Benchmarks trade negative amid new European concern

The Indian equity markets have made a weak start amid increased uncertainties across European economies. The global sentiments remained under pressure after German Chancellor Angela Merkel suggested that the second bailout package for Greece might have to be renegotiated. The US markets got a halt to their three days winning streak after a very volatile trade, as sharp division appeared among European nations to tackle the debt situation while, Asian markets witnessing mixed trend at this point of time. Back home, on the sectoral front, fast moving consumer goods remained the lone gainer while, capital goods, metal and consumer durables remained the top losers on the BSE sectoral space. Meanwhile, PSU oil marketing companies viz. BPCL, HPCL and IOC all opened higher in the trade as crude oil prices reversed all their gains on uncertainty in Europe. The broader indices too were struggling to get some traction while, the market breadth has made a negative start; there were 546 shares on the gaining side against 1,035 shares on the losing side while 54 shares remained unchanged. Moreover, the benchmarks may remain volatile, ahead of the September expiry, as investors roll-over their positions from the September series to October series.

The BSE Sensex opened at 16,387.91; about 59 points lower compared to its previous closing of 16,446.02, and has touched a low of 16,316.66 while high remain its opening.

The index is currently trading at 16,321.35, down by 124.67 points or 0.76%. There were 5 stocks advancing against 25 declines on the index.

The overall market breadth has made a negative start with 33.39% stocks advancing against 63.30% declines. The broader indices too were trading in the red; the BSE Mid cap and Small cap indices were down by 0.68% and 0.41% respectively. 

The lone gaining sectoral index on the BSE was, FMCG up by 0.11%. While, CG down by 1.67%, Metal down by 1.63%, CD down by 1.54%, Auto down by 1.39% and Realty down by 1.08% were the top losers on the index.

The top gainers on the Sensex were Jaiprakash Associates up by 0.86%, HDFC up by 0.84%, HUL up by 0.70%, Infosys up by 0.61% and ITC was up by 0.23%.

On the flip side, Tata Motors down by 2.73%, Sterlite Industries down by 2.54%, Hindalco Industries down by 2.43%, SBI down by 2.36% and L&T down by 2.30% were the top losers on the index.

Meanwhile, the government is moving quickly on a plan to open its $450 billion retail industry to international players like Wal-Mark, in spite of concerns over the losses of million jobs in small kirana and neighborhood stores. Asia’s third largest economy has dallied for years on allowing foreign direct investment (FDI) in its retail sector.

Experts from government as well as from private sector has advocated that opening of retail sector would help in capping food prices, however is resisted by the small shopkeepers who are now the backbone in India's retail economy. The huge multinationals like Wal-Mart, Carrefour SA, Tesco Plc and Metro AG have been lobbying hard to get access to the fast growing Indian retail market.

The industry secretary R.P. Singh said, 'please don't ask me for a timeline, but we are proceeding very fast.' By adding further he said, 'it's certainly not on the back burner.' Presently the recommended policy is with the Union Cabinet for consideration. However, the present political environment is expected to slow down the policy pace, as few states have elections and next general election in 2014.

Presently, around 40% of country’s harvest rot because of inadequate cold storage and supply bottlenecks, experts are of the view that the foreign investment will improve the infrastructure and it will also help in removing supply side bottlenecks.

R.P. Singh said, 'the idea is that the multi-brand retail should be able to help us in addressing the infrastructure gap, so the back end infrastructure is very important for us'. However, he said concerns that such conditions would be too restrictive on companies were unfounded. 'Conditions are not such that they will reduce the viability of the global players here,' he added. In July, the committee of top civil servants, of which Singh was a member, agreed to the suggestions of union cabinet for allowing overseas firms to take 51% stake in the Multi-Brand retail operations. 

In the different development, Walmart, the world largest retail company indicated that its investment in India will increase significantly if the government allows 51% Foreign Direct Investment in Multi-Brand retail. Walmart India President Raj Jain said 'there would be manifold increase in investment by Walmart in India if FDI in multi-brand retail is opened up.'

The S&P CNX Nifty opened at 5,924.20; about 21 points lower compared to its previous closing of 4,945.90, and has touched a high and a low of 5,925.80 and 5,906.00 respectively.

The index is currently trading at 5,907.15, down by 38.75 points or 0.78%. There were 10 stocks advancing against 40 declines on the index.

The top gainers of the Nifty were Ranbaxy up by 0.93%, HDFC up by 0.86%, Infosys up by 0.82%, HUL up by 0.75% and JP Associates up by 0.71%.

Tata Motors down by 2.82%, Sterlite Industries down by 2.66%, Cairn down by 2.64%, Hindalco by 2.54% and SBI was down by 2.29%, were the major losers on the index.

Asian markets were trading mixed; Jakarta Composite was up 5.78 points or 0.16% to 3,518.95, KLSE Composite was up 6.27 points or 0.46% to 1,377.82, Seoul Composite was up 29.39 points or 1.71% to 1,752.48 and Taiwan Weighted was up 39.69 points or 0.56% to 7,186.67.

On the flip side, Shanghai Composite was down 19.75 points or 0.83% to 2,372.31, Nikkei 225 was down 5.00 points or 0.06% to 8,610.65 and Straits Times was down by 6.13 points or 0.23% to 2,695.04.