Benchmarks trade lower in morning deals on sluggish global cues

Pressurized by sluggish global cues, Indian equity indices have made a lackluster start on Tuesday with Sensex slipping below its crucial 19,700 mark. The US markets suffered sharp profit booking overnight and the major indices lost 1-1.5 percent for the day as data on factory orders fell short of expectations. All the Asian equity indices were trading in the negative terrain on Tuesday’s morning deals as investors booked profits from recent strong rallies on worries that a potential political shake-up could disrupt the euro-zone’s efforts to resolve its debt crisis.

Back home, sentiments got dented after Finance Minister P Chidambaram reiterated his commitment to controlling spending, especially at a time when India faces fiscal and current account deficits. Traders also remained cautious ahead of advanced economic growth estimates for the current fiscal year (FY13) which will be released on Thursday. Some pressure also came in from banking counter as the sector tumbled over half a percent on the back of RBI’s new draft guidelines 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.

On the sectoral front, software and healthcare remained the only gainers on the BSE sectoral index while, realty, metal and consumer durables remained the top losers on the BSE sectoral space. The broader indices too were struggling to get some traction while, the market breadth on the BSE was negative; there were 575 shares on the gaining side against 1252 shares on the losing side while 82 shares remain unchanged.

The BSE Sensex opened at 19665.54; about 85 points lower compared to its previous closing of 19751.19, and has touched a high and a low of 19711.37 and 19662.70 respectively.

The index is currently trading at 19689.12, down by 62.07 points or 0.31%. There were 8 stocks advancing against 22 declines on the index.

The overall market breadth has made a week start with 30.86% stocks advancing against 64.68% declines. The broader indices were trading in-line with benchmarks; the BSE Mid cap and Small cap indices decline 0.87% and 0.82% respectively.

The top gaining sectoral indices on the BSE were, IT up by 0.34% and Health Care up by 0.33% while, Realty down by 1.28%, Metal down by 1.00%, Consumer Durables down by 0.92%, Power down by 0.83% and  Bankex down by 0.70% were the losers on the index.

The top gainers on the Sensex were Sun Pharma up by 3.22%, Gail India up by 1.95%, TCS up by 0.76%, ONGC up by 0.54% and Infosys up by 0.40%.

On the flip side, BHELwas down by 2.67%,  Jindal Steel was down by 1.89%, Sterlite Industries was down by 1.87%,  Hero MotoCorp was down by 1.73% and Bharti Airtel was down by 1.57% were the top losers on the Sensex.

Meanwhile, to bring down inflation on a sustained basis, the Reserve Bank (RBI) has expressed the need of policy interventions on several fronts. RBI executive director Deepak Mohanty said 'it is important to aim for nutritional security not only to harness the demographic dividend stemming from our sizable young population but also to contain food prices. This will require addressing the supply-demand imbalance in the agricultural sector and modernising the supply chain.'

While, wholesale Price Index (WPI) based inflation declined to 7.18% in December from 7.74% over the same period a year ago. But still it is much above the comfort level of RBI. The apex bank’s technical assessment has also suggested that the threshold level of inflation for India is in the range of 4 to 6% and if inflation persists beyond this level, then it could lower economic growth over the medium-term.   RBI executive director stressed the need of depth financial markets as well as calibrating monetary policy with growth-inflation dynamics. He said that to ensure industrial capacity utilisation and productivity improvement India needs to have a reliable power supply as well as availability of industrial raw materials, which will reduce reliance on imports of products for which domestic capacity exists and will moderate inflation. By adding further he said that maintaining the exchange rate stability is important to cushion transmission of international price pressures in commodities, particularly crude oil. 'This will require management of the current account in our balance of payments with the rest of the world at sustainable levels'.

The S&P CNX Nifty opened at 5,948.20; about 39 points lower as compared to its previous closing of 5,987.25, and has touched a high and a low of 5,968.05 and 5,947.90 respectively.

The index is currently trading at 5,959.70, lower by 27.55 points or 0.46%. There were 9 stocks advancing against 41 declines on the index.

The top gainers of the Nifty were Sun Pharma up by 3.00%, Gail up by 1.57%, ACC up by 0.80%, TCS up by 0.53% and ONGC up by 0.51%.

On the flip side, Jaiprakash Associates down by 2.70%, BHEL down by 2.60%, Jindal Steel down by 2.14%, Bank of Baroda down by 2.10% and Sesa Goa down by 2.05%, were the major losers on the index.

All the Asian equity indices were trading in the red; Shanghai Composite declined 9.80 points or 0.40% to 2,418.35, Hang Seng tumbled 399.72 points or 1.69% to 23,285.29, Jakarta Composite dipped 11.12 points or 0.25% to 4,479.45, KLSE Composite slipped 2.60 points or 0.16% to 1,631.95, Nikkei 225 crumbled 160.87 points or 1.43% to 11,099.48, Straits Times dropped 22.98 points or 0.70% to 3,274.39, KOSPI Composite contracted 11.85 points or 0.61% to 1,941.36 and Taiwan Weighted was down by 41.05 points or 0.52% to 7,882.11.