Benchmarks lose some more ground; Nifty sinks below 5,950 crucial mark

Indian equity markets adding losses continued to trade weak in afternoon deals on account of sustained selling pressure. The sentiments on the street turned cautious after a preliminary data released showed that the economy set to have grown 5.0% in fiscal year ending next month, underscoring the urgent need for reforms to boost growth and reflecting that the country’s slowest growth in a decade could be worse than anticipated. The Reserve Bank of India’s forecast for the year had been 5.5%, while finance minister P Chidambaram had projected growth of 5.9%, but both appear to have been over-optimistic. Traders were seen piling some position in IT, Auto and FMCG sectors while selling was witnessed in Consumer Durables, Capital Goods and Power sector. In the scrip specific development, Strides Arcolab was trading in red with a loss of more than thirteen percent on reports that the drug maker may sell its injectable-medicines unit Agila Specialties.

On the global front, most of the Asian markets were trading in red while the European markets were trading on optimistic note. The European Central Bank (ECB) is widely expected to leave its key lending rate unchanged at a record low 0.75% at its policy meeting later scheduled for today i.e. February 07, 2013. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 5,950 and 19,600 levels respectively. The market breadth on BSE was negative in the ratio of 924:1727 while 142 scrips remain unchanged.

The BSE Sensex is currently trading at 19,593.84, down by 45.88 points or 0.23% after trading in a range of 19,702.56 and 19,549.83. There were 8 stocks advancing against 22 declines on the index.

The broader indices added to the pressure; the BSE Mid cap and Small cap index was trading lower by 0.75% and 1.15% respectively.

The top gaining sectoral indices on the BSE were, IT up by 0.51%, Auto up by 0.17% and FMCG up by 0.03%, while Consumer Durables down by 2.60%, Capital Goods down by 1.11%, Power down 1.04%, Realty down by 1.02 and Metal down by 1.00% were the top losers on the index.

The top gainers on the Sensex were HDFC up by 1.41%, TCS up by 0.71%, Tata Motors up by 0.65%, Mahindra & Mahindra up by 0.64%, and Infosys up by 0.44%.

On the flip side, Sterlite Industries down by 2.97%, Bharti Airtel down by 2.86%, Cipla down by 2.61%, NTPC down by 2.43% and Gail India down by 1.67% were the top losers on the Sensex.

Meanwhile, in a move to contain the current account deficit (CAD) for the current fiscal, a RBI committee, in its report, has suggested limits on the gold import by banks and other government agencies like STC and MMTC, which account for about 56 per cent of the total import of the precious metal. The country's CAD touched a record high of 5.4 percent of GDP or $22.3 billion in the July-September quarter on account of higher capital outflows and decelerated growth in net export of services.

Worried over the rising gold imports, the RBI's report on gold loans stated ‘setting value or quantum limits for canalising agencies and banks to import gold can also reduce the demand for gold. Gold imports in the April-December period of 2012 stood at $38 billion. While, in FY12 it was $ 56.5 billion.

As per the RBI report, in the prevailing scenario of global economic slowdown, it has become necessary to check the gold import, which has widened the country’s current account deficit. The canalising agencies like MMTC, STC and the nominated banks play a major role in gold imports into the country. These organisations sell the imported gold to jewellery manufacturers and at retail level, it added.

However, the RBI's working group of gold loans also recommended that such limits can be reviewed periodically d the government may remove such restrictions once the Current Account Deficit (CAD) comes down to sustainable level.

The S&P CNX Nifty is currently trading at 5,944.75, down by 14.45 points or 0.24% after trading in a range of 5,978.50 and 5,930.60. There were 15 stocks advancing against 34 declines while 1 stock remained unchanged on the index.

The top gainers of the Nifty were Power Grid up by 1.83%, HDFC up by 1.51%, IDFC up by 1.38%, Grasim Industries up by 1.06% and JP Associate up by 0.89%.

On the flip side, Reliance Infrastructure down by 3.50%, Bharti Airtel down by 2.76%, Bank of Baroda down by 2.73%, Ambuja Cement down by 2.64% and Sesa Goa down by 2.60% were the major losers on the index.

Most of the Asian equity indices were trading in the red; Shanghai Composite declined 0.66%, Hang Seng dropped 0.34%, Nikkei 225 tumbled 0.93%, Straits Times contracted 0.61%, KOSPI Composite was down by 0.23%.On the flip side, KLSE Composite rose 0.36% and Jakarta Composite rose by 0.03%, while, Taiwan Weighted was shut for trade today.

The European markets were trading in green; France’s CAC 40 added 0.12%, Germany’s DAX rose 0.08% and United Kingdom’s FTSE 100 edged higher by 0.12%.