Indian equity trims losses; trade continues in red

Indian equity markets trimmed losses but continued weak trade in the late afternoon session due to selling in frontline counters and taking negative cues from European counterpart, triggered with unusual bailout proposal for Cyprus. The sentiments on the street remained pessimistic as Moody's Investors Service stated that India’s high food inflation is a negative for the country’s sovereign ratings as it filters through the broader economy, with adverse consequences for growth and the country’s large fiscal and current account deficits. Traders were seen adding some Consumer Durables, FMCG and Capital Goods sector stocks, while selling was witnessed in Metal, PSU and Auto sector. The sugar stocks were seen trading firm on hopes of price decontrol decision. The cabinet committee on economic affairs is likely to discuss freeing of sugar prices and the proposed food security legislation, which is expected to be a key campaign plank for the ruling Congress-led United Progressive Alliance coalition in the state polls and the 2014 general elections.

In the scrip specific development, Jet Airways plunged on reports that talks with Abu Dhabi’s Etihad Airways has run into rough weather as fresh disputes emerged over investment protection and management control. Coal India too tumbled to more than five-month low on reports that the government is planning to sell a 10% stake in the company. Indian Oil Corporation was trading in red on sell recommendations. Thomas Cook India was trading in green as the company received SEBI approval for raising funds via institutional placement programme (IPP) issue. On the global front, the Asian markets were trading in red while the European markets were trading on pessimistic note. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 5,900 and 19,400 levels respectively. The market breadth on BSE was negative in the ratio of 948:1695 while 132 scrips remain unchanged.

The BSE Sensex is currently trading at 19,312.98, down by 114.58 points or 0.59% after trading in a range of 19,320.17 and 19,232.23. There were 8 stocks advancing against 22 declines on the index.

The broader indices continued to trade in red; the BSE Mid cap and Small cap indices were trading lower by 0.26% and 0.72% respectively.

The only gaining sectoral index on the BSE was, Consumer Durables up 0.43%, FMCG up by 0.25% and Capital Goods up 0.14% while Metal down by 1.89%, PSU down by 1.51%, Auto down by 1.23%, Realty down by 1.09% and Oil & Gas down by 0.91% were the top losers on the BSE.

The few gainers on the Sensex were Cipla up by 1.29%, HDFC Bank up 1.14%, Hindustan Unilever up by 1.08%, Sun Pharma up by 0.31% and L&T up by 0.21%.

On the flip side, Coal India was down by 5.19%, Maruti Suzuki down by 2.65%, Tata Power down by 2.50%, Gail India down by 2.48% and Sterlite Industries down by 2.02% were the top losers on the Sensex.

Meanwhile, in order to increase the investment in road projects, the finance ministry has urged the Reserve Bank of India (RBI) for considering a change in its stance to treat loans to road projects as unsecured.

Concerned about the National Highways Authority of India’s (NHAI) performance, which achieved only one-tenth of its ambitious 8800 km target for this financial year, the road minister CP Joshi met the finance minister to discuss financing challenges in the sector including RBI's treatment of road sector loans as unsecured.

Central bank treats road sector loans as unsecured, as land in road projects is publicly owned and loans taken for them cannot be backed by assets, which makes the borrowing cost higher for the projects. In 2012, the project finance for infrastructure projects in the country has gone down by 49 percent. 

The roads ministry has sent multiple suggestions to the finance ministry on ways to ease the fund crunch in the sector. If the central bank sheds its reluctance to treat highway sector lending as secured loans, the credit flow to the fund-starved highway sector could grow by at least 20 to 25 percent.

Recently, in other positive development the Supreme Court allowed delinking of the two clearances as sought by the Ministry of Environment and Forest (MoEF). The NHAI had sought Supreme Court intervention allowing delinking of environment clearance from forest approval. 20 projects long stuck up due to delay in forest clearances would be executed soon after clearance from MoEF in the wake of Supreme Court orders.

The CNX Nifty is currently trading at 5,837.40, down by 35.20 points or 0.60% after trading in a range of 5,842.45 and 5,814.35. There were 12 stocks advancing against 38 declines on the index.

The top gainers of the Nifty were Cipla up by 1.47%, Siemens up by 1.25%, HCL Tech up by 1.09%, HUL up by 0.95% and HDFC Bank up by 0.95%.

On the flip side, Coal India down by 5.27%, Maruti Suzuki down by 2.94%, IDFC down by 2.92%, Tata Power down by 2.51% and BPCL down by 2.31% were the major losers on the index.

All Asian equity indices continued to reel in red; Shanghai Composite descended by 1.68%, Hang Seng tumbled down 2.00%, Jakarta Composite slipped 0.46%, KLSE Composite dropped 0.36%, Nikkei 225 crumbled 2.71%, Straits Times contracted by 0.89%, KOSPI Composite decreased 0.92% and Taiwan Weighted plunged by 1.47%.

The European markets were trading in red; France’s CAC 40 lost 1.32%, Germany’s DAX descended 1.32% and United Kingdom’s FTSE 100 dropped 1.04%.