Benchmarks fail to negotiate positive close, Nifty ends below 6,000 mark

First day of the new week was an extension to the disappointing performance for the stock markets in India as the benchmark equity indices failed to extend their initial gain and settled the session in the red. The frontline equity indices traded on a sanguine note for the most part of the day on improved risk-appetite after jobs and manufacturing data showed mild recovery in US. The frontline gauges even looked set to breach the psychological 19,900 (Sensex) and 6,050 (Nifty) levels in the session as investors continued to show across the board buying interest.

Supportive cues from US markets provided the much needed support to local markets in first half. Investors’ morale got buttressed on the back of reports that US employment grew modestly in January and job gains in the previous two months were larger than first reported, while factory activity hit a nine-month high in January. Moreover, Asian pacific shares climbed to 18-month highs on Monday boosted by firm manufacturing data from Europe and China.

However, disappointing cues from European market took their toll on domestic sentiments in late trade and dragged the frontline gauges below the psychological 6,000 (Nifty) and 19,800 (Sensex) levels. Investors mainly resorted to profit booking following the decline in European markets.

Back home, market participants expressed disappointment over the new draft guidelines announced by RBI for restructured loans which are likely to hit earnings of banks by at least 3-8 per cent over the next two years, as banks would need to step up provisioning on restructured loans by 1 per cent from FY’14 to 3.75 per cent and to 5 per cent by FY’15 on the existing stock of restructured loans. In other development it has been reported that differences have cropped up between the Reserve Bank and the finance ministry over the guidelines for new banking licences, which are likely to be announced within the next fortnight. Market-men also remained little cautious ahead of advanced economic growth estimates for the current fiscal year (FY13) which will be released on Thursday.

Selling pressure was also witnessed in IT pack after the US Government objected to India’s plans of making it compulsory for Government agencies to source electronic products, including personal computers, printers and tablets, from domestic manufacturers. However, losses remained capped as some amount of support came in from Auto sector, garnering over half a percent, after Auto companies like Hero MotoCorp, Ashok Leyland, M&M, Tata Motors and Bajaj Auto reported better sales number in January 2013.

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

The overall volumes stood at over Rs 1.08 lakh crore, which remained on the lower side as compared to that on Friday. The market breadth remained in favor of advances as there were 886 shares on the gaining side against 1,308 shares on the losing side while 811 shares remain unchanged.Finally, the BSE Sensex lost 30.00 points or 0.15% to settle at 19751.19, while the S&P CNX Nifty declined by 11.65 points or 0.19% to end at 5,987.25.

The BSE Sensex touched a high and a low of 19902.60 and 19728.21, respectively. The BSE Mid cap index declined by 0.83% and Small cap index was down by 0.71%.

The top gainers on the Sensex were, HDFC up by 2.49%, Tata Motors up by 2.40%, ICICI Bank up by 0.94%, Jindal Steel up by 0.61% and TCS up by 0.46%, while BHEL down by 2.73%, Cipla down by 2.64%, SBI down by 2.41%, Tata Power down 2.29% and ONGC down by 2.08% were the top losers on the index.

The only gainer on the BSE Sectoral space was Auto up 0.47%, while PSU down 1.56%, Health Care down 1.40%, Power down 1.36%, Oil & Gas down 1.12% and Metal down 1.11% were top losers on the sectoral space.

Meanwhile, expressing the need to cut the government subsidies, the finance minister P Chidambaram has said that freebies and subsidies alone would not help in economic development and youth should seek self-employment. While inaugurating 17 branches of REPCO Bank in Tamil Nadu and Puducherry, P. Chidambaram said 'If a country needs to grow, its people stand on their feet and see a strong economic growth, it cannot depend on freebies and subsidies alone.

Chidambaram said that it is the responsibility of the government to create jobs or self-employment for its youth and the UPA Government has a clear vision of creating jobs for its youth. By adding further he said that there are some hurdles for job creation like, if a bank opens a branch then some people thinks that public will be made debtors. But there is nothing wrong in taking loan for creating business and self- employment.

Regarding self employment, the finance minister, while extending loan for youths who have started a Self-Help group (SHG), said that youth should form more SHGs and the country where the people are self employed have the better prospect of being strong country. So, the youth should choose a self employment path and continue in that without any fear, having strong faith in their path of self development and self employment.

The S&P CNX Nifty touched a high and a low of 6,038.50 and 5,981.25 respectively.

The top gainers on the Nifty were Tata Motors up by 3.50%, Ultra Cement up by 3.38%, HDFC up by 2.68%, Asian Paint up by 2.59% and DLF up by 1.90%.

The top losers of the index were Bank of Baroda down by 7.72%, IDFC down by 5.36%, JP Associates down by 4.74%, Ranbaxy down by 3.63% and BHEL down by 2.96%.

The European markets were trading in red, France’s CAC 40 down by 0.70%, United Kingdom’s FTSE 100 down by 0.42% points and Germany’s DAX down by 0.28%.

Asian markets ended mostly higher Monday as positive economic data from U.S. supported markets, raising the expectations that the Federal Reserve will maintain its ultra-easy monetary policy for the foreseeable future. China's Shanghai Composite closed the shutter on positive note, helped by upbeat service-sector data. Japan’s Nikkei went home with green mark, reacting to the 1.2% gain that the dollar made against the yen on Friday, pushing the market to a new 33-month high. However, South Korea's Kospi Composite closed lower as local automakers retreated as the yen continued to weaken, benefitting their Japanese rivals.