Markets slide to intra-day’s low; broader indices slip into the red

Indian equity markets, paring substantial gains are currently trading near intra-day’s low level, even as European markets have got off to a positive start.  Losing steam gradually, 30 share barometer index, Sensex, is currently gyrating sub 17150 level, while the 50 share index, Nifty, oscillating around its neutral line, is holding onto its 5200 bastion. However, broader indices, shaving all the gains, have slipped into negative territory. Stocks from Health Care, Fast Moving Consumer Goods and Metal counters, are the one’s that supporting the upside of the bourses, while stocks from Information Technology, Power and Auto counters are went that endorsing the underlying weakness of the bourses.

Power stocks, are trading lackluster ahead of the Planning Commission meet with the state power ministers on Tuesday to take on board issues hampering the growth of the crucial power sector, mainly that of fuel shortages and the weak financial health of distribution companies (discoms). Power stocks in the likes of Torrent Power, Reliance Infra and GMR Infra, have plunged in the range of 1.5-5%, However, even Tata Power and Reliance Power, which gained on the reports of Delhi’s power regulator hiking electricity tariffs by 24.15 percent, effective  from July 1, have ran out of steam on profit booking. New Delhi is a key market for both power companies. Meanwhile, Aviation stocks such as Spicejet, Jet Airways and Kingfisher Airlines, are all trading sideways since Oil firms have hiked the ATF or jet fuel prices by 1.7%. This development comes as blow to the already beleaguered aviation sector, as jet fuel constitutes more than 40% of the airline’s operating cost.

On the global front, talks that Federal Reserve Chairman Ben Bernanke may signal more monetary stimulus in testimony to the U.S. Congress later in the day, buoyed the spirit of European shares. Investors have been positioning for a more dovish tone from the Fed chairman following weak U.S. retail sales data and a cut in the International Monetary Fund's global growth forecast, which have strengthened the case for slowing world economy growth.

Back home, the BSE Sensex is currently trading at 17,139.53, up by 36.22 points or 0.21% after trading in a range of 17236.08 and 17,136.38 respectively. There were 19 stocks advancing against 11 declines on the index.

The broader indices shaving all gains, slipped into the red territory; the BSE Mid and Small cap indices were trading lower by 0.28% and 0.19% respectively.

The top gainers on the BSE sectoral space were, HC up by 1.19%, FMCG up by 0.58%, Metal up by 0.11%, PSU and Bankex were up by 0.07%.  On the flip side, major losers were IT down by 0.66%, Power down by 0.38%, Auto down by 0.32%, Teck down by 0.24% and CD down by 0.16%.

Dr Reddy up by 2.20%, Sun Pharma up by 2.19%, Bharti Airtel up by 2.10%, Hindalco up by 1.06% and Coal India up by 0.78% were the top gainers on the Sensex, while Bajaj Auto down by 2.17%, TCS down by 1.84%, BHEL down by 0.67% Sterlite Industries down by 0.39% and ONGC down by 0.35% were the major losers in the index.

Meanwhile, the Planning Commission has called for a meeting of state power ministers on Tuesday to take on board issues hampering the growth of the crucial power sector, mainly that of fuel shortages and the weak financial health of distribution companies (discoms). The commission will also discuss capacity additions and challenges for the 12th Plan.

Currently, discoms’ have debt burden amounting to Rs 2 lakh crore majorly caused by subsidy on power tariffs, the major portion of which is granted to the agriculture sector. Most states have kept agriculture tariffs as low as Re 1 per unit while average tariff for general consumers across the country is pegged at Rs 3 per unit.

In a move to rejig discom’s debt, the Power Ministry is considering a proposal where 50% of the total amount of debt would be converted into bonds to be issued by the respective state governments, while the remaining will be restructured. In addition, the Centre will give moratorium on the remaining debt for 3 years. This two phased bailout package for the ailing State Electricity Distribution Companies would be sent to the Cabinet Committee for Economic Affairs’ (CCEA) approval, after the discussion with the States.

The S&P CNX Nifty is currently trading at 5,206.25, up by 9 points or 0.17% after trading in a range of 5,236.70 and 5203.60 respectively. There were 25 stocks advancing against 24 declines, while one stock remained unchanged on the index.

The major gainers on the Nifty were Dr Reddy up by 2.25%, Sun Pharma up by 2.17%, Bharti Airtel up by 2.16%, Ranbaxy up by 1.25% and Hindalco Industries was up by 1.18%.  While Bajaj Auto down by 2.33%, BPCL down by 2.29%, TCS down by 1.73%, Reliance Infra down by 1.54% and BHEL down by 0.96% were major losers on the index.

All the Asian equity indices were trading in the green; Shanghai Composite gained 0.60%, Hang Seng index surged by 1.65%, Jakarta Composite added 0.75% and KLSE Composite rose 0.32%, Nikkei 225 inched higher by 0.04% and Taiwan Weighted expanded by 0.52%.

European markets too got off to a positive start; CAC 40 added 0.41%, BEL-20 gained 0.68%, while  FTSE 100 traded flat with 0.04% loss.