Weak trade persist; Nifty below 5,100 mark

Indian equities added losses to continue its weak trade in the late afternoon session on account of selling spree by domestic investors and taking clues from subdued European counterparts. Investors have started showing rising concern from unpredictable monsoon rains this year along with provisional data, which showed that foreign funds have sold Indian stocks yesterday i.e. July 25, 2012. The market may remain volatile at the end as traders may roll over positions from the near-month July 2012 series to August 2012 series. The July 2012 derivatives contracts will expire today i.e. July 26, 2012. Traders were seen piling up position in Health Care sector while selling was witnessed in Realty, Capital Goods and Oil & Gas sector. In the scrip specific development, state-owned power equipment manufacturer BHEL was seen trading firm after reporting a 13% jump in its Q1FY13 net profit at Rs 921 crore on Y-o-Y basis. Monnet Ispat & Energy tumbled after the Supreme Court upheld the cancellation order regarding mining leases of six mining companies in Jharkhand. Meanwhile, Aviation stocks were trading on mixed note ahead of cabinet meet tentatively on July 27, to take on board, ‘FDI in Aviation’ proposal, on the losing end were Kingfisher Airline and Spicejet, while showcasing strength was Jet Airways (India).

On the global front, the Asian markets were trading mixed while the European markets too traded on mixed note. The Office for National Statistics in London stated that the UK economy shrank 0.7 percent in the second quarter from the prior three months, the most since 2009. The UK economy contracted more than expected in the second quarter. On the home turf, the NSE Nifty and BSE Sensex were trading below their psychological 5,100 and 16,900 levels respectively. The market breadth on BSE was negative in the ratio of 911:1690 while 117 scrips remained unchanged.

The BSE Sensex, losing 42.37 points or 0.25%, is currently trading at 16,803.68 after trading as high as 16899.77 and as low as 16787.82. There were 16 stocks advancing against 14 declines on the index.

The broader indices were too trading in red; the BSE Mid cap and Small cap indices were trading lower by 1.17% and 1.13% respectively.

Health Care up by 0.46% remained the sole gainer on the BSE sectoral space, while Realty down by 1.56%, Capital Goods down by 1.08%, Oil & Gas down by 0.90%, PSU down by 0.70% and Bankex down by 0.54% were the top losers on the index.

Sun Pharma up by 2.49%, Bajaj Auto up by 1.76%, Dr Reddys Lab up by 1.13%, Maruti Suzuki up by 1.09% and Bharti Airtel up by 1.05% were major gainers on the Sensex, while Tata Power down by 2.08%, Tata Motors down by 1.50%, ONGC down by 1.43%, SBI down by 1.37% and Wipro down by 1.36% were the major losers in the index.

Meanwhile, International Air Transportation Association’s (IATA) Director General and CEO, Tony Tyler has suggested a ‘India Inc.’ approach to address multi-faceted crisis in Indian aviation. The crippling issues of the sector are high operating costs, exorbitant taxes and insufficient infrastructure. He opined that the crisis can be resolved with coordinated public policies and aggregate plans by the government by keeping in view that Indian economy can be greatly complimented through a revenue generating sector like aviation.

While criticizing Airports Economic Regulatory Authority’s (AERA) move, which has increased airport charges by 346% at Delhi International Airport since May 2012, he pointed out that it will add over $400 million in operating costs for airlines providing connectivity to India through Delhi and will impact travel demand by 5-7%. He urged to expedite action in infrastructure upgrade by enhancing airline capacity in Mumbai, by building new airport.

He also pointed that the component of fuel cost in the total operational cost of Indian carriers is approximately 50 per cent, while the same is around 33 per cent in other markets. Though, the airlines cannot shift the entire escalating operational cost to the consumer in India, as these conditions will stifle demand. Hence he had asked the government to help the airlines to reduce the gap in the operational cost and operation revenue by reducing taxes and infrastructure costs.

Indian Aviation sector is supporting about 1.7 million jobs, 0.5% of GDP and 90% of international tourist arrivals.  India is a market of about 100 million passengers annually and has a projected potential of over 2 billion travelers. Albeit, Indian airline’s losses approached $2 billion for the year ended March 2012, after losing an estimated $3.5 billion over the three previous years.

The S&P CNX Nifty is currently trading at 5095.05, down by 14.55 points or 0.28% after trading as high as 5,126.30 and as low as 5,089.35. There were 21 stocks advancing against 29 declines on the index.

The major gainers on the Nifty were Sun Pharma up by 2.54%, Ambuja Cement up by 2.27%, Bajaj Auto up by 1.93%, Power Grid up by 1.40% and Maruti Suzuki up by 1.31%. While, PNB down by 3.47%, Bank of Baroda down by 2.73%, SAIL down by 2.40%, Tata Power down by 1.87% and BPCL down by 1.76% were the major losers on the index.

The Asian equity indices were trading on a mixed note; Hang Seng index gained 0.08%, Nikkei 225 added 0.92%, Kospi Composite Index rose 0.74% and Straits Times expanded 0.69%, while Taiwan Weighted slid 0.12%, KLSE Composite descended 0.72%, Jakarta Composite lost 0.24% and Shanghai Composite down by 0.47%, were the major losers.

The European markets were trading on a mixed note with, France’s CAC 40 ascended 0.08%, Germany’s DAX lost 0.46% and the United Kingdom’s FTSE 100 dropped 0.06%.