Indian equities continue reeling under pressure; Nifty above 5,300 mark

Indian equities continued its weak trade in the late afternoon session on account of selling in front line counters and taking clues from European counterparts. The hawkish tone, which was reflected in a speech delivered by Reserve Bank of India (RBI) governor D Subbarao in the US on August 28, 2012 has dented the sentiments with the barometer index BSE - Sensex and NSE - Nifty hitting their lowest level in two and half weeks. Traders were seen piling up position in Health Care, FMCG and Bankex sector while selling was witnessed in Realty, Auto and Metal sector. 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, Bharat Forge was trading firm on reports that promoters of auto ancillary firm are in talks with private equity firms to sell a $300 million stake in their wind energy firm, Kenersys. ONGC continued its yesterday’s fall triggered by reports that CAG in its report has slammed the firm for poor performance, static production and lowest drilling efficiency in the sector. Also, Morgan Stanley has downgraded the state-run firm to ‘equal weight’ citing potential downward revisions to domestic crude oil volumes for fiscal 2014 and uncertainty on international production. Bajaj Finserv was trading in red as the company fixed rights issue price at Rs 650 a share today. Sesa Goa was under pressure on reports that the Goa State Pollution Control Board (GSPCB) has directed Cosme Costa & Sons' Sonshi mine, which is operated by Sesa Goa, to stop dumping at sites located at Vaghuriem and Codierm villages of Sattari taluka. Wipro was trading firm after HSBC upgraded it to ‘overweight’ from ‘neutral’, stating that the Indian software services exporter was competing effectively for large deals, and adding the company is well positioned to improve sales after its extensive restructuring.

On the global front, the Asian markets were trading on a mixed note while the European markets were trading on pessimistic note. The political leaders shifted focus to Spain and leaders ramp up meetings this week to finalize the process of releasing capital to Spanish banks. Spanish Prime Minister Mariano Rajoy is scheduled to meet European Council President Herman Van Rompuy. The Spanish premier will also meet with French President Francois Hollande later this week. Besides, the National Statistics Institute in Madrid reported Spain’s recession grew worse in the second quarter, with the euro member’s gross domestic product falling 0.4% from the first quarter. 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 1024:1602 while 135 scrips remained unchanged.

The BSE Sensex is currently trading at 17,546.82, down by 84.89 points or 0.48% after touching a high of 17653.90 and low of 17,490.93. There were 10 stocks advancing against 20 declines on the index.

The broader indices were trading in red; the BSE Mid cap and Small cap indices were down by 0.28% and 0.39% respectively.

The top gainers on the BSE sectoral space were, Health Care up by 0.52%, Fast Moving Consumer Goods (FMCG) up by 0.38%, Bankex up by 0.09% and Consumer Durables up by 0.03% while Realty down by 1.93%, Auto down by 1.27%, Metal down by 1.00% Oil & Gas down by 0.73% and Capital Goods down by 0.70% were the top losers on the index.

Tata Power up by 2.65%, Jindal Steel up by 1.60%, Wipro up by 1.42%, Coal India up by 0.57%, and HDFC Bank up by 0.28% were the major gainers on the Sensex, while Sterlite Industries down by 4.26%, Bajaj Auto down by 3.82%, BHEL down by 2.80%, Hero MotoCorp down by 2.05% and ONGC down by 2.04% were the major losers on the index. 

Meanwhile, sensing growing split within Cabinet over the contentious Land Acquisition and Rehabilitation and Resettlement (LARR) Bill, 2011, Prime Minister (PM) Manmohan Singh referred the same to a group of ministers (GoM), after its provisions were hailed as 'flawed' and clauses relating to compensation were criticized for being anti-growth.

The very political bill was floated after the government decided to amend the provisions of Land Acquisition bill of 1894 when strong protest against land acquisition, especially in tribal areas, rocked states in 2007. The idea was to abate the absolute powers of state governments to acquire land by specifying in the bill the purpose for which it could be done.

Ironically, despite being endorsed as United Progressive Alliance’s gift to the aam admi, the bill was met with fierce flak by the party’s own ministers during Tuesday’s cabinet meeting. With no price for guessing, the Trinamool Congress (TMC) was also vocal in its opposition to the Bill. However, even vehement argument was put from urban development minister Kamal Nath who condemned that the bill would stall all activity, from metro rail to urbanization and industrialization.

However, Rural Development Minister Jairam Ramesh, who has been keen on pushing the Bill, is optimistic  that there would not be much of trouble to clear the bill, as 25 out of the 28 recommendations of the standing committee, were accepted.

The S&P CNX Nifty is currently trading at 5,302.60, down by 32.00 points or 0.60% after trading in a range of 5,345.50 and 5,290.15. There were 14 stocks advancing against 36 declines on the index.

The top gainers on the Nifty were Tata Power up by 2.76%, Wipro up by 1.42%, Jindal Steel up by 1.41%, Kotak Bank up by 1.22% and Ranbaxy Laboratories up by 0.83%. While, JP Associates down by 7.52%, SAIL down by 4.77%, Sesa Goa down by 4.61%, Sterlite Industries down by 4.36% and Bajaj Auto down by 3.64% were top losers on the index.

Asian indices were trading mixed; Kospi Composite Index up by 0.64%, Nikkei 225 added 0.40%, Taiwan Weighted advanced 0.40% and Straits Times gained 0.15% while  KLSE Composite was trading down by 0.04%,  Hang Seng lost 0.12%, Shanghai Composite plunged 0.96% and Jakarta Composite down by 1.40% were the losers.

The European markets were trading in red with, France’s CAC 40 descending 0.43%, Germany’s DAX dropped 0.44% and the United Kingdom’s FTSE 100 lost 0.54%.