Benchmarks continue to trade in red amid weak global cues

Indian benchmarks- Sensex, Nifty fell by 0.30% in the late morning session, snapping its three-session winning streak, as funds and retail investors booked profits. On the global front, 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, the traders were seen piling up position in Oil & Gas, PSU and IT while selling was seen in Metal, Realty and FMCG. Shares of public sector undertakings (PSU) oil marketing companies (OMCs) such as BPCL, HPCL and Indian Oil 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. IT stocks saw buying interest ahead of Infosys earnings announcement next week. Metal stocks such as Sesa Goa, Sterlite Industries (India), Hindalco Industries, Hindustan Zinc, Jindal Steel & Power, Tata Steel, JSW Steel and Bhushan Steel edged lower as LMEX, a gauge of six metals traded on the London Metal Exchange, fell 1.18% to 3,539.60 on 3 January 2013. Manappuram Finance, Muthoot Finance and Muthoot Capital Services extended yesterday’s gains triggered by the Reserve Bank of India proposing an increase in the loan-to-value ratio on gold loans to 75% from 60% currently. DLF was trading under pressure after the Competition Commission of India passed a supplementary order modifying an Apartment Buyers Agreement entered into between the company and apartment allottees. Jet Airways (India) gained on reporting that the Abu Dhabi based Air Carrier, Etihad Airways is likely to acquire 24% stake in Jet Airways and the negotiations between the two sides are expected to sail through over the next 10 days. The NSE Nifty and BSE Sensex were managing to hold their psychological 5950 and 19700 levels respectively. The market breadth on BSE was positive, in the ratio of 1097:1051.

The BSE Sensex is currently trading at 19704.28 down by 60.50 points or 0.31% after trading in a range of 19790.58 and 19686.34. There were 12 stocks advancing against 18 declines on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.08% and Small cap index was up by 0.09%.

The top gaining sectoral indices on the BSE were, Oil & Gas up by 0.82%, PSU up by 0.74%, IT up by 0.71%, Teck up by 0.48% and Power up by 0.02% while, Metal down by 1.10%, Realty down by 0.85%, FMCG down by 0.52% , Auto down by 0.49%  and Bankex down by 0.44% were the top losers on the index.

The top gainers on the Sensex were ONGC up by 2.13%, Wipro up by 1.74%, BHEL up by 1.07%, TCS up by 1.07% and Gail India up by 0.62%.

On the flip side, Jindal Steel was down by 2.01% ,Sterlite Industries was down by 1.85%, Hindalco Industries was down by 1.79%, HDFC was down by 1.49%, and Tata Power was down by 1.36% were the top losers on the Sensex.

Meanwhile, amid the rising coal supply crunch, Planning Commission deputy chairperson Montek Singh Ahluwalia has made a strong pitch for privatization of the coal sector to boost growth, which as per finance ministry's mid-term review has dipped below 6%. At present, private companies are allowed to do captive mining in specified end-use sectors like power, steel and cement firms.

As per the plan document, total demand for coal grew by around 6.6% during the 11th Five Year Plan against domestic production growth of only 4.6%, and the gap was bridged by higher imports. Ahluwalia, who advocated private investment in the coal sector, stated that, “If petroleum, which is much scarcer than coal, is open to private sector, there is no reason why coal should not be opened up” and has maintained that Coal India doesn't have the capacity to meet the coal demand of 43,000 MW power plants.

However, industry experts of the proposal say that it would lead to huge increase in coal prices resulting in higher electricity cost for common person.

Indian coal sector is the exclusive domain of world largest coal producer CIL and its subsidiaries, which account for 80% of the country's production. However, CIL alone is not sufficient to meet the demand from consumers and thus India faces annual shortage of 140 million tonnes, coercing bulk consumers to bridge the gap via imports.

The S&P CNX Nifty is currently trading at 5,991.70 down by 17.80 points or 0.30% after trading in a range of 6,011.95 and 5,982.70. There were 22 stocks advancing against 28 declines on the index.

The top gainers of the Nifty were BPCL up by 2.66%, ONGC up by 2.57%, Wipro up by 1.77%, PNB up by 1.30% and BHEL up by 0.92%.

On the flip side, DLF down by 1.95%, Sesa Goa down by 1.86%, Hindalco Industries down by 1.79% , Jindal Steel down by 1.77% and HDFC down by 1.56%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 170.53 points or 0.75% to 23,228.07, KLSE Composite slipped 3.43 points or 0.20% to 1,689.22, Straits Times declined 1.87 points or 0.04% to 3,223.53, KOSPI Composite contracted 15.41points or 0.76% to 2,003.90 and Taiwan Weighted was down by 44.34 points or 0.57% to 7,791.82.

On the flip side, Jakarta Composite added 7.51 points or 0.17% to 4,406.77 and Nikkei 225 was up by 291.68 points or 2.81% to 10,688.80.