Weak trade persist; Nifty slips below 5,700 mark

Indian equity markets add losses to continue weak trade hovering near the lowest point of the day in the late afternoon session due to selling in frontline counters. Traders were seen adding some FMCG and Health Care sector stocks, while selling was witnessed in Realty, Capital Goods (CG) and Power sector. In scrip specific development, Sugar companies were sulking in red for the second consecutive session after the Cabinet Committee on Economic Affairs (CCEA) deferred the sugar decontrol proposal yesterday in absence of Finance Minister P Chidambaram, Defence Minister AK Antony and Health Minister Ghulam Nabi Azad. Housing Development and Infrastructure (HDIL) tumbled after it asked local credit agency Credit Analysis and Research (CARE) to review a ratings downgrade. CARE downgraded HDIL’s non-convertible debentures and short-term non-convertible debentures, of a combined Rs 2,095 crore to ‘D’. Manappuram Finance extended its yesterday’s fall after the company stated that it expects an under recovery of revenue on certain gold loan portfolios due to a correction in gold price. Zee Entertainment Enterprises was trading in red after Goldman Sachs downgraded the television broadcaster to neutral from buy, stating that the stock appears fairly valued given macro headwinds that could hurt advertisement spending.

On the global front, most of the Asian markets were trading in red while the European markets were trading on optimistic note. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 5,700 and 19,000 levels respectively. The market breadth on BSE was negative in the ratio of 646:2082 while 111 scrips remain unchanged.

The BSE Sensex is currently trading at 18,905.46, down by 102.64 points or 0.54% after trading in a range of 19,028.09 and 18,871.76. There were 10 stocks advancing against 19 declines while 1 stock remains unchanged on the index.

The broader indices were trading in red; the BSE Mid cap and Small cap indices were trading lower by 1.77% and 1.85% respectively.

The top gaining sectoral indices on the BSE were FMCG up by 0.55% and Health Care up by 0.05%, while Realty down by 3.54%, Capital Goods down by 2.01%, Power down by 1.92%, PSU down by 1.79% and Bankex down by 1.47% were the top losers on the BSE.

The top gainers on the Sensex were Hindustan Unilever up by 2.56%, Cipla up by 1.94%, Tata Motors up by 0.87%, TCS up by 0.64% and Bajaj Auto up by 0.53%.

On the flip side, SBI down by 2.67%, NTPC down by 2.39%, L&T down by 2.36%, BHEL down by 1.91% and ONGC down by 1.91% were the top losers on the Sensex.

Meanwhile, to recover the major portion of the non performing assets (NPAs), the finance ministry has suggested the state-runs banks to review their top 300 non-performing accounts by their board's management committee and also implement a strict recovery policy, especially in cases where defaulting companies have affluent promoters. Pursuant to which, the bank’s board will suggest measures accordingly and if there is a case for recovery, steps will be taken. Almost all state-run banks have senior finance ministry officials on their boards.

The finance ministry has also asked the banks to take the support from Lok Adalats and recovery camps to check fresh slippages and devise a strategy for their minimization. It has already directed banks to disclose their top 50 NPAs along with the details of loan sanctioning officer, the collateral furnished by the borrower, terms of the loan and how the bank covers the risk.

As of December 2012, gross nonperforming assets of public sector banks have risen from Rs 71,080 crore in March 2011 to Rs 1.55 lakh crore. Further, as many as 215 projects with investments of Rs 7 lakh crore are currently stalled, and banks have disbursed about Rs 54,000-crore loans towards these projects. Moreover, stalled projects, mainly due to coal linkage, environment clearances and land acquisition problems in sectors like power, coal, iron, steel and road transport have further added to the problem of bad loans.

The CNX Nifty is currently trading at 5,697.35, down by 48.60 points or 0.85% after trading in a range of 5,745.30 and 5,692.75. There were 13 stocks advancing against 37 declines on the index.

The top gainers of the Nifty were Hindustan Unilever up by 2.52%, Cipla up by 1.99%, Lupin up by 1.36%, Asian Paints up by 1.13% and Grasim Industries up by 1.05%.

On the flip side, Reliance Infrastructure down by 7.02%, JP Associates down by 5.18%, IDFC down by 3.97%, ACC down by 3.81% and PNB down by 3.72% were the major losers on the index.

Most of the Asian equity indices were trading in red; Jakarta Composite declined 0.10%, Straits Times slipped 0.37%, KOSPI Composite declined 0.97% and Taiwan Weighted was down by 0.52%.

On the flip side, Shanghai Composite soared 2.66%, Hang Seng rose 0.97% and KLSE Composite was up by 0.39%.  Japanese Nikkei remained shut for the trade today.

The European markets were trading in green; France’s CAC 40 added 0.88%, Germany’s DAX ascended 0.79% and United Kingdom’s FTSE 100 jumped 0.52%.