Benchmarks trade in red; Nifty slips below 5950 mark

Indian equity markets pared gains to continue their trade below neutral line in the late afternoon session on account of profit booking in front line blue chip counters, taking cues from European counterparts. The trade started on an optimistic note at D-street after the government liberalized FDI limits in a dozen sectors, including allowing 100% FDI in telecom and allowing higher limits in state-of-the-art defence manufacturing to shore up foreign investments and boost the sagging economy. The mood was also upbeat after Finance Minister P. Chidambaram stated that the country will achieve its overall budgeted revenue target in the fiscal year to March. India has in recent months stepped up enforcement of tax collections as it looks to raise revenue to help plug its widening fiscal deficit. In scrip specific development, Ranbaxy Laboratories was trading in red on reports that the company’s Toansa and Mohali plants may be under the USFDA scanner for manufacturing practices. Already three of their plants in India Poanta Sahib, Batamandi and Dewas are currently under import alert and the company cannot export to the US from them. JSW Steel was trading weak after CLSA downgraded the stock to sell from underperform and set a lower target price.

On the global front, the Asian markets were trading on a mixed note while the European markets were trading on a pessimistic note. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 5,950 and 19,900 levels respectively. The market breadth on BSE was negative in the ratio of 914:1210, while 142 scrips remain unchanged. 

The BSE Sensex is currently trading at 19821.32, down by 29.91 points or 0.15% after trading in a range of 19,983.22 and 19,803.90. The broader indices were too trading in red; the BSE Mid and Small cap indices were trading lower by 0.38% and 0.09% respectively.

The top gaining sectoral indices on the BSE were, FMCG up by 2.45%, IT up by 0.70%, Consumer Durables up by 0.51%, TECK up by 0.05% and Oil & Gas up by 0.05%. While, Bankex down by 3.27%, Metal down by 2.38%, PSU down by 1.37%, Auto down by 1.28% and Realty down by 1.17% were the top losers on the BSE.

Out of 30 share index, 12 stocks were on advancing side, while 18 were declining. The top gainers on the Sensex were Hindustan Unilever up by 5.04%, NTPC up by 2.13%, ITC up by 2.12%, Dr. Reddy’s Lab up by 1.39% and RIL up by 1.32%. On the flip side, HDFC Bank down by 3.75%, Mahindra & Mahindra down by 3.40%, ICICI Bank down by 3.21%, Tata Steel down 3.12% and Sterlite Industries down by 3.11% were the top losers on the Sensex.

Meanwhile, India’s gems and jewellery exports tumbled 41 per cent to $2.3 billion in June, 2013 as compared to $4 billion in the corresponding month previous year mainly due to shortage of yellow metal and limited inventory in domestic market. The major reason behind the shortage of raw-material for jewellery manufacturing was the government's move to curb gold imports. Though, the industry is expected to get a sufficient raw-material supply for jewellery manufacturing as the shortage is a short-term phenomenon.

India imported around 830 tonnes of gold in 2012-13. The government hiked the import duty on gold thrice in a year and raised it recently by 2 per cent to 8 per cent to curb demand. Besides, RBI too has put restrictions on banks on importing gold. Gold imports in June too are projected to have plunged to around 31 tonnes as against 162 tonnes in May and 141 tonnes in April. High imports strain the Current Account Deficit (CAD), which hit a record high of 4.8 per cent in the 2012-13 fiscal.

Meanwhile, jewellery exports declined 73 per cent as there were no outbound shipments of gold medallions and coins in June 2013. However, silver jewellery exports were up 52 per cent and outward shipments of cut and polished diamonds jumped about 22 per cent. On cumulative basis, the gems and jewellery exports declined 13.2 per cent year-on-year to $8.5 billion during April-June 2013.

India is the largest importer of gold which is mainly utilised to meet demand of the jewellery industry and the major markets for the country’s jewellery exports are the US, Europe, Middle-East, Hong Kong and Japan.

The CNX Nifty is currently trading at 5,935.80, down by 19.45 points or 0.33% after trading in a range of 5,989.80 and 5,933.20.

Out of the 50 share index, 16 stocks were on advancing side and 34 were declining ones. The top gainers of the Nifty were HUL up by 5.02%, Asian Paint up by 2.77%, ITC up by 2.21%, NTPC up 2.06% and Ambuja Cement up by 1.87%. On the flip side, IndusInd Bank down by 4.47%, Axis Bank down by 3.88%, HDFC Bank down by 3.83%, M&M down by 3.44% and Tata Steel down by 3.32% were the major losers on the index.

The Asian equity indices were trading mixed; Shanghai Composite declined 1.01%, KLSE Composite slipped 0.07%, Straits Times decreased 0.22% and Taiwan Weighted was down by 0.01%.

On the flip side, Hang Seng rose 0.28%, Jakarta Composite increased 0.19%, Nikkei 225 up by 0.11%, and Seoul Composite was up by 1.13%.

The European markets were trading in red; France’s CAC 40 was down 0.17%, Germany’s DAX lost 0.04% and the United Kingdom’s FTSE 100 inched lower by 0.01%.