Benchmarks trade lower tracking weak global markets

Key domestic benchmarks have made a lackluster start losing some ground in early morning trade on Wednesday, with the Sensex and Nifty losing about half a percent each as market participants stayed away to take any positions in the equities on the penultimate day of F&O September series expiry amid weakness in global markets. The US markets plunged overnight as the concern of Europe and weak outlook of multinational manufacturer Caterpillar weighed on the positive economic developments amid statement of Fed official that QE3 may not meaningfully boost economy. While, most of the Asian counters were trading in the red at this point of time on concern that stimulus announced by different central banks may not be sufficient to stop the slowing global economic growth.

Back home, traders were getting some support from Chief Economic Advisor Raghuram Rajan’s statement that India’s recent reforms measures has changed international perception about the country for the better and is likely to reverse the downward trajectory of economic growth and could help avert a credit ratings downgrade. Meanwhile, sentiments also remained optimistic after Liquor baron Vijay Mallya-led UB group stocks have been on buyers’ radar after the United Spirits confirmed that they are in talks with Diageo for stake sale. Kingfisher Airlines gained 4 per cent ahead of AGM today.

On the sectoral front, realty witnessed the maximum gain in trade followed by healthcare and fast moving consumer goods while, technology, capital goods and power remained the top losers on the BSE sectoral space. The broader indices were outperforming benchmarks while the market breadth on the BSE was evenly divided; there were 898 shares on the gaining side against 702 shares on the losing side while 72 shares remain unchanged.

The BSE Sensex opened at 18,644.54; about 50 points lower compared to its previous closing of 18,694.41, and has touched a low of 18,603.74 while high remain its opening.

The index is currently trading at 18,603.74, down by 90.67 points or 0.49%. There were 9 stocks advancing against 21 declines on the index.

The overall market breadth has made a positive start with 53.71% stocks advancing against 41.99% declines. The broader indices were outperforming benchmarks; the BSE Mid cap and Small cap indices surged 0.32% and 0.37% respectively.

The few gaining sectoral indices on the BSE were, Realty up by 0.81%, HC up by 0.57%, FMCG up by 0.49% and CD up by 0.09%. While, TECk down by 0.89%, CG down by 0.86%, Power down by 0.72%, Metal down by 0.71% and IT down by 0.67% were the top losers on the index.

The top gainers on the Sensex were Cipla up by 1.75%, GAIL up by 1.54%, M&M up by 1.07%, HUL up by 0.62% and ITC up by 0.58%.

On the flip side, Bharti Airtel was down by 2.83%, BHEL was down by 2.32%, Tata Power was down by 1.31%, Coal India was down by 1.22% and Tata Motors was down by 1.04% were the top losers on the Sensex.

Meanwhile, aiming the revival of insurance sector, the government is planning to unveil a slew of measures by easing the rules with the help of insurance regulator - IRDA, to protect the growth of the industry from hobbling. To make the financial products more attractive and to draw the investors away from assets such as gold, the government is looking at the tactic of lowering the service tax on insurance premiums.

Further, Finance Minister, P Chidambaram has convened a meeting with the IRDA on Sept 26, to firm up proposals to increase retail participation in insurance. This is mainly done to restore the sales of life insurance products, which fell steeply in the last financial year, due to strict regulatory regime following the plunge in the equities market that took the luster off unit-linked products.

The finance ministry is of the view that multiple tie-ups give consumers more choice and increase the reach of insurance. However, the regulator is against allowing banks to sell products of multiple insurers, arguing that this could raise operational costs and lead to mis-selling. Instead, it has suggested that banks set up separate brokerage firms, which could sell products of multiple insurers. The insurance industry also wants more flexibility in investment rules for insurance companies.

With the main concern to make sure the safety of shareholders' funds and to allow insurers subscribe more to infrastructure debt funds, IRDA has agreed in-principle to change the investment norms for insurers, to allow insurers to take a larger exposure to the infrastructure sector and also help deepen the bond market.

The S&P CNX Nifty opened at 5,653.40; about 20 points lower compared to its previous closing of 5,673.90 and has touched a high and a low of 5,658.50 and 5,643.75 respectively.

The index is currently trading at 5,651.95, down by 21.95 points or 0.39%. There were 19 stocks advancing against 31 declines on the index.

The top gainers of the Nifty were Cipla up by 1.72%, JP Associates up by 1.64%, GAIL up by 1.46%, M&M up by 1.29% and ACC up by 1.26%.

On the flip side, Bharti Airtel down by 2.74%, BHEL down by 2.23%, Tata Power down by 1.70%, SAIL down by 1.23% and HCL Tech down by 1.19%, were the major losers on the index.

Most of the Asian equity indices were trading in the red; Shanghai Composite was down by 9.66 points or 0.48% to 2,019.63, Hang Seng lost 187.88 points or 0.91% to 20,510.80, Jakarta Composite declined by 25.43 points or 0.61% to 4,201.29, Nikkei 225 plunged by 155.82 points or 1.71% to 8,935.72, Straits Times was lower by 19.68 points or 0.64% to 3,048.24, Kospi Composite declined by 11.25 points or 0.58% to 1,980.38 and Taiwan Weighted lost 67.39 points or 0.87% to 7,666.72.

On the other hand KLSE Composite, up by marginal 0.60 points or 0.04% to 1,618.99 was the lone gainer.