Selling pressure slows; Nifty at striking distance of 5,800 mark

Sensex and Nifty, albeit trading lower, were at striking distance of 19,500 and 5,800 mark respectively. Bears apparently have got a halt in early noon deals as selling pressure at D-street has finally been arrested, with equity indices even recouping some lost ground tracing the positive start of European markets. Besides, lower gold import data is also providing some solace to worried investors, which remained increasingly concerned about Rupee’s record low level in early deals amidst CII survey report which pointed out to further depreciation of Indian currency if the government fails to tackle issues like dwindling FDI flow and high current account deficit (CAD).

On the global front, European shares rose on Monday, with investors finding value in beaten-down stocks after Friday's drop, with chances of Greece getting its next aid payment and an improved political situation in Portugal boosting sentiment. Closer home, sentiment also received some boost with the recovery of Indian rupee from the perilous 61/S level on anticipated RBI’s measures, including providing a special window for oil companies to buy dollars. On the BSE sectoral front, stocks from Technology, Information Technology and Health Care counters were the top gainers, while those from Realty, Public Sector Undertaking and Auto counters were prominent losers. The overall market breadth on BSE is in the favour of declines which thumped advances in the ratio of 1210:814; while 97 shares remained unchanged.

The BSE Sensex is currently trading at 19495.82, down by 218.21 points or 1.12% after trading in a range of 19,422.69 and 19185.92. There were 6 stocks advancing against 24 declines on the index.

The broader indices were trading in red; the BSE Mid cap and Small cap indices were down by 0.42% and 0.46% respectively.

The top gaining sectoral indices on the BSE were, TECk up by 0.53%, IT up by 0.41% and Health Care up by 0.16%, while Realty down by 2.06%, PSU down by 1.89% and Auto down by 1.74%, Oil & Gas down by 1.62% and Metal down by 1.56% were the top losers on the BSE.

The top gainers on the Sensex were Wipro up by 1.80%, Sun Pharma up by 0.98%, Dr Reddys Lab up by 0.90%, Infosys up by 0.43% and Hero MotoCorp up by 0.22%.

On the flip side, Tata Motors down by 3.56%, HDFC down by 3.34%, Coal India down by 2.66%, ONGC and ICICI Bank were  down by 2.41% a were the top losers on the Sensex.

Meanwhile, in a move to reduce subsidy burden, the government may change the pricing methodology of diesel and LPG rates as the rupee depreciation is making it difficult to curb the burgeoning subsidies. The total subsidy for selling diesel, kerosene at LPG at rates below cost was put at Rs 80,000 crore in April’13, which has now climbed to Rs 125,000 crore owing to the major fall in rupee value, which has made imports costlier.

Meanwhile, the government had constituted a panel under former Planning Commission member Kirit S Parikh to suggest a suitable pricing mechanism. Earlier, the oil ministry has asked the committee to revisit the current pricing methodology of import party/trade parity for diesel, PDS kerosene and subsidised domestic LPG and suggest a suitable pricing mechanism for sale of these products. However, as the government has approved a shift to export parity pricing (EPP) for refinery output, the ministry has asked the panel to revisit the current pricing methodology of petroleum products, and suggested a pricing mechanism benchmarked to export parity pricing, which is also related to the actual export realisation of the petroleum products exported from India by private refiners. The panel report will become the benchmark for subsidy calculations.

Presently, diesel is priced at trade parity, in which 80 percent is import price and 20 percent is export rate. Kerosene and LPG are priced at import parity. With a move to shift to export parity pricing, the government can cut its huge subsidy burden. With export parity pricing, the government would have cut the subsidy on diesel by Rs 14,372 crore to Rs 77,689 crore in 2012-13. Further, Rs 2,245 crore would have been saved on LPG and Rs 1,001 crore on kerosene. The saving would come from the removal of import duty and notional transportation cost in the import parity price.

The CNX Nifty is currently trading at 5,797.45, down by 70.45 points or 1.20% after trading in a range of 5,833.85 and 5,775.55. There were 12 stocks advancing against 38 declines on the index.

The top gainers of the Nifty were HCL Tech up by 2.28%, Cairn up by 1.94%, Reliance Infra up by 1.37%, Sun Pharma up by 0.92% and Dr Reddy’s Lab up by 0.78%.On the flip side, JP Associate down by 4.96%, BPCL down by 4.65%, Tata Motors down by 3.58%, HDFC down by 3.40% and ONGC down by 2.72% were the major losers on the index.

Most of the Asian equity indices were trading in red; Shanghai Composite declined 2.36%, Hang Seng dropped 1.49%, Jakarta Composite slumped 2.81%, KLSE Composite decreased 0.42%, Nikkei 225 down by 1.40%., Straits Times contracted 0.55%, KOSPI Composite dropped 0.90% and Taiwan Weighted was down by 1.44%.

European markets have got off to a positive start; with CAC 40 adding 1.07%, DAX rising 0.87% and FTSE 100 inching higher by 0.13%.