Weak trade persists; SBI Q4 disappoints

Indian equity markets continued its weak trade almost hovering near the lowest point of the day in the late afternoon session on account of persistent selling in front line blue chip counters due to global sell off in Asian and European market. The sentiments got some relief after Finance Minister P Chidambaram stated that Fed statement on the possible scaling back of the bond buying programme has been misunderstood. Traders were seen selling in Realty, Capital Goods and Power sector stocks. In the scrip specific development, State Bank of India was trading weak after the country’s largest lender, reported nearly 19% year-on-year drop in its fourth quarter (January - March, FY13) net profit at Rs 3,300 crore. Higher provisions against non-performing assets and marginal growth in other income dented the bank’s profit margin. Anil Dhirubhai Ambani Group stocks like Reliance Communications, Reliance Power, Reliance Capital, Reliance Infrastructure, Reliance Broadcast Network and Reliance Mediaworks were trading in red with major cut.

On the global front, the Asian markets were trading in red while the European markets were too trading on pessimistic note. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 6,000 and 19,700 levels respectively. The market breadth on BSE was negative in the ratio of 506:1648, while 121 scrips remain unchanged.

The BSE Sensex is currently trading at 19,698.43, down by 363.81 points or 1.81% after trading in a range of 20,027.56 and 19,685.59. There were 3 stocks advancing against 27 declines on the index.

The broader indices too declined further; the BSE Mid cap index and Small cap index were trading lower by 1.98% and 2.02% respectively.

There were no sectoral indices in green on the BSE, while Realty down by 5.67%, Capital Goods down by 5.14%, Power down by 3.57%, Bankex down by 2.91% and PSU down by 2.41% were the top losers.

The top gainers on the Sensex were HDFC up by 0.38% ONGC up by 0.33% and HUL up by 0.01%. On the flip side, SBI down by 6.90%, L&T down by 6.37%, BHEL down by 4.82%, Bharti Airtel down by 3.62%, and Jindal Steel down by 3.28% were the top losers on the Sensex.

Meanwhile, in order to achieve Rs 40,000 crore disinvestment target in the current fiscal, the finance ministry has asked cash-rich public sector entities (PSE) such as Coal India, ONGC and Oil India to consider buying government equity in other state-run firms. The ministry has written to all cash-rich PSUs to give detail about their cash balance and capex plans and has informed them if they do not have sufficient capex plans then they should buyback government share or pay higher dividend. 

India’s 17 major public sector entities including Coal India (CIL), ONGC, NMDC and OIL has over Rs 1.62 lakh crore in cash reserves during 2012-13. Among these PSEs, CIL had the maximum cash and bank balance at Rs 43,776 crore, followed by ONGC (Rs 22,450 crore), NMDC (Rs 17,230 crore) and NTPC (Rs 16,185 crore). 

Among these public sector units, CIL, Indian Oil and SAIL, are in the government radar for disinvestment. The government is planning to raise about Rs 17,000 crore through the stake sale and CIL is the biggest disinvestment proposal for the government in 2013-14 fiscal. Further, the proposed stake sale of the PSEs will split into Offer for Sale (OFS) and buyback and is expected that buyback be done post OFS as share buyback usually happens at a premium.

Under the buyback mode, the government can raise money by selling its equity in the company to the PSE itself. In last year, the government had included buyback of shares mode to prune its stake in state-run firms, however, no funds have been raised through the route so far.

The CNX Nifty is currently trading at 5,978.95, down by 115.55 points or 1.90% after trading in a range of 6,081.45 and 5,970.55. There were 4 stocks advancing against 45 declines while 1 stock remained unchanged on the index.

The top gainers of the Nifty were ONGC up by 0.49%, UltraTech Cement up by 0.42%, HDFC up by 0.12% and Hero MotoCorp up by 0.10%. On the flip side, Ranbaxy down by 9.35%, Reliance Infrastructure down by 7.70%, JP Associate down by 7.70%, SBI down by 6.90% and L&T down by 6.20% were the major losers on the index.

All Asian equity indices were trading in red; Shanghai Composite was down by 1.16%, Hang Seng tumbled 2.54%, Jakarta Composite dropped 1.77%, KLSE Composite dipped 0.71%, Nikkei 225 crashed 7.32%, Straits Times contracted 1.83%, KOSPI Composite declined 1.24% and Taiwan Weighted was down by 1.92%.

The European markets were trading in red; France’s CAC 40 was down 2.46%, Germany’s DAX dropped 2.63% and United Kingdom’s FTSE 100 inched lower 1.91%.