Indian equity pare gains; Sensex dips below 19,600 mark

Indian equity markets trimmed intraday gains but continued to trade in the green in the late afternoon session on account of buying in front line blue chip counters. The sentiments on the street turned somewhat dull after Reserve Bank of India (RBI) Governor D Subbarao stated that the country’s retail inflation still remains high despite the wholesale price-led inflation cooling off. Dr Subbarao added that there were several upside risk factors to inflation and the RBI has to remain sensitive to these. Traders were seen piling position in IT, TECK and Health Care stocks while selling was witnessed in Consumer Durables, Realty and Power sector stocks. In the scrip specific development, Polaris Financial Technology was trading firm on reports that the company is in talks to sell its IT services unit. The two companies which are in race of acquiring the IT unit are Tech Mahindra and L&T Infotech. Ranbaxy Laboratories was trading under pressure after Apollo Pharmacy suspended sale and further procurement of medicines manufactured by the company for now. Maruti Suzuki India was trading in red amid a one day production shut-down at its two plants at Gurgaon and Manesar today ahead of a six-day scheduled maintenance closure later this month.

On the global front, all the Asian markets were trading in red barring KLSE Composite while the European markets were trading on a mixed note. Back home, the NSE Nifty and BSE Sensex were trading above their psychological 5,900 and 19,500 levels respectively. The market breadth on BSE was negative in the ratio of 1079:1095, while 160 scrips remain unchanged.

The BSE Sensex is currently trading at 19,573.97, up by 54.48 points or 0.28% after trading in a range of 19,711.55 and 19,424.97. There were 12 stocks advancing against 17 declines while 1 stock remained unchanged on the index. The broader indices pared some gains; the BSE Mid cap and Small cap index were trading up by 0.01% and 0.33% respectively.

The top gaining sectoral indices on the BSE were, IT up by 1.98%, TECK up by 1.29%, Health Care up by 0.28%, Oil & Gas up by 0.27% and FMCG up by 0.07%, while Consumer Durables down by 0.88%, Realty down by 0.66%, Power down by 0.52%, PSU down 0.43% and Bankex down 0.41% were the top losers on the BSE.

The top gainers on the Sensex were TCS up by 3.97%, Dr. Reddy’s Lab up by 2.65%, Wipro up by 2.09%, Infosys up by 1.05% and Hero MotoCorp up by 0.86%. On the flip side, Maruti Suzuki down by 1.35%, Coal India down by 1.07%, Mahindra & Mahindra down by 1.06%, Bharti Airtel down by 0.96% and NTPC down by 0.89% and were the top losers on the Sensex.

Meanwhile, attributing high depreciation in rupee value to rising current account deficit (CAD), the RBI Deputy Governor K C Chakrabarty said that the central bank will take necessary steps to check currency volatility. Chakrabarty said that in a high CAD and fiscal deficit scenario, rupee has to depreciate orderly and can’t expect the domestic currency to strengthen. Meanwhile, the central bank will do everything to turn down the volatility, but will not disclose its strategy. The RBI has forex reserves of over USD 290 billion to deal with the situation on the external sector. 

Recently, the rupee hit 57-level lows after 11 months on account of the high CAD, which widened due to rising gold import and high crude oil prices. Further, persistent dollar demand from importers and banks also added to the fall in rupee value. In May, India’s gold imports touched 162 tonnes, while in April, it was around 100-120 tonnes, higher than the average monthly import level of 70-80 tonnes. While, the CAD widened to a record high of 6.7% in the third quarter of FY13.

Further, in a big disappointment to Indian policymakers, the recently released World Gold Council (WGC) report highlighted that India’s gold imports in April-June quarter of 2013 may increase by 200 percent y-o-y to around 300-400 tonnes, which would be almost half the imports of whole of 2012.

The CNX Nifty is currently trading at 5,929.60, up by 8.20 points or 0.14% after trading in a range of 5,972.70 and 5,886.60. There were 22 stocks advancing against 26 declines while 2 stocks remained unchanged on the index.

The top gainers of the Nifty were TCS up by 4.09%, Dr. Reddy’s Laboratories up by 2.44%, Lupin up by 2.07%, Infosys up by 1.04% and BPCL up by 0.80%. On the flip side, JP Associates down by 3.00%, Axis Bank down by 1.61%, Maruti Suzuki down by 1.39%, DLF down by 1.14% and Coal India down by 1.11% were the major losers on the index.  

Most of the Asian equity indices were trading in red; Shanghai Composite declined 1.39%, Hang Seng tumbled 1.21%, Jakarta Composite crumbled 2.11%, Nikkei 225 declined 0.21%, Straits Times lost 0.08%, KOSPI Composite contracted 1.80% and Taiwan Weighted was down by 0.01%.

On the flip side, KLSE Composite was the sole gainer up by 0.45%.

The European markets were trading on a mixed note; France’s CAC 40 was up 0.01%, Germany’s DAX added 0.08% and the United Kingdom’s FTSE 100 edged lower 0.04%.