Benchmarks extend consolidation mood for second straight day

Extending their consolidation mood for second straight day, Indian equity benchmarks snapped Monday’s trade flat, marginally in the green with frontline indices just managing to hold their crucial 6,000 (Nifty) and 20,150 (Sensex) bastions. Earlier, after a sluggish start, markets gained strength and entered into the green terrain as some support came in from report that foreign institutional investors (FIIs) bought shares worth a net Rs 252.26 crore on July 19, 2013. Domestic gauges extended their northward journey to touch intraday high in noon deals supported by short covering in banking counter. Investors also piled up positions in Auto related stocks like M&M, Bajaj Auto, Hero MotoCorp and Tata Motors. But, indices pared most of their intraday gain in last leg of trade, as sentiments got dented after Larsen and Toubro (L&T) reported lower than expected Q1 numbers.

Global cues remained mixed with most of the European counters opening in the red as traders remained cautious on report that politicians in Portugal failed to reach an agreement over the future of the country’s bailout package. Meanwhile, most of the Asian equity indices shut shop in the green as sentiments remained up-beat after the Japan’s ruling Liberal Democratic Party coalition easily won a majority of the 121 seats contested in the upper house elections over the weekend. The victory gave Prime Minister Shinzo Abe control over both houses, consolidating its political power.

Back home, stocks related to retail space too remained on the buyers’ radar on report that DIPP, in order to accommodate some demands of global retailers, has circulated the draft of a Cabinet note seeking views of different ministries to ease FDI norms in multi-brand segment. Meanwhile, stocks related to software and technology counters remained on the buyers’ radar as Indian rupee continued to lose sheen against dollar. The rupee fell by 21 paise to 59.56 against the dollar at the time of equity market closing at the Interbank Foreign Exchange market on increased demand for the US currency from importers amid a weak opening in local equities.

However, the gains remained capped on investors’ cautiousness related to the slow growth in Indirect tax collection. During April-June quarter of current fiscal, the indirect tax collection grew by mere 4.7% to Rs 1.11 lakh crore, mainly on account of decline in excise duty collection. Gains also remained limited after L&T reported weaker than expected Q1 earnings. The company registered a fall of 12.46% in its net profit at Rs 756.03 crore for the quarter ended June 30, 2013 as compared to Rs 863.65 crore for the same quarter in the previous year. Earlier, index heavyweight Reliance Industries (RIL) too disappointed with its Q1 numbers, reporting 4.6% yoy fall in its net sales to Rs 87,645 crore mainly due to 42% yoy fall in revenue from its oil and gas business. Though, its net profit rose 18.9% at Rs 5,352 crore for the quarter ended June 30, 2013.

The NSE’s 50-share broadly followed index Nifty rose by just 3 points, managing to hold its psychological 6,000 support level, while Bombay Stock Exchange’s Sensitive Index - Sensex rose by about ten points to hold its psychological 20,150 mark.

The broader markets, however, struggled to get some traction and ended the session mixed. The market breadth remained in favour of declines as there were 1,032 shares on the gaining side against 1,233 shares on the losing side while 151 shares remain unchanged.

Finally, the BSE Sensex gained 9.27 points or 0.05% to settle at 20,159.12, while the CNX Nifty rose by 2.60 points or 0.04% to end at 6,031.80.

The BSE Sensex touched a high and a low of 20,264.90 and 20,065.69, respectively. The BSE Mid cap index was up by 0.04% and Small cap index was down by 0.32%.

The top gainers on the Sensex were, HDFC up by 3.17%, Sun Pharma up 2.75%, Mahindra & Mahindra up 2.63%, Bharti Airtel up 1.65% and ICICI Bank up by 1.64%, while L&T down by 7.46%, BHEL down 7.05%, Tata Steel down 2.95%, ONGC down 2.85% and Dr Reddys Lab down by 1.71% were the top losers on the index. 

