Markets make a flat but positive closing amid FDI in retail discussion

The Indian equity markets remained cautious throughout the session on the politically crucial day. A hot debate was going on in the parliament on the issue of allowing FDI in retail, though the government remained confident of getting through it successfully but the traders remained in wait and watch position, waiting for the vote to finally be over. Parliamentary affairs minister Kamal Nath exuded his confidence before the debate in Lok Sabha and also said that the government would get the amendments to the Foreign Exchange Management Act (FEMA), required to facilitate FDI in multi-brand retail, passed in both houses, if needed. On the other hand, leader of opposition BJP Sushma Swaraj said that manufacturing sector will witness maximum unemployment due to FDI.

Back on street, there was complete inactiveness and the benchmarks traded in a tight range, with hardly any trigger to move the markets in either direction. Though, the cautiousness got doubled with global ratings agency Fitch warning that a loosening in fiscal policy ahead of the 2014 elections could further weaken India's public finances and fiscal slippages in the run-up to 2014 general elections along with declining growth could result in India's rating downgraded to below the investment level.

The global markets too remained unsupportive, while the US markets ended lower on weak manufacturing data, the Asian markets made a mixed closing. The only solace was that Chinese market snapped their long losing streak and ending with gain of about a percent after South Korea said it agreed with China to allow banks in both countries to borrow funds from an existing swap arrangement to encourage trade settlement in local currencies. Though, some support to the domestic markets came from the positive start of the European markets.

Back home, the trade remained lackluster and consolidation lingered for the second straight day. Though, the outcome of the discussion is more or less priced in and there is no knee-jerk reaction expected but still traders remained on side lines, retail stocks such as Pantaloon Retail reversed gains once debate started in the Lok Sabha. Market-men were slightly encouraged by the finance ministry’s assertion to global rating agency Moody's that the government is committed to restricting fiscal deficit to 5.3 per cent of GDP this fiscal and has adequate cash balance to deal with the situation. On the sectoral front, though realty maintained its lead for yet another day but oil & gas piped it last to emerge as the top gainer of the day after the market heavy weight Reliance Industries surged by over 2% on report that the oil ministry is set to approve the company's investment plans for the controversial KG-D6 block, in its bid to reverse the sharp decline in output by developing new fields. Power sector too remained in limelight, while the drag in consumer durables, IT and Auto stocks kept the markets near the neutral level.

Finally, the BSE Sensex gained 42.80 points or 0.22% to settle at 19,348.12, while the S&P CNX Nifty rose by 18.30 points or 0.31% to end at 5,889.25.

The BSE Sensex touched a high and a low of 19,373.94 and 19,263.71, respectively. The BSE Mid-cap index was up by 0.10% and Small-cap index gained 0.59%.

Tata Power up 4.00%, Reliance up 2.49%, SBI up 1.59%, Bajaj Auto up 1.55% and ICICI Bank up by 1.53% were the major gainers on the Sensex, while Mahindra & Mahindra down 1.75%, Wipro down 1.65%, NTPC down 1.34%, Sterlite down 1.29% and TCS down 1.25% were major losers on the index.

The few gainers on the BSE sectoral space were Oil & Gas up 1.57%, Realty up 0.84%, Power up 0.83%, Bankex up 0.75% and Health Care (HC) up 0.32%, while Consumer Durables (CD) down 0.68%, Auto down 0.43%, Metal down 0.35% and TECk down 0.27% were top losers on the BSE sectoral space.

Meanwhile, in the pre-budget recommendations to the government, the industry body, Assocham President Rajkumar Dhoot has advised raising personal income tax exemption limit to Rs 3 lakh, reducing service tax and excise to 8% from 12% and increase in deduction of interest on housing loan to 5 lakh to revive consumer demand and to boost investment. The pre-budget memorandum for 2013-14 was jointly released by the chamber including President Dhoot, Chairman and Co-Chairman of taxes council Ved Jain and J.K. Mittal and chamber's Secretary-General D.S. Rawat.

Dhoot has also asked for reduction of corporate tax to 25% from 30%, besides demanding grant of infrastructure status to special economic zones and industrial parks. According to Assocham’s pre-budget memorandum for 2013-14, the base exemption limit of resident individual below the age of 60 years should be raised to Rs 3 lakh, to incentivize people to come into the tax net, ensure higher collection from greater compliance and encourage consumption and savings.

Moreover, the chamber said the tax base for goods and services has already expanded to generate high revenue and the government can selectively increase customs duty rates to neutralise the effect of lower tax rate of excise duty and service tax. Besides, by increasing customs rates, the government can protect the domestic industry from unfair competition from countries like China.

The S&P CNX Nifty touched a high and a low of 5,894.95 and 5,859.00 respectively.

The top gainers on the Nifty were JP Associates up 4.52%, Tata Power up 3.95%, Reliance up 2.59%, Ranbaxy up 2.26% and Reliance Infra up by 1.84%.

The top losers on the index were Wipro down 2.17%, Ambuja Cement down 2.05%, M&M down 2.05%, TCS down 1.82% and Grasim down 1.34%.

European markets were trading in green. France’s CAC 40 up 0.76%, Germany’s DAX up 0.34% and Britain’s FTSE 100 was up by 0.22%.

Asian markets went home on mixed note following weak US manufacturing data and renewed fears over US economic outlook. However, Hong Kong and Shanghai rebounded from the previous day's losses and ended with green mark. Nikkei came off the previous session gains and closed lower, as exporters came under pressure from a bout of profit taking sparked by the weak US data. Moreover, South Korea market ended in negative territory with Posco declining by 1.9%.