Indian equities trim losses; trade continues on a weak note

Indian equities trimmed losses however, trade continues on a weak note below neutral line in the late afternoon session. Traders were seen piling up position in FMCG and TECk sector while selling was witnessed in Metal, Capital Goods and Bankex sector. Metal stocks were trading under pressure as global commodity prices declined since there is growing concerns about the strength of the global economy. Also on fears that slowdown in the economy could crimp new orders prompted selling in Capital Goods stocks. In the scrip specific development, Axis Bank was trading in red touching its three-month low after Morgan Stanley downgraded the private sector lender to ‘underweight’ from ‘equal weight’ and slashed its target price citing rising impairments. Balaji Telefilms was trading firm on reports that Star India is open to selling its 25.9% stake in company, to its promoters. The broadcaster had bought the stake in 2004. Exide Industries, the country's largest lead acid storage battery manufacturer and stored energy solutions provider, was trading in green after the Bank of America - Merrill Lynch upgraded rating on the stock to buy.

On the global front, the Asian markets were trading in red while the European markets were trading on pessimistic note. European Central Bank (ECB) President Mario Draghi is expected to unveil measures tomorrow i.e. September 06, 2012, to support sluggish growth in debt-stricken Europe. Besides, Mario Draghi hinted that he is comfortable buying 3-year bond issued by member nations. The widely anticipated and expected action has kept the yields on Spanish and Italian bonds under control. On the home turf, the NSE Nifty and BSE Sensex were trading below their psychological 5,250 and 17,400 levels respectively. The market breadth on BSE was negative in the ratio of 1215:1423 while 133 scrips remain unchanged.

The BSE Sensex is currently trading at 17,322.18, down by 118.69 points or 0.68% after touching a high of 17411.67 and low of 17,250.80. There were 7 stocks advancing against 23 declines on the index.

The broader indices too succumbed to selling pressure; the BSE Mid cap and Small cap index were trading lower by 0.25% and 0.27% respectively.

The gainers on the BSE sectoral space was, FMCG up by 0.69% and TECk up 0.34%. While Metal down by 2.39%, Capital Goods down by 2.12% Bankex down by 1.51%, Power down by 1.45%, and PSU down by 1.13 were the top losers on the sectoral space.

The top gainers on the Sensex were Bharti Airtel up by 2.92%, Hindustan Unilever up by 1.70%, TCS up by 0.78%, ITC up by 0.66% and HDFC Bank up by 0.47%. On the flip side, BHEL down by 4.34%, Jindal Steel down by 3.93%, Tata Steel down by 3.28%, ICICI Bank down by 2.99% and Sterlite Industries down by 2.91% were the top losers on the Sensex.

Meanwhile, the Commerce and Industry Minister Anand Sharma confirmed that the government is not diluting mandatory sourcing norm for global retailers. He affirmed that the global retailers would have to procure 30% of their merchandise requirement from domestic small industries that have a total investment in plant and machinery not exceeding $1 million.

The minister also ensured that the government, in order to make the policy attractive for investments would issue norms for 100% foreign direct investment (FDI) in single-brand retail. This is conjunction with Swedish furniture retailer IKEA‘s investment proposal. The retail giant had proposed to invest about Rs 10,500 crore for single brand retail stores in India and had asked the centre to allow it to continue sourcing from small units even after the vendors have crossed the mandatory $1 million investment limits.

It has also proposed that the calculation of the 30% norm has to be done for cumulative periods of 10 years of operations starting with the approval of the present application. Brands like Apple and Rolex have stepped back from investing in India as they cannot meet the mandatory sourcing requirements.

The S&P CNX Nifty is currently trading at 5,230.45, down by 43.55 points or 0.83% after trading in a range of 5,259.50 and 5,215.70. There were 7 stocks advancing against 42 declines on the index, while 1 stock remain unchanged.

The top gainers of the Nifty were Bharti Airtel up by 2.90%, HUL up by 1.71%, TCS up by 1.10%, ITC up 0.62% and HDFC Bank up by 0.52%. On the flip side, AXIS Bank down by 4.61%, BHEL down by 4.41%, Jindal Steel down by 4.12%, Tata Steel down by 3.40% and Sesa Goa down by 3.21% were the major losers on the index.

All the Asian indices were trading in red; Nikkei 225 plunged 1.09%, Hang Seng index slid 1.47%, Shanghai Composite lost 0.29%, Kospi Composite Index plummeted by 1.74%, Taiwan Weighted skid 1.13%, Jakarta Composite lost 0.53%, Straits Times slid 0.57% and KLSE Composite declined by 0.66%.

The European markets were trading in red with, France’s CAC 40 descended 0.75%, Germany’s DAX dropped 0.42% and the United Kingdom’s FTSE 100 lost 0.60%.