Benchmarks end lower weighed down by rate sensitive counters

Tuesday’s trading session turned out to be a disappointing session of trade for the Indian equity markets, as market participants booked all their initial gains after higher than expected retail inflation numbers dashed hopes that the Reserve Bank of India (RBI) will reduce interest rate in upcoming monetary policy review on March 19, 2013. Retail inflation moved up for the fifth consecutive month to 10.91% in February -- remaining in the double-digit terrain for third month in a row -- on account of higher prices of vegetables, edible oil, cereals and protein-based items. The inflation crossed double digit mark in December at 10.56%, against 9.90% in November. The food and beverages prices grew by 13.73% in January when fuel and light grew by 8.67% and clothing, bedding and footwear prices grew by 10.91%. The rate of increase in the prices of vegetables was as high as 21.29%. The prices of cereals and products went up by 17.04%.

Meanwhile, industrial production (IIP), which includes output of factories, mines and utilities, rose an annual 2.4% in January after unexpectedly falling 0.6% in December. It was 1% in the same month of last year. The three sectors that constitute the index, i.e., mining, manufacturing and electricity sectors for the month of January grew by (-) 2.9%, 2.7% and 6.4% respectively.

On the global front, other Asian counters too dampened the sentiments as most of them reversed their morning gains and shut shop in the red as worries grew about China’s recovery and Europe’s doldrums. Higher-than-expected inflation of 3.2 percent in February also raised questions about the government’s ability to do more to shore up the world’s second-largest economy. However, European counters, up to certain extent, helped domestic bourses to trim losses as most of the European markets managed to keep their head above water in the early deals.

Back home, selling resumed in late trade as bleeding continued in interest rate sensitive counters like Banks and Realty since higher-than-expected Feb retail inflation numbers dashed hopes that the central bank will reduce interest rate. Though, the bourses managed to hold their psychological 19,550 (Sensex) and 5,900 (Nifty) levels as some buying was witnessed in defensive FMCG counter. Sugar stocks like Bajaj Hindusthan, Dhampur Sugar Mills, Sakthi Sugars, Balrampur Chini Mills, Triveni Engineering & Industries, Shree Renuka Sugars and Rana sugars all edged higher on reports that the government is likely to consider a proposal on sugar decontrol this week.

The NSE’s 50-share broadly followed index Nifty lost about thirty points but managed to hold its psychological 5,900 support level, while Bombay Stock Exchange’s Sensitive Index - Sensex declined by about eighty points to finish below its psychological 19,600 mark. Moreover, the broader markets too butchered during the trade and ended the session with a cut of over half a percent.

The market breadth remained in favor of declines as there were 1,205 shares on the gaining side against 1,688 shares on the losing side while 128 shares remain unchanged.

Finally, the BSE Sensex lost 81.29 points or 0.41% to settle at 19,564.92, while the CNX Nifty declined by 28.25 points or 0.48% to end at 5,914.10.

The BSE Sensex touched a high and a low of 19,697.84 and 19,505.75, respectively. The BSE Mid cap index down by 0.63% and Small cap index was down by 0.53%.

The top gainers on the Sensex were, Hindustan Unilever up by 1.16%, Tata Motors up 0.96%, Jindal Steel up 0.62%, ITC up 0.59% and RIL up 0.45%, while Tata Power down by 3.12%, Bharti Airtel down by 2.13%, BHEL down by 2.12%, HDFC Bank down 1.79% and Sterlite Industries down by 1.55% were the top losers on the index.

The top gainers on the BSE Sectoral space were, FMCG up by 0.49% and Auto up by 0.08%, while Consumer Durables down by 1.99%, Power down 1.36%, Realty down 1.24%, Bankex down 0.92% and Capital Goods down 0.90% were top losers on the sectoral space.

Meanwhile, in order to attract more overseas investment into the country, the government is working on bringing new norms for a common know your customer (KYC) for foreign institutional investors (FIIs). While addressing the Rajya Sabha on the Securities and Exchange Board of India (Amendment) Bill, 2013, Finance Minister P Chidambaram said, ‘government will soon come out with a new set of norms that will have a common KYC across various regulators, be it pension, banking, stocks or insurance. There should be one KYC.’

By adding further he said, if a new FII applies in India, it has to go through due diligence and once registered it has to go through KYC norms. Currently, there are 1,756 FIIs registered in the country and it takes a maximum of three weeks for an FII to register with Securities and Exchange Board of India (SEBI).  Chidambaram also assured of serious action in matters of insider trading and said that SEBI has been asked to step up systems and surveillance to deal with such matters.

Observing that the cumulative investment graph of FIIs in the country is rising, Chidambaram said, during the year 2012, there has been an investment of $31 billion by FIIs. During the current year from January 1 till date, there has been an investment of $10 billion by FIIs.’ Pursuant to which Indian stock markets have risen by 25 per cent and have given a good return.  Chidambaram also hoped for more investments coming in from FIIs in the stock markets, which will further enhance returns to investors.

Meanwhile, the SEBI (Amendment) Bill, 2013, which was passed in the Rajya Sabha by voice vote also sought the appointment of a retired High Court judge having held the position for the next  seven years for heading the Securities Appellate Tribunal (SAT). As per existing provisions, only a serving or retired Supreme Court judge can head the Tribunal, but government was finding it difficult to fill the slot.

The CNX Nifty touched a high and a low of 5,952.00 and 5,893.65 respectively. 

The top gainers on the Nifty were Ranbaxy up by 2.47%, Ambuja Cements up 1.50%, ACC up 1.12%, Hindustan Unilever up 0.95% and Tata Motors up by 0.93%.

On the flip side, the top losers of the index were, Cairn down by 3.24%, Tata Power down by 3.11%, BHEL down by 2.34%, Bharti Airtel down by 2.21% and Siemens down by 2.01%.

Most of the European markets were trading in green, France’s CAC 40 up by 0.06% and the United Kingdom’s FTSE 100 up by 0.02% while Germany’s DAX down by 0.11%.

Reversing their initial rally, most of the Asian equity indices shut shop in the negative terrain as the strong performance in the United States was slightly overshadowed by disappointing economic data from China. The soft Chinese industrial production and retail sales figures stoked some concerns that the recent pick-up in the country’s growth rate may have stalled. In addition, higher-than-expected inflation of 3.2 percent in February raised questions about the government's ability to do more to shore up the world's second-largest economy.

Jakarta Composite remained shut for the trade today.