Indian equities drift further; oscillate near lowest point of the day

Indian equities added losses to continue its weak trade in red oscillating near the lowest point of the day in the late afternoon session on back of selling in frontline counters and taking cues from European counterparts. The sentiments in the market were also dampen on reports suggesting that rating agency S&P lowered India’s GDP growth forecast to 5.5%, which mainly discouraged investor’s from building position in risky asset class such as equities. Traders were seen piling up position in Realty, Power and Capital Goods sector while selling was witnessed in FMCG, Oil & Gas and Health Care sector. In the scrip specific development, sugar stocks were seen trading firm in green on buzz that the government will announce reduction in subsidy on sugar made available to below-poverty-line consumers under the public distribution system. Jai Balaji Industries was trading in green on receiving CDR approval letter. GVK Power & Infrastructure was trading in green on reports that the company, which operates Mumbai Airport, has sought more than sevenfold increase in aeronautical tariffs. Jain Irrigation Systems were firm on reports that the company has allotted 75 lakh warrants to promoters at Rs 86.30 per share on a preferential basis.

The market may remain volatile this week as traders may roll over positions in the F&O segment from the near month i.e. September 2012 series to next month i.e. October 2012 series. The September 2012 F&O contracts expire on Thursday i.e. September 27 2012. On the global front, the Asian markets were trading on a mixed note while the European markets were trading on pessimistic note.  On the home turf, the NSE Nifty and BSE Sensex were trading below their psychological 5,700 and 18,700 levels respectively. The market breadth on BSE was positive in the ratio of 1585:1177 while 120 scrips remain unchanged.

The BSE Sensex is currently trading at 18,675.76, down by 77.07 points or 0.41% after trading in a range of 18,811.13 and 18,674.24. There were 14 stocks advancing against 16 declines on the index.

The broader indices were trading in green, with the BSE Mid cap index trading up by 0.44% and Small cap index gaining 1.02%.

On the BSE sectoral space, Realty up by 1.85%, Power up by 1.85%, Capital Goods up by 1.56%, Metal up by 0.89% and Auto up by 0.78% were the top gainers. While FMCG down by 1.44%, Oil & Gas down by 0.88%, Health Care down by 0.48%, TECk down by 0.46% and IT down by 0.45% were the top losers.

The top gainers on the Sensex were BHEL up by 7.04%, Jindal Steel up by 4.54%, Mahindra & Mahindra up by 3.57%, Hindalco Industries up by 2.46% and Maruti Suzuki up by 2.03%. On the other hand, Hindustan Unilever down by 2.79%, HDFC down by 2.33%, ITC down by 2.03%, Cipla down by 1.87% and ONGC down by 1.24% were the top losers on the Sensex.

Meanwhile, after the string of strong policy reforms taken to reduce the burden of fiscal deficit and to facilitate more foreign money into the country, India is now anticipating for more reforms, as Prime Minister Manmohan Singh affirmed revitalization of corporate and commercial laws after the overseas borrowing norms were eased by the government for availing credit facility for local companies and to garner more capital. The government is examining the commercial and corporate laws to make them relevant to the challenges that lie ahead. By adding further he said, more reforms are required to pull the country out of a 1991-type economic abyss.

The government had raised the limit of rupee loans that infrastructure and manufacturing companies are allowed to refinance through overseas borrowings. He also pointed out that it is the responsibility of the centre to ensure that the corporate laws match up to international standards, to the expectations of international investors. With the exit of Mamata Bannerjee’s TMC, the UPA government has now got the freedom to push through several important bills, including the land bill, the pension and insurance bills which have been paused due to strong opposition from Mamata. The Companies Bill, which plays a major role in the functioning of the corporate sector, is stalled as the opposition - Bharatiya Janata Party protested it to be passed in its current form and had demanded some significant changes.

The bill has proposed tightening of laws for raising money from the public. It also urges to prohibit insider trading by company directors or other officials of the company and to treat such activities as a criminal offence. It also suggests that the companies should keep aside 2% of the average profit of the preceding three years for CSR activities and to make a disclosure to shareholders about the policy adopted in the process. The new bill also incorporate features like class action suits, which will benefit small investors seeking relief from large corporations.

The S&P CNX Nifty is currently trading at 5,668.40, down by 22.75 points or 0.40% after trading in a range of 5,709.85 and 5,667.95. There were 19 stocks advancing against 31 declines on the index.

The top gainers of the Nifty were BHEL up by 7.25%, Jindal Steel up by 4.56%, M&M up by 3.42%, Reliance Infrastructure up by 3.30% and Siemens up by 2.73%. While, HCL Tech down by 2.99%, Hindustan Unilever down by 2.80%, HDFC down by 2.51%, Ranbaxy Laboratories down by 2.28% and ITC down by 2.06% were the top losers on the index.

Some of the Asian indices were trading in green towards the end of the trade, Shanghai Composite was up by 0.32%, Kospi Composite Index gained 0.05%, and Taiwan Weighted was up by 0.18%.    

On the other hand, Hang Seng declined 0.19%, Jakarta Composite lost 1.04%, KLSE Composite slid 0.72%, Nikkei 225 descended 0.45% and Straits Times skid 0.19%.

The European markets were trading in red with, France’s CAC 40 descending 0.90%, Germany’s DAX dropped 0.39% and the United Kingdom’s FTSE 100 inched down 0.48%.