Indian equities trim gains; trade continues above neutral line

Indian equities pare gains but continued to trade above neutral line in the late afternoon session taking clues from European counterparts. Also, the annual rate of inflation, based on the consumer prices index (CPI) in India, too eased in the month of June to 10.02 percent as compared to 10.36 percent for the previous month, supported the market. Besides, investors are also expecting that government will kick-start economic reforms after the upcoming presidential election. Traders were seen piling up position in Metal, IT and TECk sector while selling was witnessed in Auto, Consumer Durable and Health Care sector. Sesa Goa, Jindal Steel, Sterlite Industries, Tata Steel and SAIL from Metal pack were trading in green inching markets higher.  Infosys, Wipro, TCS and HCL Tech from IT counters were seen trading firm in green pulling the markets higher. In the scrip specific development, Cadila Healthcare is seen trading in green extending the yesterdays rally after the company announced that the USFDA has found the company's facilities at Moraiya acceptable.

On the global front, the Asian markets were trading mostly in red while the European markets were trading on optimistic note. The International Monetary Fund approved the disbursement of €1.48 billion to Portugal after completing its fourth review of the country’s performance under an economic program supported by an extended fund facility arrangement, bringing total disbursements to €21.13 billion. Also, policymakers at the Swedish central bank noted that the unease in Europe is casting a shadow over the Swedish economy. Meanwhile, Moody's Investors Service downgraded by one to two notches the long-term debt and deposit ratings for ten Italian banks and the issuer ratings for three Italian financial institutions, prompted by the weakening of the Italian government's credit profile. On the home turf, the NSE Nifty and BSE Sensex were trading above their psychological 5,150 and 17,100 levels respectively. The market breadth on BSE was negative in the ratio of 1455:1166 while 145 scrips remained unchanged.

The BSE Sensex is currently trading at 17,114.53, up by 9.23 points or 0.05% after trading as high as 17,147.75 and as low as 17,038.59. There were 17 stocks advancing against 13 declines on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.12% while Small cap indices were up by 0.04%.

The only gainers on the BSE sectoral space were, Metal up by 1.15%, IT up by 0.30% and TECk up by 0.27%. On the flip side, Auto down by 0.59%, Consumer Durable down by 0.41%, Health Care down by 0.35%, Oil & Gas down by 0.31% and Public Sector Undertaking (PSU) down by 0.19%, were top the losers on the index.

Bajaj Auto up by 3.03%, Tata Power up by 2.66%, Jindal Steel up by 1.81%, Sterlite Industries up by 1.78% and Coal India up 1.50% were the major gainers on the Sensex, while Tata Motors down by 2.72%, Dr. Reddy’s Lab down by 2.16%, SBI down by 1.22%, NTPC down by 1.04% and Hero MotoCorp down by 1.00% were the major losers on the index.

Meanwhile, in a meeting to discuss the strategy to deal with various issues of energy sector in the country in the 12th Five Year Plan (2012-17), Planning Commission urged States to increase electricity charges to instead use power subsidy to improve essential services like drinking water, education and health, essential for promoting inclusive growth.

Acknowledging that high growth is unattainable without addressing the issues of power sector, Plan panel deputy chairman Montek Singh Ahluwalia, while addressing the conference of states' power ministers, said, that the current situation could be handled through some combination of tariff increase and serious efforts to reduce Aggregate Technical and Commercial Losses (AT & C Losses), which is nothing but the sum total of technical loss, commercial losses and shortage due to non-realization of total billed amount.

Seconding Power Ministry's proposal to restructure power distributions companies’ debt to the extent of Rs 200,000 lakh crore, Ahluwalia said the states should increase the electricity tariff to reduce these firms deficit. Only rationalization of tariff, the Commission urged, could ensure sustainable growth of the ailing power sector. Though, he also warned States failing to raise power charges to be prepared for making steep adjustments, while stating that Centre would soon come out with a scheme to link central support to states with rationalization of power tariff.

The S&P CNX Nifty is currently trading at 5,193.20, up by 0.35 points or 0.01% after trading as high as 5,204.20 and as low as 5,169.05. There were 26 stocks advancing against 24 declines on the index.

The top gainers on the Nifty were Bajaj Auto up by 3.12%, Tata Power up by 2.82%, Sesa Goa up by 2.26%, Jindal Steel up by 1.80% and Sterlite Industries by 1.68%.  While PNB down by 2.94%, Tata Motors down by 2.81%, Dr. Reddy’s Lab down by 2.41%, SBI down by 1.41% and Power Grid down by 1.25% were the major losers on the index.

Most of the Asian equity indices were trading in the red; Kospi Composite plunged by 1.48%, Strait Times lost 0.02%, Taiwan Weighted descended by 1.09%, Hang Seng index plunged by 1.11%, and Nikkei 225 down 0.32%. While Jakarta Composite was up 0.05%, Shanghai Composite added 0.37% and KLSE Composite gained 0.24% were the only gainers amongst the Asian pack.

The European markets were trading in green with, France’s CAC 40 ascending 1.10%, Germany’s DAX added 0.37% and the United Kingdom’s FTSE 100 gained 0.25%.