First day of new series ends on a disappointing note

Indian equity markets despite a positive opening reversed all their gains and lost momentum in the second half to end below their crucial 6,000 (Nifty) and 19,800 (Sensex) levels with a cut of over half a percent. Investors lacked conviction to open fresh positions amid lots of undermining leads from the domestic markets. India’s eight core sector rose 2.6 per cent in December, lower than the 4.9 per cent posted in the same month a year earlier, dragged down by a decline in coal, natural gas and fertilizer sectors. Sentiments also got hurt after India’s fiscal deficit for the first three quarters of the current financial year touched 78.8 per cent of the budget estimates (BE) of Rs 5.14 lakh crore for the entire financial year ending March 31, 2013. India’s fiscal deficit widened to Rs 4.05 lakh crore ($76 billion) in absolute terms.

Selling got intensified after the seasonally adjusted HSBC Purchasing Managers’ Index (PMI), a composite indicator of operating conditions in the manufacturing economy slowed to three months low of 53.2 in January against its previous reading of 54.7 in December, thereby underscoring the risks to Asia’s third largest economy from weak global demand, particularly in Europe. Some disappointment also came from result front after Bharti Airtel and BHEL reported lower than expected third quarter numbers. Bharti Airtel’s net profit on consolidated basis declined by 71.94% at Rs 283.70 crore for Q3FY13 as compared to Rs 1011.30 crore for the corresponding quarter of the previous year while, BHEL registered a fall of 17.50% in its net profit at Rs 1181.85 crore in Q3FY13 as compared to Rs 1432.61 crore in the corresponding quarter previous year.

However, global cues remained supportive as European counters traded higher in early deals as encouraging Chinese data boosted investors’ appetite for assets perceived to carry higher risk, although Spanish stocks slumped after a short-selling ban was lifted. While, most of the Asian equity indices ended the session in the green on back of modest recovery seen in China, however, caution remained ahead of US non-farm payrolls report later today, which is likely show a rise of 160,000 jobs and the jobless rate staying steady at 7.8 percent.

Back home, selling in banking counter dampened the sentiments as stocks like ICICI Bank, PNB, SBI, Union Bank of India and IDBI Bank all edged lower after the Reserve Bank of India proposed a steep rise in the provisioning requirement for loan restructuring to five per cent from April 1, against 2.75 per cent at present. Sentiments also remained frail after Oil India ended the session with a cut of about three per cent, after EGoM fixed Oil India OFS base price at Rs 510, at a discount of a little over 5 per cent to its last day’s closing price. However, losses remain capped up to some extent after oil marketing companies like BPCL, HPCL and IOC surged after Oil Minister M Veerappa Moily reiterated that diesel prices will be hiked by 40-50 paise per litre every month till losses on the nation’s most used fuel are completely wiped out. Additionally, airline stocks, i.e., Kingfisher Airlines, Jet Airways and SpiceJet ended well even as jet fuel prices were hiked by 2 per cent.

The NSE’s 50-share broadly followed index Nifty lost over thirty five points to end below its psychological 6,000 support level, while Bombay Stock Exchange’s Sensitive Index - Sensex declined by over one hundred and five points, ending below its psychological 19,800 mark. Moreover, the broader markets too traded weak and snapped the session in the red.

The overall volumes stood at over Rs 1.10 lakh crore, which remained on the lower side as compared to that on Thursday. The market breadth remained in favor of advances as there were 958 shares on the gaining side against 1,153 shares on the losing side while 876 shares remain unchanged.

Finally, the BSE Sensex lost 113.79 points or 0.57% to settle at 19,781.19, while the S&P CNX Nifty declined by 35.85 points or 0.59% to end at 5,998.90.

The BSE Sensex touched a high and a low of 19,966.69 and 19,736.45, respectively. The BSE Mid cap index down by 0.05% and Small cap index was down by 0.25%.

The top gainers on the Sensex were, Maruti Suzuki up by 1.65%, Cipla up by 1.58%, Dr Reddys Lab up by 1.48%, Tata Power up by 1.43% and Bajaj Auto up by 1.26%, while Tata Motors down by 4.36%, Bharti Airtel down by 2.62%, ONGC down by 2.12%, Hindulca down 1.99% and Sterlite Industries down by 1.71% were the top losers on the index.

The top gainers on the BSE Sectoral space were Consumer Durables up 1.77%, Health Care up 0.78%, FMCG up 0.21%, Oil & Gas up 0.17% and Power up by 0.06%, while Realty down 1.16%, Auto down 0.98%, Bankex down 0.79%, Metal down 0.78% and TECk down 0.63% were top losers on the sectoral space.

Meanwhile, the government will come up with a modified Direct Taxes Code (DTC) bill after incorporating the suggestions of the Standing Committee on Finance, which has suggested many things regarding direct tax bill including raising annual income tax exemption limit to Rs 3 lakh.

While addressing an event organized by the FICCI, Parthasarathi Shome, adviser to the finance ministry, said that the ministry is looking at the Bill and working on tax structures suggested by the committee. He said that we are trying to see what could be the best in terms of transparency so that issues that are hurting industry could be covered adequately.

Regarding the issue of expenditure control, Shome said that expenditure control is a major challenge and is being addressed by the finance minister. He added that we should do more in terms of expenditure efficiency.

Earlier, the parliamentary panel, in its report of March 2012, had suggested raising the tax exemption tax limit to Rs 3 lakh as against Rs 2 lakh proposed in the original DTC Bill. The current tax exemption limit is Rs 1.8 lakh. It also suggested that subsequent tax slabs be adjusted accordingly to provide relief to people reeling under the impact of inflation. Moreover, the DTC will eventually replace the over-five-decades-old Income Tax Act.

The S&P CNX Nifty touched a high and a low of 6,052.95 and 5,983.20 respectively.

The top gainers on the Nifty were BPCL up by 2.96%, Cipla up by 1.95%, Bajaj Auto up by 1.47%, Maruti Suzuki up by 1.46% and Tata Power up by 1.43%.

The top losers of the index were JP Associates down by 4.14%, DLF down by 3.60%, Bharti Airtel down by 3.24%, Ambuja Cement down by 2.84% and Hindalco down by 2.54%.

The European markets were trading in green, France’s CAC 40 up by 0.71%, United Kingdom’s FTSE 100 up by 0.58% points and Germany’s DAX up by 0.59%.

Asian shares ended mostly higher on Friday as markets remained optimistic about the Chinese economic outlook despite a mild disappointment over official data on the country’s manufacturing sector. Chinese stocks rebounded from early weakness and went home with green mark on the back of rally in banking shares, while Hong Kong's closed lower, weighed by local Chinese companies. Japan’s Nikkei finished higher as the yen fell to multi-year lows against the euro and the U.S. dollar. Meanwhile, investors' focus now turns to the U.S. nonfarm payrolls report, which will likely show a rise of 160,000 jobs.