Domestic bourses pause for breath after series of gains

Indian equities paused for breath in view of fourteen-month highs, as participants preferred to book some profit off the table in absence of fresh positive triggers on Tuesday. The bourses traded in tight band throughout the day’s trade and snapped the session near their pre-close levels as investors waited for further signals after the series of gains. The gauges turned negative, after recapturing positive terrain in early trade, following bitter consumer prices index (CPI) in India, which crept higher in the month of August, entering double digit figure of 10.03 percent, driven by the rise in food inflation. August CPI food inflation accelerated to 12.03 percent from 11.53 percent a month earlier.

Some sense of cautiousness also was drawn on account of political drama in the country, as Mamta Banerjee led Trinamool Congress is expected to take some decision on its support to Congress-led United Progressive Alliance (UPA) government, after its 72-hour deadline to rollback diesel price hike, remove the cap on subsidised LPG cylinders and disallow foreign direct investment (FDI) in multi-brand retail ends on Tuesday evening. The sentiments also remained pessimistic after Industry body ASSOCHAM said that it is deeply disappointed by the Reserve Bank of India's decision to leave interest rates unchanged.

The global cues too remained feeble as European counters traded lower in the early deals as investors turned their attention from central bank’s stimulus to slowing global growth and uncertainty about Spain’s desire for an international aid package. Investors’ worries about Spain's willingness to accept an EU/IMF bailout overshadowed the recent progress that policymakers made in fighting the euro zone debt crisis. Moreover, Asian markets too shut shop in the red as markets paused from sharp gains inspired by the Federal Reserve’s aggressive stimulus and turned instead to concerns about the growth slowdown in China.

Back home, some amount of pressure came in from energy stocks, which remained the biggest underperformers led by the sharp fall in market bellwether Reliance Industries, losing over two percent. The selling in software pack too dampened the sentiments and stocks like TCS, Wipro, Tech Mahindra and Mphasis all edged lower after Indian rupee strengthened against the US dollar as rupee recovered to 54.00 levels from 54.36. However, losses remain capped after banking stocks advanced for the second straight day after RBI announced a reduction of 25 basis points in the cash reserve ratio (CRR) of scheduled banks to 4.5% of their net demand. The sentiments also got some respite after shares of sugar manufacturing companies remained in demand with most of the frontline stocks up by over 4 percent on expectation of huge demand ahead of the festive season.

Eleven sugar shares rose by 0.69% to 6.3% at 15:20 IST on BSE on expectations of a rise in retail demand in the next two months due to festivals.

Meanwhile, the NSE’s 50-share broadly followed index Nifty, fell by just ten points but managed to hold the psychological 5,600 support level, while Bombay Stock Exchange’s Sensitive Index - Sensex moved down by about fifty points to finish tad below the psychological 18,500 mark. Moreover, the broader markets outperformed benchmarks and ended the session with a gain of about a percent. The market breadth remained in favor of declines as there were 1,692 shares on the gaining side against 1,197 shares on the losing side while 124 shares remain unchanged.

The BSE Sensex lost 46.30 points or 0.25% to settle at 18,496.01, while the S&P CNX Nifty declined by 9.95 points or 0.18% to close at 5,600.05.

The BSE Sensex touched a high and a low of 18,580.48 and 18,469.51 respectively. However, the BSE Mid cap index was up by 0.88% and Small cap index up by 0.73%. 

BHEL up by 5.44%, SBI up by 3.59%, Gail India up by 3.01%, Jindal Steel up by 2.64% and Infosys up by 1.45% were top gainers on the Sensex, while Wipro down 3.79%, TCS down 3.02%, Hindalco down 2.13%, Reliance down 2.11% and NTPC down 1.51% were top losers on the index.

The major gainers on the BSE sectoral space were, PSU up 1.58%, Capital Goods (CG) up 0.90%, Power up 0.88%, Bankex up 0.69% and Realty up 0.49%, while Oil & Gas down 1.13%, IT down 0.54%, Health Care (HC) down 0.22%, Metal down 0.19% and TECk down 0.09% were top losers on the BSE sectoral space.  

Meanwhile, despite the hue and cry by the allies of the government and opposition, Finance Minister P Chidambaram has ruled out rolling back decisions on diesel, LPG and FDI in retail and has expressed confidence that the government faces no threat from allies either inside or outside.

Not only this, the Finance Minister said that the government will take more policy steps in the next one-and-half months to revive growth, ‘I am very confident that between now and October 30, the government is expected to take a number of additional policy measures and also lay out a plan of fiscal consolidation.’

Chidambaram also appreciated the RBI’s initiative of reduction in CRR by 0.25 per cent to unlock Rs 17,000 crore of banking funds and said that the response of RBI on October 30 will be far more supportive of growth. The Reserve Bank is scheduled to come out with second quarter monetary policy review on October 30.

However, he raised his apprehensions about fiscal deficit target not being achieved and said that we will be lucky if we can achieve the fiscal deficit target of 5.1 percent of GDP and conceded that there could be some slippage.  

The S&P CNX Nifty touched a high and low of 5,620.55 and 5,586.45 respectively.

The top gainers on the Nifty were PNB up by 7.90%, BHEL up by 5.20%, SBI up by 3.39%, Bank of Baroda up by 3.02% and GAIL up by 2.71%. On the flip side, Cairn down by 3.81%, Wipro down 3.78%, TCS down 3.00%, Hindalco down 2.39% and Reliance down by 2.15% were top losers.

The European markets were trading in red, France's CAC 40 down by 1.06%, Germany's DAX down by 0.95% and United Kingdom’s FTSE 100 down by 0.66%.

Most Asian stocks ended lower on Tuesday on the back of profit-taking after last week's huge gains sparked by the US Federal Reserve stimulus plan and following losses on Wall Street. Increasing geo-political worries between Japan and China dragged down shares of Tokyo- listed companies like Honda Motor and Fast Retailing on Shanghai Composite and slowing growth in the U.S. also pressurized the market to an extent. However, gains among utilities restricted losses on Japan’s Nikkei 255 as equity markets reopened today after a public holiday. Meanwhile, Korea Composite closed higher amid alternate bouts of buying and selling throughout the day. Hong Kong shares fell from a 4-1/2-month high in light trade, due to weakness in commodity sectors.