Southward journey continues on D-street as global cues play spoilsport

Indian equity indices extended their previous session’s southward journey with both the frontline gauges losing their crucial 5,850 (Nifty) and 19,300 (Sensex) levels on the back of feeble global cues. After a gap-down opening, market traded in the tight band throughout the session, as investors opted to remain on sidelines ahead of the Reserve Bank of India’s (RBI’s) policy announcement tomorrow. The markets never looked confident and traded below their crucial levels throughout the trade.

Global cues played the major spoilsport as an unparalleled levy on bank deposits in Cyprus is likely to plunge Europe back into crisis. All the Asian equity indices shut shop in the red with Shanghai Composite losing over one and a half percent as China’s property developers stretched losses. Meanwhile, Hong Kong also ended in the negative territory. Meanwhile, European counters followed Asian shares and traded choppy in the early deals.

Back home, sentiments remained somber after Global rating agency Moody’s said that India’s high food inflation is credit negative for the country as it hurts government finances and curtails the ability of the RBI to deal with monetary issues. Selling in banking stocks too was dampening the sentiments as scrips like, ICICI Bank, Axis Bank and HDFC Bank edged lower after finance ministry and the RBI started  investigating allegations of money laundering practices at these top private sector lenders. Additionally, shares of public sector oil marketing companies like BPCL, HPCL and IOC gone through the floor after Indian Oil Corporation slashed petrol price by Rs 2 per litre excluding VAT with effect from midnight of March 15, 2013, while there was no hike in diesel prices. Bucking the trend, sugar related stocks like Shree Renuka Sugar, Bajaj Hindusthan, Triveni Engineering Industries and Rana Sugars edged higher on report that the Union Cabinet is likely to meet on March 18, 2013, to consider partial decontrol of the sugar sector.

The NSE’s 50-share broadly followed index Nifty lost about forty points to end below its psychological 5,850 support level, while Bombay Stock Exchange’s Sensitive Index - Sensex- tumbled by over one hundred and thirty points to finish below its psychological 19,300 mark. Moreover, the broader markets too got butchered during the trade and ended the session with a cut of about half a percent.

The market breadth remained in the favour of declines as there were 1,091 shares on the gaining side against 1,757 shares on the losing side, while 121 shares remained unchanged.

Finally, the BSE Sensex lost 134.36 points or 0.69% to settle at 19293.20, while the CNX Nifty declined by 37.35 points or 0.64% to end at 5,835.25.

The BSE Sensex touched a high and a low of 19345.42 and 19232.23, respectively. The BSE Mid cap index down by 0.29% and Small cap index was down by 0.67%.

The top gainers on the Sensex were, Cipla up by 1.70%, Hindustan Unilever up 1.20%, HDFC Bank up 0.75%, ITC up 0.66% and Hero MotoCorp up 0.18%, while Coal India down by 5.41%, Tata Power down by 3.43%, Gail India down by 3.16%, Maruti Suzuki down 2.98% and Sterlite Industries down by 2.68% were the top losers on the index.

On the BSE Sectoral front, FMCG up by 0.68%, Consumer Durables up by 0.32% and Health Care up by 0.30% were the top gainers, while Metal down by 2.34%, PSU down 1.64%, Auto down 1.44%, Realty down 1.21% and Oil & Gas down 1.20% were the top losers in the space.

Meanwhile, private oil refiners may not sell any fuel to state-owned oil firms if the government changes the way for pricing petrol and diesel to export parity price. Private refiners like Essar and Reliance supply one-fifth of diesel that Indian Oil Corp, Hindustan Petroleum and Bharat Petroleum sell through their petrol pumps.

The government wants the refiners to charge petrol and diesel at a rate that they get in export market, rather than current practice of pricing the fuels after adding transportation and customs duty to the international price as the duty was adding to the under-recoveries of the state-run oil marketing companies without contributing any revenue to the exchequer.

Though, the government’s move would save Rs 18,000 crore from subsidy bills, but it will hit hard the public sector oil firms who are short in diesel and LPG production capacity and will be left with only alternative to import the fuel to meet domestic demand. They are of the view that export parity price of fuel will lower their profit and if they are to get export parity price, they might move to overseas market to sell the fuel by setting up an export-oriented unit (EOU) or a SEZ refinery and avail of tax benefits like 7-year holiday on payment of income tax and duty free imports and exemption from payment of excise duty.

Oil Minister M V Moily has already raised concerns about this finance ministry's move, as the oil marketing companies have not been adding any margin on crude oil or on petroleum products from 2005-06, they get compensated for the loss on selling diesel, domestic LPG and kerosene at controlled rates. If the actual losses are not compensated they won’t get money and can’t go for any expansion.

The CNX Nifty touched a high and a low of 5,850.20 and 5,814.35 respectively. 

The top gainers on the Nifty were, Cipla up by 2.15%, HCL India up 1.38%, Siemens up 1.18%, HUL up 1.12% and ITC up by 1.01%.

On the flip side, the top losers of the index were, Coal India down by 5.72%, IDFC down by 3.49%, Tata Motors down by 3.444%, Maruti Suzuki down by 3.19 and JP Associates down by 3.09%.

The European markets were trading mixed, France’s CAC 40 down by 1.42%, Germany’s DAX up by 0.97% and the United Kingdom’s FTSE 100 down by 1.16%.

Asian markets ended with sharp fall on Monday as a controversial bailout plan for Cyprus that will impose a tax on bank deposits in return for financial, added to the worries about Europe's debt crisis. The Japanese stock market closed with heavy losses after touching 10 months low on the back of profit-taking after recent strong gains. Shanghai Composite went home with red mark as China’s property developers stretched losses. Meanwhile, Hong Kong also ended in the negative territory.