Markets on recovery path after a soft start

Indian equity markets after a soft start are slightly moving up, though the cautiousness of the discussion and vote in the Parliament on the FDI in retail is still persisting. Though, the government looked firm on getting through the crucial vote after garnering sufficient numbers. Parliamentary affairs minister Kamal Nath has exuded his confidence and has said 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. Though there looked no hurry on the street and the markets were moving with a snail’s pace with market-men still in wait and watch position. Also, there was cautiousness after global credit rating agency Fitch warning that fiscal slippages in the run-up to 2014 general elections may lead to downgrade of ratings. Back on street the broader indices are once again showing greater buying interest compared to the benchmarks, while Realty too has strengthened in early trade on the sectoral space, along with power and oil & gas. Though there was some weakness in IT, FMCG and TECk sectors.

The BSE Sensex opened at 19,277.58; about 30 points lower compared to its previous closing of 19,305.32, and has touched a high and a low of 19,329.85 and 19,274.03 respectively. The index is currently trading at 19,310.96, up by 5.64 or 0.03%. There were 18 stocks advancing against 12 declines on the index.

The market breadth on the BSE was positive; there were 1,275 shares on the gaining side against 574 shares on the losing side while 90 shares remain unchanged. The broader indices were outperforming benchmarks; the BSE Mid cap and Small cap indices rose 0.71% and 0.67% respectively.

The top gaining sectoral indices on the BSE were, Realty up by 1.19%, Power up by 0.79%, Healthcare up by 0.78%, Oil& Gas up by 0.77% and PSU was up by 0.49%, while IT down by 0.38%, BSE FMCG down by 0.36%, TECk down by 0.21% and Auto down by 0.02% were the losers on the BSE.

The top gainers on the Sensex were BHEL up by 1.67%, Jindal Steel up by 1.56%, Cipla up by 1.45%, RIL up by 1.16% and Tata Motors up by 0.75%.

On the flip side, M&M down by 1.01%, ITC down 0.95%, Infosys down by 0.74%, Hero MotoCorp down by 0.68% and Hindalco Inds down by 0.51% were the top losers on the Sensex.

Although, government is struggling to keep the pace of reforms going, global ratings agency Fitch has cautioned 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 rating agency though pegged the GDP growth for the current financial year to 6 percent from its earlier estimates of 6.5 percent and said that that an improved investment climate which supports greater infrastructure investment, and a sharp sustained decline in inflation, would support the current 'BBB -' rating, which is a notch above the investment grade. But it also said that 'Policy slippage and/or mounting evidence of a structural decline in the trend growth rate, such as protracted relatively weak economic data, could cause the ratings to be downgraded”.

Fitch has lowered India's credit rating outlook to negative from stable in June, and had later said the possibility of downgrading the country's sovereign rating is more than 50 percent in the next 12-24 months. The latest caution from Fitch comes as a fresh challenge for the government, which is fighting to avert a downgrade from global ratings agencies.

The S&P CNX Nifty opened at 5,866.80; slightly lower from its previous closing of 5,870.95, and has touched a high and a low of 5,879.00 and 5,862.25 respectively. The index is currently trading at 5,875.25, up by 4.30 points or 0.07%. There were 33 stocks advancing against 17 declines on the index.

The top gainers of the Nifty were BPCL up by 2.38%, Jindal Steel up by 1.78%, IDFC up by 1.62%, DLF up by 1.55% and Cipla up by 1.48%.

On the flip side, M&M down by 1.23%, ITC down by 0.96%, Infosys down by 0.89%, Hero MotoCorp down by 0.82% and TCS down by 0.59% were the top losers on the Nifty.

Most of the Asian markets continue to trade in red; Shanghai Composite was down by 0.40%, Jakarta Composite was down by 0.77%, KLSE Composite down by 0.14%, Nikkei 225 declined by 0.21%, Seoul Composite was lower by 0.25%, Straits Times was down by 0.20% and Taiwan Weighted was down by 0.33%

On the other hand, Hang Seng up by 0.06% was the lone gainer.