Indian equities trim gains; Nifty holds 5,700 mark

Indian equities trim gains but continued to trade in green in the late afternoon session on back of buying in frontline counters and taking cues from the European counterparts. The sentiment in the market remained on optimistic mood from the start of the session on account of Spain’s austerity plan and on government’s H2FY13 borrowing calendar, which was in line with budget estimates combined with SC ruling on Presidential Reference, which provided the required fillip to local equity markets. However, cautiousness crept in after the release of core sector growth, which failed to emerge as a positive trigger for equity markets as eight core industries grew at a slower pace of 2.1 percent in August, as against 3.8 percent in the same month last year due to negative growth in crude oil, natural gas, fertilizer and cement. Traders were seen piling up position in Auto, Metal and Consumer Durables sector. In the scrip specific development, Kingfisher Airlines was locked in lower circuit limit after SBI-led consortium of lenders turned down the company’s Rs 200 crore working loan request. Tata Global Beverages was seen trading in green after the company confirmed that by the end of October 2012, it will open first Tata Starbucks store in India in Mumbai.

On the global front, Asian markets were trading in green barring Nikkei 225 while the European markets too were trading on optimistic note. Spanish Prime Minister Mariano Rajoy’s government announced an austerity plan to reduce the nation’s budget deficit, which features 40 billion euros ($51.7 billion) of spending cuts in 2013, resulting in an 8.9% decline in government spending compared with this year. Social spending will make up 64% of the proposed budget. Back home, the NSE Nifty and BSE Sensex were trading above their psychological 5,700 and 18,700 levels respectively. The market breadth on BSE was positive in the ratio of 1618:1144 while 128 scrips remain unchanged.

The BSE Sensex is currently trading at 18,799.33, up by 219.83 points or 1.18% after trading in a range of 18,869.94 and 18,698.51. There were 27 stocks advancing against 3 declining ones on the index.

The broader indices were too trading in green; the BSE Mid cap and Small cap indices were trading higher by 0.94% and 0.83% respectively.

Gains were sputtered across the board, prominent gainers on the BSE sectoral space were, Auto up by 2.04%, Metal up by 1.64%, Consumer Durables up by 1.56%, FMCG up by 1.45% and Power up by 1.38%.

The top gainers on the Sensex were Tata Motors up by 3.91%, Hindalco Industries up by 3.65%, Tata Power up by 2.34%, Cipla up by 2.02% and Tata Steel up by 2.01%. On the other hand, BHEL down by 0.79%, SBI down by 0.47% and HDFC Bank down by 0.13% were the only losers on the Sensex.

Meanwhile, after several rounds of discussions, the Group of Ministers (GoM) on pharma chaired by Agriculture Minister Sharad Pawar, has finalized drug pricing formula, it has proposed for fixing maximum retail price (MRP) of 348 essential medicines at the average price of all brands in a segment that has more than one per cent market share by sales. The draft of pricing policy is likely to reach Union Cabinet by next week for seeking approval. All the 348 drugs with 614 dosages of each and other combinations of medicines as mentioned in the National List of Essential Medicines (NLEM) are included in the draft for price control.

By passing this proposal, price of several costly brands will come down. Besides it will allow low-cost medicine manufacturers to increase their price. The draft also mandates doctors to recommend generic medicines and recommends opening up of more generic drugs stores across the country. The ministry panel however, denied to extend exemptions to medicines priced under or at Rs 3 a tablet, which was been put forth by the draft, National Pharmaceuticals Pricing Policy of November 2011.

However, Pharmaceutical companies are concerned that their margins will trim down, as the span of price control will now cover around 30 per cent of the Indian pharmaceutical market. The top 100 drug companies, both domestic and multinational, will be affected and there will be a 15-17 per cent revenue loss to the industry, at about Rs 1,500 crore.

The S&P CNX Nifty is currently trading at 5,712.90, up by 63.40 points or 1.12% after trading in a range of 5,735.15 and 5,683.45. There were 42 stocks advancing against 8 declines on the index.

The top gainers of the Nifty were Tata Motors up by 3.95%, Hindalco Industries up by 3.73%, Power Grid up by 3.04%, JP Associates up by 2.67% and Tata Power up by 2.30%. While, HCL Tech down by 1.01%, Ranbaxy Laboratories down by 0.97%, Reliance Infrastructure down by 0.70%, SBI down by 0.48% and BHEL down by 0.48% were the top losers on the index.

Most of the Asian indices were trading in green, Shanghai Composite surged 1.45%, Kospi Composite Index added 0.38%, Taiwan Weighted ascended 0.41%, Hang Seng gained 0.38%, Jakarta Composite moved higher by 0.43%, Straits Times rose 0.06% and KLSE Composite was up 0.40% while Nikkei 225 was down by 0.89% was the sole loser.

The European markets were trading in green with, France’s CAC 40 inched up 0.02%, Germany’s DAX added 0.42% and the United Kingdom’s FTSE 100 gained 0.33%.