Markets extend early losses despite FM’s assurance on govt’s position

Indian equity markets, extended early losses in the late morning session on Wednesday following withdrawal of support by DMK to the UPA government. The markets remained nervous even after finance minister P Chidambaram and parliamentary affairs minister Kamal Nath held a press conference to assure that the government was not under any threat after DMK pullout. Meanwhile, investors remained cautious amid raising doubts about the fate of government's reforms. In currency market, following a lower opening and subsequent retreat rupee again slipped against dollar. On sectoral front, banking stocks extended losses on continued disappointment after the RBI left CRR unchanged. Select FMCG and Pharma stocks were trading in green.

On the global front, most Asian shares were trading lower after a bailout plan for Cyprus fell into disarray, but losses were limited on investors' hopes that a last minute deal was still within reach. Back home, the market breadth was favoring negative trend; there were 1,761 shares on the losing side against 656 shares on the gaining side while 113 shares remain unchanged.

The BSE Sensex is currently trading at 18,925.60, down by 82.50 points or 0.43% after trading in a range of 19,028.09 and 18,896.87. There were 9 stocks advancing against 21 declines on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 1.40% and Small cap index was down by 1.22%.

The top gaining sectoral indices on the BSE were FMCG up by 0.34% and Health Care up by 0.25%, while Realty down by 3.01%, Power down by 1.49%, Consumer Durables down by 1.49%, PSU down by 1.47% and Bankex down by 1.21% were the top losers on the BSE.

The top gainers on the Sensex were Hindustan Unilever up by 2.01%, Cipla up by 1.81%, TCS up by 1.03%, Sun Pharma up by 0.68% and Hero MotoCorp up by 0.54%.

On the flip side, NTPC was down by 2.32%, ONGC was down by 2.08%, Hindalco was down by 1.67%, SBI was down by 1.45% and L&T was down by 1.14% were the top losers on the Sensex.

Meanwhile, the Cabinet Committee on Investment (CCI) is likely to consider few proposals for the highway sector. The proposal relates to relaxing the exit clauses of highway developers that would enable developers to exit early and make way to investors to come in and replace current developers who are struggling with finances; and are unable to build roads. Currently, there are no limits for highway developers for exiting from projects and to what extent they can exit.

The only condition is that firms that replace current developers should meet the net-worth criteria to bid for the project. With this move, the government wants to make the developers more cautions towards the road projects. CCI would also consider another proposal to permit investors in those projects that have achieved financial closure but are stressed due to lack of equity funding.

Earlier, 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. 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.

Recently, in other positive development for the highway sector, the Supreme Court (SC) allowed delinking the two clearances as sought by the Ministry of Environment and Forest (MoEF). With the SC allowing modification in norms, 20 delayed highway projects worth Rs 27,000 crore investments are expected to be executed soon.

The CNX Nifty is currently trading at 5,712.70 down by 33.25 points or 0.58% after trading in a range of 5,745.30 and 5,703.85. There were 14 stocks advancing against 36 declines on the index.

The top gainers of the Nifty were Hindustan Unilever up by 1.94%, Cipla up by 1.92%, Lupin up by 1.48%, TCS up by 0.92% and Asian Paints up by 0.91%.

On the flip side, Reliance Infra down by 5.10%, JP Associates down by 4.76%, ACC down by 2.93%, PNB down by 2.49% and Ultra Tech Cement down by 2.33% were the major losers on the index.

Most of the Asian equity indices were trading in red; Jakarta Composite dipped 0.22%, Straits Times slipped 0.32%, KOSPI Composite declined 0.97% and Taiwan Weighted was down by 0.52%.

On the flip side, Shanghai Composite soared 2.40%, Hang Seng rose 0.69% and KLSE Composite was up by 0.30%.

Japanese Nikkei remained shut for the trade today.