Indian equities trim gains to trade in red

Indian equity markets trimmed gains to continue its weak trade below neutral line in the late afternoon session on account of selling in frontline counters . Though the street cheered after Reserve Bank of India (RBI) slashed its repo rate by 25 basis points (bps) to 7.75% against 8% earlier in third quarter review of monetary policy 2012-13 but the momentum was short-lived with benchmarks drifting lower. Traders were seen piling some position in Bankex, Metal and Health Care sectors while selling was witnessed in Oil & Gas, Realty and Consumer Durables sectors. The market may remain volatile this week as traders may roll over positions in the futures & options (F&O) segment from the near month i.e. January 2013 series to next month i.e. February 2013 series. The January 2013 F&O contracts will expire on Thursday, January 31, 2013. In the scrip specific movement, Axis Bank was trading firm after touching 52-week high as the bank is planning to sell 3.40 crore shares through a qualified institutional placement (QIP). Adani Ports and SEZ was trading in green after the company said that it will divest almost entire stake in Australia’s Abbot Point Coal Terminal to the Adani family.

On the global front, most of the Asian markets were trading in green while the European markets were trading on optimistic note. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 6,100 and 20,100 levels respectively. The market breadth on BSE was negative in the ratio of 1130:1562 while 121 scrips remain unchanged.

The BSE Sensex is currently trading at 20,050.09, down by 53.26 points or 0.26% after trading in a range of 20,203.66 and 20,005.48. There were 9 stocks advancing against 21 declines on the index. The broader indices too lost some ground; the BSE Mid cap and Small cap index were trading down by 0.16% and 0.33% respectively.

The top gaining sectoral indices on the BSE were, Bankex up by 0.28%, Metal up by 0.23% and Health Care up by 0.03%. While, Oil & Gas down by 1.18%, Realty down by 0.77%, Consumer Durables down by 0.74%, TECK down by 0.47% and PSU down by 0.41% were the top losers on the index.

The top gainers on the Sensex were ICICI Bank up by 1.69%, Coal India up by 1.27%, Hero MotoCorp up by 0.71%, ITC up by 0.50% and Jindal Steel up by 0.42%.

On the flip side, HDFC Bank down by 1.58%, Bharti Airtel down by 1.51%, Reliance Industries down by 1.47%, Bajaj Auto down by 1.43% and Wipro down by 1.32% were the top losers on the Sensex.

Meanwhile, the government has agreed to make a significant concession in compensating state governments’ revenue loss on account of the reduction in the central sales tax (CST). The chairman of the Empowered Committee of State Finance Ministers, Sushil Kumar Modi, said that States have agreed to the compensation formula suggested by the Centre for their CST revenue loss for implementing the Goods and Services Tax (GST).

Sushil Kumar Modi said that Centre has agreed to full CST compensation for 2010-11, offset 75% of states’ CST losses in 2011-12 and 50% for 2012-13. The compensation formula has been prepared on the basis of the August 22, 2008, guidelines.

Contradictory to the move of containing fiscal deficit, now the centre will have to shell out about Rs 34,000 crore for compensating states for the three years. Significantly, the government has also dropped its earlier stand that it would deduct from the compensation amount any revenue gain states may have made by increasing state-level value-added tax or VAT from 4% to 5%.

Regarding the delay in introduction of GST, Modi said that States are not responsible for the delay in introduction of GST because they have lost heavily on account of gradual cut in the CST. The Empowered Committee has also asked the Centre to prepare a payment schedule. Some States are of the view that they should revert to the earlier 4% CST to make up for the huge losses in case there is a delay in introduction of GST beyond April 1, 2014.

Meanwhile, the states having manufacturing base and mineral export are the worst sufferers due to the gradual cut in CST. States that have lost more than Rs 1,000 crore include Gujarat, Andhra Pradesh, West Bengal, Tamil Nadu, Odisha and Haryana.

The S&P CNX Nifty is currently trading at 6,067.30, down by 7.50 points or 0.12% after trading in a range of 6,111.80 and 6,053.00. There were 19 stocks advancing against 30 declines while 1 stock remains unchanged on the index.

The top gainers of the Nifty were Axis Bank up by 4.94%, JP Associate up by 2.65%, ICICI Bank up by 1.94%, Sesa Goa up by 1.48% and Coal India up by 1.31%.

On the flip side, HDFC Bank down by 1.71%, Bank of Baroda down by 1.67%, BPCL down by 1.41%, Bharti Airtel down by 1.40% and Bajaj Auto down by 1.37% were the major losers on the index.

Most of the Asian equity indices were trading in the green; Shanghai Composite added 0.53%, Jakarta Composite rose 0.31%, Nikkei 225 surged 0.39%, KOSPI Composite gained 0.84%and Taiwan Weighted was up by 1.13%. On the flip side, Straits Times declined 0.18%, KLSE Composite lost by 0.01% and Hang Seng was down by 0.07%.

The European markets were trading in green with; France’s CAC 40 added 0.02%, Germany’s DAX jumped 0.12% while the United Kingdom’s FTSE 100 edged higher by 0.20%.