Selling pressure intensifies; Nifty below 5,350 mark

Indian equities added losses to continue its weak trade gyrating near the lowest point of the day in the late afternoon session on account of selling in front line counters and taking clues from European counterparts. Traders were seen piling up position in IT, TECk and FMCG sector while selling was witnessed in Metal, Consumer Durables (CD) and Capital Goods (CG) sector. Majority of the companies, which are named in the list of coal scam disclosed by the Comptroller and Auditor General (CAG) last week, have been witnessing selling pressure. The market may remain volatile this week as traders may roll over positions in the Futures & Options (F&O) segment from the near-month i.e. August month series to next month i.e. September month series. The August 2012 derivatives contracts will expire on Thursday i.e.  August 30, 2012. In the scrip specific development, Power stocks, in the likes of Tata Power, Reliance Power and Adani Power, too could gain traction, as in much relief of India’s power producers that own 12,000 mw of capacity that use imported coal, the Attorney General of India, has cleared the way for a hike in tariff of electricity from private producers by saying that the central regulator should have the right to increase tariffs irrespective of the contracts signed by power producers with distribution companies.

On the global front, the Asian markets were trading in red barring Hang Seng index and Shanghai Composite while the European markets were trading on pessimistic note. Investors are eager to hear from European Central Bank President Mario Draghi, who is expected to speak at Jackson Hole on Saturday. Investors shifted attention to the long expected central bank action to revive sovereign bond market after talks between leaders of Germany, France and Greece were inconclusive. In economic news, UK home prices fell in August and German import price inflation declined unexpectedly and Swedish retail sales increased in July. On the home turf, the NSE Nifty and BSE Sensex were trading below their psychological 5,350 and 17,600 levels respectively. The market breadth on BSE was negative in the ratio of 709:1908 while 123 scrips remained unchanged.

The BSE Sensex is currently trading at 17583.65, down by 95.16 points or 0.54% after touching a high of 17712.35 and low of 17570.71. There were 9 stocks advancing against 21 declines on the index. The broader indices were too trading in red; the BSE Mid cap index was down by 1.70%, while Small cap index was down by 1.71%.

The top gainers on the BSE sectoral space were, IT up by 0.94%, TECk up by 0.47% and FMCG up by 0.33%, while Metal down by 3.29%, Consumer Durables down by 2.03%, Capital Goods down by 1.82%, Realty down by 1.41% and Bankex down by 1.28% were top losers on the index.

TCS up by 1.58%, Tata Power up by 1.45%, NTPC up by 1.12%, Infosys up by 1.08% and ITC up by 0.94% were the major gainers on the Sensex, while Jindal Steel down by 7.13%, Sterlite Industries down by 5.13%, Hindalco Industries down by 4.00%, Tata Steel down by 2.65% and L&T down by 2.47% were the major losers on the index.

Meanwhile, with the aim to boost bilateral investments and to strengthen economic relationship, India and China have agreed to establish a joint working group. At the ninth session of the India-China Joint Group on Economic Relations, Trade, Science and Technology, both countries also agreed to work on a five-year plan to address all trade-related issues, including the widening trade balance between the two countries.

In the meeting India raised concerns over widening trade deficit in favour of China and restricted market access in areas such as IT, pharmaceutical and agricultural products. India also pointed that non-tariff barriers by China to discourage imports is a major concern for Indian exporters. India also reemphasized on its invitation for leading Chinese companies to set up manufacturing bases in India.

The Chinese Trade Minister expressed hope of achieving $100-billion trade target by 2013. The total bilateral trade between India and China for 2011-12, stood at $75,457.42 million as compared with $59,000.36 million in 2010-11. During 2011-12, the exports were $17,902.98 million while the imports stood at $57,554.44 million. The provisional trade deficit for 2011-12 was $39,651.46 million.

The S&P CNX Nifty is currently trading at 5,319.35, down by 30.90 points or 0.58% after trading in a range of 5,359.25 and 5,312.60. There were 12 stocks advancing against 38 declines on the index.

The top gainers on the Nifty were TCS up by 1.63%, Power Grid up by 1.61%, NTPC up by 1.33%, Tata Power up by 1.29% and Infosys up by 1.08%. While, Jindal Steel down by 7.14%, Sterlite Industries down by 5.31%, JP Associates down by 4.59%, Hindalco Industries down by 4.00% and Sesa Goa down by 3.68% were the top losers on the index.

Asian indices were mostly trading in the red zone; Nikkei 225 declined 0.57%, KLSE Composite lost 0.11%, Taiwan Weighted plunged 1.42%, Jakarta Composite shed 0.42%, Straits Times dropped 0.14% and Kospi Composite Index was down by 0.08%, while Hang Seng index gained 0.07% and Shanghai Composite added 0.85% were the only gainers.

The European markets were trading in red with, France’s CAC 40 descending 0.63%, Germany’s DAX dropped 0.62% and the United Kingdom’s FTSE 100 lost 0.32%.