Indian benchmarks inch lower; late recovery minimizes damage

Pressurized by weak global cues, Indian equity benchmarks snapped Friday’s trade in the red terrain with both the gauges hitting seven and a half week low. The frontline indices traded choppy throughout the day and extended their southbound journey for second straight day, however the recovery in the late trade minimized the extent of damage for the bourses. The psychological 5,850 (Nifty) and 19,400 (Sensex) levels proved as strong support as the benchmarks rebounded after hitting intraday lows. Sentiments remain dampened from the beginning of the trade as investors reacted negatively to the SEBI’s action of imposing a total penalty of Rs 30.75 crore on 118 entities, including the promoters of erstwhile Bank of Rajasthan (BoR), for manipulative practices in the stock market. Lower-than-expected quarter earnings by some blue-chip companies also triggered selling.

Global cues too remained unsupportive as disappointing news from Germany’s economy sent European markets lower as investors turned their attention to a major economic conference this weekend. Germany’s economy contracted a worse-than-expected 0.6 per cent in the last quarter of 2012 as recession deepened across the 17 European Union countries that use the euro. Moreover, Asian markets ended mixed with Japanese Nikkei tumbling the most as investors pared exposure to exporters and banks while awaiting the weekend G20 meeting.

Back home, selling got intensified in the mid noon trade after global rating agency Moody’s warned that India’s expanding current-account deficit and external debt will make the country more vulnerable to international financial volatility and have negative implications for its sovereign credit profile. Sentiments also got dampen after realty sector ended slightly in the red after realty major DLF, reported a 10.1 percent growth in the December quarter from Rs 258.35 crore a year ago to Rs 284.80 crore, which missed market expectations. However, some recovery was witnessed in late trade to help the frontline indices to pare most of their initial losses as investors started piling up positions in rate sensitive like Auto and Banking on hopes that weak industrial growth and better inflation data will prompt RBI to go for more rate cuts. Rally in sugar stocks too supported the sentiments after the food minister said that the decision on partial sugar decontrol is likely in the next 15 days.

The NSE’s 50-share broadly followed index Nifty rose by ten points to end comfortably above the psychological 5,900 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex surged by over fifty points to finish above the psychological 19,600 mark. However, broader markets struggled to get traction and ended the session in the red with a cut off about half a percent. The market breadth remained in favor of declines as there were 892 shares on the gaining side against 1,229 shares on the losing side while 852 shares remain unchanged.

The market breadth remained in favor of declines as there were 896 shares on the gaining side against 1,234 shares on the losing side while 834 shares remain unchanged.

Finally, the BSE Sensex lost 29.03 points or 0.15% to settle at 19,468.15, while the S&P CNX Nifty declined by 9.55 points or 0.16% to end at 5,887.40.

The BSE Sensex touched a high and a low of 19,512.89 and 19,381.82, respectively. The BSE Mid cap index up by 0.28% and Small cap index was down by 0.64%.

The top gainers on the Sensex were, Tata Motors up by 2.48%, Tata Power up by 1.79%, Bharti Airtel up by 1.23%, Sterlite Industries up by 1.22% and Gail India up by 0.99%, while Dr Reddys Lab down by 3.55%, Bajaj Auto down by 1.41%, Tata Steel down by 1.21%, RIL down by 1.20% and Infosys down by 0.99% were the top losers on the index.

The only gainer on the BSE Sectoral space was Auto up 0.43%, Bankex up 0.21% and FMCG up 0.11% while Oil & gas down by 0.83%, IT down 0.58%, Health Care down 0.30%, TECk down 0.27% and Consumer Durables down by 0.14% were top losers on the sectoral space.

Meanwhile, as per the Supreme Court’s ruling on February 15, 2013, the telecom firms whose licences were quashed by the verdict and stayed away from participating in fresh auction for 2G spectrum will now cease to operate forthwith. The apex court on January 14 had extended till February 4, the January 18 deadline for existing operators of 2G spectrum to carry out operations. The deadline was further extended till further orders.

This ruling comes as a disappointment to companies like Sistema and Tata Tele, who did not bid in the auction. Sistema Shyam, Idea Cellular, Videocon and Tata Teleservices had filed separate petitions in the last stage of appeal available in Indian law. However, the court ruled all these petitions as invalid. Sistema Shyam, which uses the less popular CDMA technology, had argued that its case was different from the others because there had been no competition for CDMA airwaves in the 2008 sale, given that most bidders were interested in GSM services.

Besides, the apex court ordered the telecom firms, which continued operation after cancellation of licenses, to pay fee as per the reserved price fixed for fresh auction in November 2012. The Supreme Court ruled that all 2G spectrum freed up when licences were cancelled must be auctioned. Furthermore, the apex court clarified that its February 2, 2012 order cancelling licences will not be applicable on telecom firms holding 900 MHZ band spectrum.

The S&P CNX Nifty touched a high and a low of 5,899.95 and 5,853.90 respectively.

The top gainers on the Nifty were Tata Motors up by 2.52%, IDFC up by 1.78%, Bharti Airtel up by 1.49%, Gail up by 1.42% and Tata Power up by 1.26%.

The top losers of the index were Dr Reddy's Laboratories down by 3.22%, Cairn down by 2.37%, Grasim down by 2.31%, DLF down by 2.30% and UltraTech Cement down by 2.21%.

The European markets were trading in green, France’s CAC 40 up by 0.05%, United Kingdom’s FTSE 100 up by 0.03% and Germany’s DAX up by 0.04%.

Asian markets shut shop on a mixed note on Friday with Japanese Nikkei tumbling the most as investors pared exposure to exporters and banks while awaiting the weekend G20 meeting. A deepening recession in the euro zone also dragged down shares, and sentiment deteriorated in late trade on news that a conservative, former finance ministry bureaucrat is the leading candidate to head the Japanese central bank. Markets in mainland China and Taiwan remained closed for public holiday.