Benchmarks trade lower tracking weak global markets

Snapping their two consecutive days rally, domestic benchmarks have made a weak start as investors opted to book profits amid frail global cues. The US markets retreated overnight after a huge rally in the last session as minutes of Fed meetings revealed disagreement on how long the central bank would buy bonds while, most of the Asian markets were trading in the red as global risk appetite remained frail after several Federal Reserve officials expressed concerns about continuing to expand stimulative bond buying in the Thursday’s Federal Open Market Committee (FOMC) meet.

Back home, NSE’s Nifty breached its crucial 6,000 level while, BSE’s Sensex trying hard to hold its crucial 19,700 mark as selling pressure witnessed in metal counter. Stocks like Sesa Goa, Sterlite Industries, Hindalco, Hindustan Zinc and Jindal Steel & Power all tumbled as LMEX, a gauge of six metals traded on the London Metal Exchange, fell 1.18% to 3,539.60 on January 3, 2013. However, the losses remain capped as some support came in from PSU oil marketing companies. Stocks of BPCL, HPCL and IOC edged higher on reports that the oil ministry proposes to hike diesel prices by less than a rupee per month, reduce subsidy and raise cap on cylinders.

On the sectoral front, oil and gas witnessed the maximum gain in trade followed by software and public sector undertaking while, metal, realty and banking remained the top losers on the BSE sectoral space. The broader indices were trading flat while, the market breadth on the BSE was positive; there were 940 shares on the gaining side against 817 shares on the losing side while 70 shares remain unchanged.

The BSE Sensex opened at 19,782.59; about 17 points higher compared to its previous closing of 19,764.78, and has touched a high and a low of 19,790.58 and 19,686.34 respectively.

The index is currently trading at 19,706.78, down by 58.00 points or 0.29%. There were 9 stocks advancing against 21 declines on the index.

The overall market breadth has made a positive start with 51.45% stocks advancing against 44.72% declines. The broader indices were trading mixed; the BSE Mid cap indices was down by 0.02% and BSE Small cap indices up by 0.02%.

The top gaining sectoral indices on the BSE were, Oil & Gas up by 0.64%, IT up by 0.63%, PSU up by 0.36%, Teck up by 0.36% and Power up by 0.08% while, Metal down by 0.98%, Realty down by 0.86%, Bankex down by 0.53%, Auto down by 0.43% and FMCG down by 0.37% were the top losers on the index.

The top gainers on the Sensex were ONGC up by 1.97%, BHEL up by 1.55%, Wipro up by 1.53%, Infosys up by 0.61% and TCS up by 0.59%.

On the flip side, Sterlite Industries was down by 1.52%, Hindalco Industries was down by 1.45%, HDFC was down by 1.17%, Jindal Steel was down by 1.13% and Tata Motors was down by 1.10% were the top losers on the Sensex.

Meanwhile, in order to trim down food and fertilizer subsidies, which could rise to Rs 200,000 crore next fiscal, the government's advisory body on farm prices Commission for Agriculture Costs and Prices (CACP) in its pre-budget consultations with Finance Minister P Chidambaram, has recommended direct cash transfer to beneficiaries in order to rationalize food and fertilizer subsidies. It has also asked for stable export policy for farm commodities and promotion of palm oil to cut vegetable oil imports, which was at a record 10 million tonnes (worth Rs 60,000 crore) in 2011-12.

The advisory body also demanded deregulation of urea sector to attract more investment and improve balanced use of fertilizers. Moreover, CACP added that higher farm exports and reduction in edible oil imports would help centre to curb current account deficit.

After the pre-budget meeting, CACP Chairman Ashok Gulati said 'rising current account deficit is the biggest problem that the government currently facing. So, we have pitched for rationalization of food and fertiliser subsidies in the forthcoming Budget'.By adding further he said, the government can save Rs 50,000 crore by plugging the leakages through conditional cash transfer (CCT) and also save additional Rs 10,000-15,000 crore from storage cost of grains. He also pointed that 40 per cent of food distributed through shops get diverted.

Further, CCT can be implemented initially in 33 cities of more than one million population and then expand to cereal surplus states and finally to cereal deficit states. On fertilizers, CACP chief said that the government can save Rs 20,000 crore if it immediately starts direct cash transfer of subsidy to farmers. For the 2012-13 fiscal, the Budget allocation for food and fertiliser subsidies was 136,000 crore, which is expected to rise in the revised Budget estimate.

The S&P CNX Nifty opened at 6,011.95; about 2 points higher as compared to its previous closing of 6,009.50, and has touched a high and a low of 6,011.95 and 5,982.70 respectively. The index is currently trading at 5,989.40, lower by 20.10 points or 0.33%. There were 17 stocks advancing against 33 declines on the index.

The top gainers of the Nifty were BPCL up by 2.50%, ONGC up by 2.11%, Wipro up by 1.41%, BHEL up by 1.40% and HCL Tech up by 0.93%.

On the flip side, DLF down by 1.70%, Sesa Goa down by 1.61%, HDFC down by 1.43%, Hindalco Industries down by 1.34% and Jindal Steel down by 1.31%, were the major losers on the index.

Most of the Asian equity indices were trading in the red; Shanghai Composite dipped 4.88 points or 0.21% to 2,264.25, Hang Seng dropped 174.57 points or 0.75% to 23,224.03, KLSE Composite slipped 2.46 points or 0.15% to 1,690.19, Straits Times declined 4.64 points or 0.14% to 3,220.16, KOSPI Composite contracted 16.89 points or 0.84% to 2,002.52 and Taiwan Weighted was down by 53.76 points or 0.69% to 7,783.08.

On the flip side, Jakarta Composite added 5.59 points or 0.13% to 4,404.85 and Nikkei 225 was up by 268.52 points or 2.58% to 10,663.70.