Benchmarks extend losses; Realty, Capital Goods drag Indices down

Indian equities have extended their losses diving much steeper down in the late morning session tracking weak global cues after Ben Bernanke, the US Federal Reserve chairman, hinted at exiting Federal Reserve's exceptionally loose monetary policy. Sentiments have got dampened on weak trend in Asian region following overnight losses at the US market after Federal Reserve said the Fed could scale back stimulus measures if economic conditions improved. Besides, a weakening rupee, which dipped to over six-month low to about 55.75 against the dollar, also hit the sentiment. On the global front, most of the Asian equity indices were trading in red at this point of time after Chinese factory activity shrank for the first time in seven months in May as new orders fell, adding to concerns that a recovery in the world’s second-largest economy is sputtering. The flash HSBC Purchasing Managers’ Index for May fell to 49.6, slipping under the 50-point level demarcating expansion from contraction for the first since October. The final HSBC PMI stood at 50.4 in April.

Back home, the traders were seen piling up positions in IT while selling was seen in Realty, Capital Goods and Power sector. In scrip specific actions, Pipavav Defence surged after the company said it has bagged orders worth Rs 595 crore for specialised offshore vessels from a European client. Tata Steel gained ahead of its quarterly results. Ranbaxy Laboratories tanked after Daiichi Sankyo Co, the Japanese parent of company, said that it may initiate legal action against certain former shareholders of the Indian generic drug maker for concealing and misrepresenting critical information related to investigations by US agencies. Jet Airways dropped after the Securities and Exchange Board of India (Sebi) has written to Jet Airways, raising questions over parts of the agreement signed by the Indian carrier with Etihad Airways last month as they appear to confer substantial management rights to the Middle-Eastern airline. State Bank of India, JSW Steel, BHEL and Dish TV slipped ahead of its quarterly results. Thermax dropped after the company reported 11% decline in its net profit number to Rs 115 crore versus Rs 129 crore in the same quarter of last year.

Meanwhile, the NSE Nifty and BSE Sensex were trading just above their psychological 6,000 and 19,000 levels respectively. The market breadth on BSE was showing negative trend with advances to declines in ratio of 435: 1211.

The BSE Sensex is currently trading at 19912.52, down by 149.72 points or 0.75% after trading in a range of 20027.56 and 19887.00. There were 7 stocks advancing against 23 declines on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 1.50% and Small cap index was down by 1.16%. The only gaining sectoral indices on the BSE was, IT up by 0.58% while Realty down by 4.08%, Capital Goods down by 2.73%, Power down by 2.44%, Consumer Durables down by 2.14% and Bankex down by 1.68%, were the top losers on the BSE.

The top gainers on the Sensex were HDFC up by 1.53%, Sun Pharma up by 1.13%, TCS up by 1.05%, ONGC up by 0.93% and Tata Steel up by 0.82%. On the flip side, Bharti Airtel was down by 3.62%, BHEL was down by 3.29%, Maruti Suzuki was down by 3.28%, SBI was down by 2.93% and  ICICI Bank was down by 2.85% were the top losers on the Sensex.

Meanwhile, In a major relief to the fuel retailers to cover their revenue losses on fuel sale, the finance ministry has agreed to provide a record Rs 100,000 crore towards diesel and cooking fuel subsidy in 2012-13, however, it wants the pricing formula to be changed from current year to cut down the outgo.

The three retailers such as Indian Oil (IOC), Hindustan Petroleum (HPCL) and Bharat Petroleum (BPCL) lost Rs 161,029 crore in 2012-13 on selling diesel, domestic LPG and kerosene at government controlled rates which are way below market price. Of this, the government has provided Rs 55,000 crore by way of cash subsidy and about Rs 45,000 crore was made good by upstream firms like ONGC.

Meanwhile, there remained unmet under-recovery or revenue loss of about Rs 60,000 crore and the upstream firms are expected to chip in another Rs 15,000 crore, while the rest will come from finance ministry. In 2011-12, oil firms lost Rs 138,541 crore in revenue on fuel sales.

Further, in order to cut the subsidy outgo, the government wants petrol and diesel to be priced at a rate the oil firms get in export market, rather than current practice of pricing the fuels after adding transportation and customs duty to the international price. The difference between the Export Parity Price (EPP) and the currently in vogue Trade Parity Price is about $3-4 per barrels. The government is expected to decide soon on the issues and has referred the matter to Kirit Parekh committee.  

The CNX Nifty is currently trading at 6,042.65 down by 51.85 points or 0.85% after trading in a range of 6,081.45 and 6,035.75. There were 15 stocks advancing against 35 declines on the index.

The top gainers of the Nifty were HDFC up by 1.35%, Sun Pharmaceuticals up by 1.20%, ONGC up by 0.90%, TCS up by 0.88% and Ultra Cement up by 0.81%. On the flip side, Ranbaxy down by 6.21%, JP Associate down by 4.97%, DLF down by 4.12%, Bharti Airtel down by 3.78% and Reliance Infra down by 2.61%, were the major losers on the index.

Most of the Asian equity indices were trading in red; Hang Seng tumbled 452.50 points or 1.95% to 22,808.58, Jakarta Composite dropped 48.33 points or 0.93% to 5,159.67, KLSE Composite dipped 4.26 points or 0.24% to 1,779.62, Nikkei 225 crumbled 662.79 points or 4.24% to 14,964.47, Straits Times contracted 27.31 points or 0.79% to 3,427.02, KOSPI Composite declined 16.46 points or 0.84% to 1,977.00 and Taiwan Weighted was down by 155.54 points or 1.85% to 8,243.30.

On the flip side, Shanghai Composite was up by 1.52 points or 0.07% to 2,303.92.