets, most of the Asian shares were trading in green. Back home, the market breadth favoring positive trend; there were 1,495 shares on the gaining side against 891 shares on the losing side while 96 shares remained unchanged.

The BSE Sensex is currently trading at 17,282.48 up by 49.93 points or 0.29% after trading as high as 17,342.88 and as low as 17,264.79. There were 18 stocks advancing against 11 declines on the index and one remained unchanged.

The broader indices were trading on a positive note; the BSE Mid cap index up 0.47% while Small cap index was up 0.59%.

The top gainers on the BSE sectoral space were, Bankex up by 0.55%, TECk up by 0.36%, Oil & Gas up by 0.35%, PSU up by 0.30% and Auto up by 0.29, while Metal down by 0.30% and Consumer Durables down by 0.12% were top losers on the index.

Cipla up by 1.72%, TCS up by 1.65%, HDFC Bank up by 1.40%, Gail India up by 1.07% and Hero MotoCorp up by 0.99% were the major gainers on the Sensex, while Jindal Steel down by 1.58%, Maruti Suzuki down by 0.90%, Infosys down by 0.68%, Sun Pharma down by 0.48% and Dr Reddys Lab down by 0.37% were the major losers in the index.

Meanwhile, in a bid to rein in the burgeoning fiscal deficit, the government is likely to hike the price of heavily subsidized and widely used fuels such as diesel, after the much awaited presidential election on July 19, as the downgrade sword continues to hang around the neck of India’s sovereign rating. However, any decision is unlikely to be taken by the government, with thin majority, before elections for the two top constitutional posts, at the altar of economic policies. It is reported that diesel prices could be hiked either after presidential election on July 19 or after appointment of the new vice-president on August 7, 2012. 

The speculation is rife that the government this time around may go for Rs 5 per litre hike, after being forced to partially roll back Rs 7.54 hike in petrol prices on May 23, following strong backlash by Opposition parties as well as a UPA ally, the Mamata Banerjee-led Trinamool Congress.

The ministerial panel on fuels, back in June 2010, took a bold, in principle decision to deregulate diesel prices. But the development on this decision has been static in backdrop of political unfeasibility in the labyrinth of coalition politics. However, the government this time around, is left with no-option, rather than hiking diesel prices, to prevent downgrade of India's sovereign rating by Standard & Poor's (S&P), which could trigger an exodus of foreign investors.  Further, the government, which is estimated to be shouldering diesel subsidy burden of around Rs 80,000 crore annually, is also estimated to have cooking gas and Kerosene price hike on cards.

Back in April, citing slow progress on its fiscal situation, as well as deteriorating economic indicators, Ratings agency S&P slashed India's outlook to negative from stable, with a further threat to downgrade India’s country’s credit rating to junk status on account of falling growth prospects for Indian gross domestic product, and political paralysis threatening fiscal reforms. S&P in all serves a 90 day’s notice to governments to take corrective action, with around two months of the notice period remaining for India, after its outlook was rated negative, the uproar for price hike gains momentum.  

The S&P CNX Nifty is currently trading at 5,242.75, up by 7.50 points or 0.14% after trading as high as 5,267.15 and as low as 5,242.75. There were 30 stocks advancing against 20 declines on the index.

The top gainers on the Nifty were TCS up by 1.62%, Cipla up by 1.44%, HDFC Bank up by 1.34%, IDFC up by 1.10% and PNB up by 1.07%. On the other hand, Jindal Steel down by 1.73%, Maruti down by 0.97%, Sterlite Industries down by 0.67%, Infosys down by 0.64% and JP Associates down by 0.64% were the major losers on the index.

Most of the Asian equity indices were trading in green; Hang Seng index up by 0.28%, Nikkei 225 up 0.12%, Kospi Composite Index up 1.79%, Strait Times up 0.32%, Jakarta Composite up 0.75% and KLSE Composite up 0.04% and Shanghai Composite was up 0.13%. On the flipside, only Taiwan Weighted was down 0.37%.