Indian equities trim gains; trade continues in green

Indian equities trimmed gains but continued its firm trade in green in the late afternoon session on back of buying in frontline counters. The market started off the trade on a positive note with 50-unit S&P CNX Nifty touching its highest level in more than 17-months whereas the barometer index Sensex touched its high level in more than 14-months. Investors’ are taking cautious approach and are reluctant to open fresh position in absence of positive triggers, and have started eyeing the second quarter September 2012 earnings season, which will begin around mid-October 2012. Traders were seen piling up position in Health Care, Oil & Gas and Metal sector while selling was witnessed in Consumer Durables, Realty and Auto sector. In the scrip specific development, Kingfisher Airlines is trading in lower circuit limit after the company declared partial lock-out on continued labour unrest and decided that the flight operations to be suspended until October 04, 2012. Infosys was trading in red after global brokerage CLSA retained its underweight call on the software services exporter, and said prices can fall up to 40% from current levels. Hotel Leela Venture is trading in green on reports that the company is expecting to raise Rs 620 crore by selling non-core assets. Rain Commodities is trading firm on reports that the company will buy back the shares at Rs 46 per share.

On the global front, Asian markets were reeling under pressure while the European markets too were trading on a pessimistic note.  Spain has replaced Greece, Ireland and Portugal as the main threat to the euro zone and the euro. Separately, Greece faced more protests as troika inspectors and finance ministry struggled to finalize the details of austerity measures before the release of the next installment of loans. Greece is resisting the demand to implement additional 2 billion euros of spending and asking for more time but IMF has refused to accept it. Back home, the NSE Nifty and BSE Sensex were trading above their psychological 5,700 and 18,800 levels respectively. The market breadth on BSE was positive in the ratio of 1596:1197 while 141 scrips remain unchanged.

The BSE Sensex is currently trading at 18,853.05, up by 29.14 points or 0.15% after trading in a range of 18,905.62 and 18,816.57. There were 20 stocks advancing against 10 declines on the index.

The broader indices were too trading in green; the BSE Mid cap and Small cap indices were trading up by 0.30% and 0.71% respectively.

On the BSE sectoral space, Health Care up by 0.80%, Oil & Gas up by 0.70%, Metal up by 0.42%, Capital Goods up by 0.41% and FMCG up by 0.39% were top gainers. While, Consumer Durables down by 0.50%, Realty down by 0.39%, Auto down by 0.36%, Bankex down by 0.24% and IT down by 0.18% were the top losers on the sectoral space.

The top gainers on the Sensex were Dr Reddy’s Lab up by 2.61%, Hindustan Unilever up by 1.95%, Coal India up by 1.58%, TCS up by 1.34% and Reliance Industries up by 1.25%. On the other hand, Jindal Steel down by 3.79%, Hero Moto Corp down by 1.39%, ITC down by 1.30%, Bajaj Auto down by 1.29% and Infosys down by 1.12% were top losers on the Sensex.

Meanwhile, the twin factors- dwindling global demand and delayed monsoon that have exacerbated India’s recent economic slowdown, have now led to reduced growth forecasts by the Asian Development Bank (ADB) for fiscal years 2012 and 2013. In its  report “Asian Development Outlook 2012 Update”, ADB lowering its projection, has pegged India’s gross domestic product to grow by 5.6% in FY2012 (which ends March 2013) and 6.7% in FY2013, from earlier projections of 7.0% and 7.5%, respectively, for the two years. Besides this, the report has also raised projected inflation to 8.2% in FY2012 (from 7.0%) on the back of higher domestic food and fuel prices.

Additionally, the report has blamed tight monetary policy to counter persistently high inflation and a high deficit for having left little room for policy to stimulate growth. Further, the report has mainly highlighted ongoing sovereign debt crisis in the euro area and looming fiscal cliff in the US to have disastrous spillovers to the rest of the world, particularly developing Asia.

However, the Manila-based bank, in its reports, has suggested the region to start reversing this trend by improving investment climate and expediting reforms, which off lately seems to be a top priority for the government, has made some headway in addressing these challenges recently. In its latest reform drive, a long needed but politically controversial decision to permit foreign direct investment (FDI) in multi-brand retail stores has been cleared, diesel prices have been hiked by 12%, use of subsidized liquefied petroleum gas has been capped to contain the fiscal deficit and lastly a controversial proposal to review tax avoidance on foreign investments has been deferred by three years.

The S&P CNX Nifty is currently trading at 5,727.60, up by 8.80 points or 0.15% after trading in a range of 5,743.25 and 5,715.80. There were 27 stocks advancing against 23 declines on the index.

The top gainers of the Nifty were IDFC up by 4.17%, Siemens up by 3.22%, Dr Reddy’s Lab up by 2.62%, Hindustan Unilever up by 1.96% and Ambuja Cement up by 1.89%. While, Jindal Steel down by 4.02%, Power Grid down by 1.75%, Axis Bank down by 1.48%, Bajaj Auto down by 1.40% and Hero MotoCorp down by 1.35% were top losers on the index.

All the Asian markets were reeling under pressure, Jakarta Composite declined by 0.18%, Nikkei 225 lost 0.45%, Straits Times descended by 0.28% and Taiwan Weighted slipped by 0.44%. On the other hand, Hang Seng gained 0.23%. Meanwhile, markets in China and Korea are closed today for holidays.

The European markets were trading in red with, France’s CAC 40 dropped by 0.24%, Germany’s DAX inched lower 0.02% and the United Kingdom’s FTSE 100 lost 0.10%.