Indian equities pare losses; trade continues in red

Indian equities pared losses but continued its weak trade in the late afternoon session on account of selling in frontline counters and taking cues from subdued European counterparts. The markets did not cheer the outcome of Gujarat State Assembly Elections, where Narendra Modi looked set for a third consecutive victory. Traders were seen piling some position in Metal, Health Care and TECk sectors, while selling was witnessed in Auto, Capital Goods and Consumer Durables sectors. In the scrip specific development, iron ore miner NMDC was seen trading under pressure after government auditor CAG came out with the report stating that the company has suffered Rs 745.94 crore revenue loss during 2007-10 for not revising the domestic prices of the steel-making raw material in line with prevailing market rates. Yes Bank was trading in red after global rating agency Moody’s assigned the bank’s financial strength rating of D+ with a stable outlook. Non-banking finance company Shriram City Union Finance is trading in green on reports that PE major TPG is set to buy 25% stake in the company. Persistent Systems is trading firm on account of fund based buying activities. Opto Circuits (India) extended yesterday’s gains after the board of directors approved issue of warrants to promoter. The company will issue 20 lakh convertible warrants to promoter Vinod Ramnani at Rs 145 per convertible warrant.

On the global front, all the Asian markets were trading on a mixed note while the European markets were too trading mixed. Standard and Poor’s upgraded Greece’s credit rating from selective default to B-, citing the successful completion of the debt buyback and with winning the approval by the Euro group for a loan disbursement under the second economic adjustment program. The debt rating agency stated that the euro zone member’s decision to provide material cash flow relief to Greece is indicative of their determination to restore stability to Greek finances, and to preserve the country’s euro zone membership. Besides, Euro area construction output declined in October, according to data released by Eurostat, the statistics office of the European Union.  Back home, the NSE Nifty and BSE Sensex were trading above their psychological 5,900 and 19,400 levels respectively. The market breadth on BSE was negative in the ratio of 1197:1566 while 112 scrips remain unchanged.

The BSE Sensex is currently trading at 19,455.23, down by 20.77 points or 0.11% after trading in a range of 19,520.51 and 19,335.72. There were 13 stocks advancing against 17 declines on the index.

The broader indices were too trading in red; the BSE Mid cap and Small cap indices were trading lower by 0.03% and 0.33% respectively.

The top gaining sectoral index on the BSE was, Metal up by 1.03%, Health Care up by 0.27%, TECk up by 0.25%, IT up by 0.12% and FMCG up 0.09% while, Auto down by 0.63%, Capital Goods down by 0.55%, Consumer Durables down by 0.45%, Power down by 0.42% and Oil & Gas down by 0.28% were the top losers on the index.

The top gainers on the Sensex were Hindalco Industries up by 2.59%, Tata Steel up by 1.37%, Jindal Steel up by 1.29%, Cipla up by 1.17% and TCS up by 0.99%.

On the flip side, M&M down by 1.65%, Bajaj Auto down by 1.35%, Sun Pharma down by 1.00%, Wipro down by 0.96% and L&T down by 0.70% were the top losers on the Sensex.

Meanwhile, as per former chief economic advisor and now World Bank chief economist Kaushik Basu, a 5-6 percent inflation is not 'too high' for India economy and if it would be maintained at that level then it would be 'worth it'. Basu said, in current time Indian economy is growing and the inflation of 5-6% is not high for the growing economy. He added that when you are growing rapidly, you have to live with some inflation. Citing examples of developed country, Basu said during periods of very high growth, like we saw in South Korea in 1970, the inflation rate was high.

Further expressing his views on inflation, Basu said the recent moves by the government to implement the direct cash transfer scheme might create inflationary pressure on the economy. Since the scheme will give more money to the poor people through their bank account as a subsidy, so there is the risk of higher inflation as more money will be pumped into the system.

By adding further he said, the DTC scheme should be indexed to adjust with the inflation, so that the poor will not get affected with the rise in inflation and will continue to have the same buying power in future. 

However, in an anti-inflationary stance RBI kept its policy interest rates unchanged on December 18 meeting, and ignored the growing demands from India. Inflation rate, as measured by the Wholesale Price Index, dropped to a ten-month low of 7.24 percent during November from 7.45 percent a month ago and 9.46 percent in the corresponding month a year ago.

The S&P CNX Nifty is currently trading at 5,913.75, down by 15.85 points or 0.27% after trading in a range of 5,937.60 and 5,881.45. There were 16 stocks advancing against 33 declines on the index, while 1 stock remains unchanged.

The top gainers of the Nifty were Hindalco Industries up by 2.43%, Jindal Steel up by 1.36%, Cipla up by 1.21%, Tata Steel up by 1.21% and HUL up by 1.05%.

On the flip side, Ambuja Cement down by 2.79%, BPCL down by 2.31%, M&M down by 1.69%, Sun Pharma down by 1.41% and Bajaj Auto was down by 1.40% were the major losers on the index.

Most of the Asian equity indices were trading mixed; Jakarta Composite tumbled 1.18%, Nikkei 225 plunged 1.19% and Taiwan Weighted plummeted 1.07%.

On the flip side, Hang Seng jumped 0.16%, Shanghai Composite gained 0.28%, Straits Times added 0.32%, KOSPI Composite advanced 0.32% and KLSE Composite inched up by 0.08% were the gainers amongst Asian pack.

The European markets were trading on a mixed note with, France’s CAC 40 added 0.35%, Germany’s DAX descended 0.21% while the United Kingdom’s FTSE 100 dropped 0.07%.