Domestic bourses trade slightly lower tracking weak global markets

Domestic equity indices have made a flat start and were trading tad below their pre-close level on weak global cues. US stocks lost ground on Monday, as investors drew back from recent gains that lifted the S&P 500 to a five-year high, in anticipation of sluggish growth in corporate profits. While, most of the Asian equity indices were trading in the red at this point of time with Japanese market losing the most as yen strengthened for the second straight day putting pressure on the exporters.

Back home, the frontline gauges were trading cautiously as traders eyeing important events like IIP numbers and result announcements starting with IT bellwether Infosys later in the week. Though, there are not much expectations from the December quarter but some companies may surprise with better topline. However, losses remain capped as sentiments got some support with the statement of Finance minister P Chidambaram that the difficult phase for the economy is over and that the focus should now shift to higher growth. Moreover, shares of telecom services provider like Idea Cellular, Reliance Communication and Bharti Airtel edged higher in morning deals after the Empowered Group of Ministers (EGoM) on telecom decided to slash the reserve price for CDMA spectrum by 30-50 percent.

On the sectoral front, healthcare witnessed the maximum gain in trade followed by auto and fast moving consumer goods while, capital goods, metal and software remained the top losers on the BSE sectoral space. The broader indices were outperforming benchmarks while, the market breadth on the BSE was positive; there were 966 shares on the gaining side against 684 shares on the losing side while 77 shares remain unchanged.

The BSE Sensex opened at 19,681.38; about 10 points lower compared to its previous closing of 19,691.42, and has touched a high and a low of 19,710.74 and 19,652.82 respectively.

The index is currently trading at 19,673.34, down by 6.94 points or 0.04%. There were 15 stocks advancing against 15 declines on the index.

The overall market breadth has made a strong start with 55.94% stocks advancing against 39.61% declines. The broader indices were trading in-line with benchmarks; the BSE Mid cap and Small cap indices rose 0.21% and 0.19% respectively.

The top gaining sectoral indices on the BSE were, Health Care up by 0.81%, Auto up by 0.34%, FMCG up by 0.09%, Bankex up by 0.05% and Realty up by 0.04% while, Capital Goods down by 0.84%, Metal down by 0.51%, IT down by 0.34%, Consumer Durables down by 0.18% and Oil & Gas down by 0.16% were the only losers on the index.

The top gainers on the Sensex were Sun Pharma up by 1.67%, Cipla up by 0.72%, Dr Reddys Lab up by 0.71%, Tata Motors up by 0.59% and SBI up by 0.48%.

On the flip side, L&T was down by 1.23%, Infosys was down by 1.04%, Tata Steel was down by 0.93%, ONGC was down by 0.92% and Hindalco Industries was down by 0.86% were the top losers on the Sensex.

Meanwhile, Planning Commission Member B K Chaturvedi headed meeting to oversee the massive debt restructuring scheme for ailing electricity distribution companies is scheduled on January 9. Representatives from Power and Finance Ministries as well as from some distribution companies among others will participate in the first meeting of a central panel for discussing concerns over power sector woes.

Measures mooted in debt restructuring scheme include significant tariff hikes and conversion of 50 per cent of their short-term debt into bonds backed by respective states, while one of the key proposals in the scheme is to ensure regular rationalization of tariff to cover cost of services. Low tariff is a major factor hurting the financials of discoms.

The accumulated losses of electricity distribution companies are estimated to be whopping Rs 2.46 lakh crore as on March 2012 and it was pegged at around Rs 1.9 lakh crore till March 2011.

Meanwhile, power ministry said that ‘the restructuring/re-scheduling of loan is to be accompanied by concrete and measurable action by the discoms/states to improve the operational performance of the distribution utilities.’ The Power Ministry had notified the financial restructuring scheme for state-owned discoms on October 5.

However, in the last 15 months, minimum 18 states have announced significant tariff increases during the period, with Tamil Nadu proposing as much as 37 per cent hike to improve the financial health of electricity distributing companies. The uncertain financial health of discoms has also raised concerns of loan defaults in the financial system.

The S&P CNX Nifty opened at 5,983.45; about 5 points lower as compared to its previous closing of 5,988.40, and has touched a high and a low of 5,990.65 and 5,973.00 respectively.

The index is currently trading at 5,986.40, higher by 2.00 points or 0.03%. There were 25 stocks advancing against 25 declines on the index.

The top gainers of the Nifty were Sun Pharma up by 1.58%, ACC up by 1.10%, Reliance Infrastructure up by 0.96%, Lupin up by 0.83% and Dr Reddys Lab up by 0.78%.

On the flip side, L&T down by 1.15%, Tata Steel down by 1.03%, Infosys down by 1.01%, IDFC down by 0.82% and ONGC down by 0.80%, were the major losers on the index.

Most of the Asian equity indices were trading in the red; Shanghai Composite dipped 1.57 points or 0.07% to 2,283.80, Hang Seng declined 106.63 points or 0.46% to 23,223.12, KLSE Composite dropped 5.79 points or 0.34% to 1,688.37, Nikkei 225 tumbled 95.73 points or 0.90% to 10,503.28, Straits Times slipped 4.73 points or 0.15% to 3,213.53, KOSPI Composite decreased 9.48 points or 0.47% to 2,001.77 and Taiwan Weighted was down by 50.36 points or 0.65% to 7,704.73.

On the flip side, Jakarta Composite was up by 15.62 points or 0.36% to 4,408.00.