The top gainers on the BSE Sectoral space were, Auto up 1.06%, Bankex up 0.98%, IT up 0.73% and TECk up 0.71%, while Capital Goods down 5.57%, Oil & Gas down 1.65%, Power down 0.91%, PSU down 0.62% and Realty down 0.53% were the top losers on the sectoral space.

Meanwhile, on the grounds of potential threat to country’s security, the Home Ministry has strongly opposed any move to increase the FDI cap in the broadcasting and print media. Apprehending 'undue' influence by big global players, the Home Ministry strongly favours control of media houses by Indians, and is of the view that opening up of current affairs TV channels, newspapers and periodicals dealing with news and current affairs may lead to meddling in India’s domestic affairs and politics.

The Ministry also fears that increase of FDI in broadcasting and print media may also allow foreign players to launch propaganda campaign during any national crisis as well as when interests of any particular country is harmed through any government decision.

Further, it feels that big foreign media players with vested interests may try to fuel fire during internal or external disturbances and also can encourage political instability in the country through their publications or broadcasting outlets.

It was basically after Home Ministry's strong objections that a high-level meeting chaired by Prime Minister Manmohan Singh, on July 16, did not clear the Commerce Ministry's proposal for increasing FDI in broadcasting and print media to 49% through automatic route. Currently, the sectoral cap for FDI in FM radio, uplinking news and current affairs TV channels and in print media is 26 per cent and the Commerce Ministry has proposed to raise it to 49 per cent through the automatic route.

The CNX Nifty touched a high and low of 6,064.15 and 6,004.25 respectively. 

The top gainers on the Nifty were HDFC up 3.42%, IndusInd Bank up 2.84%, Sun Pharma up 2.72%, M&M up 2.59% and Bank of Baroda up by 2.57%.

On the flip side, the top losers of the index were, L&T down 7.60%, BHEL down 6.97%, Ambuja Cement down 4.49%, ONGC down 3.31% and Tata Steel down by 3.24%.

The European markets were trading in red, France’s CAC 40 down by 0.26%, the United Kingdom’s FTSE 100 down by 0.63% and Germany’s DAX down by 0.56%.

Asian markets concluded Monday’s trade mostly in green after China removed a floor on banks’ lending rates and Japan’s ruling government regained control of the parliament’s upper house, raising hopes for further reforms in both economies. China’s Shanghai though declined in the early deals but ended the trade in green. The banking sector witnessed hectic activity after China removed controls on lending rates. People’s Bank of China’s decision to abandon a floor on the rates bank could charge on their loans marked a structural reform, but one that wouldn’t significantly affect bank earnings nor provide help to the economy. Credit ratings agency Moody’s Investors Service stated that while the removal of the lending rate marked an important step in China’s financial reforms, removal of the lending rate floor was a credit negative for banks. Separately, the average new home cost rose to a 20-week high last week in Shanghai amid strong sales of luxury properties, while overall transaction volume registered a rather insignificant rebound during the same period. The average price of new residential properties, excluding government-subsidized affordable housing, climbed 2% to 25,566 yuan ($4,137) per square meter during the seven-day period ended on Sunday. Meanwhile, new home purchases rose 7.3% week-on-week to 164,300 square meters.

Japan’s Nikkei closed in green after the ruling Liberal Democratic Party’s coalition easily won a majority of the 121 seats contested in the upper house elections over the weekend. The victory gave Prime Minister Shinzo Abe’s LDP control over both houses, consolidating its political power. South Korean shares made the first rise in three sessions as both foreign and institutional investors bought shares. Indonesia’s Jakarta Composite concluded the trade in red. The country’s Finance Minister Chatib Basri stated that, inflation rate is poised to peak after rising quite substantially in June and July. Basri, who last month oversaw Indonesia’s first price increase for subsidized fuel in five years as Southeast Asia’s largest economy grapples to cut energy spending. Consumer prices rose 5.9% last month from the year earlier, the fastest pace since May 2011, based on the latest data from the Central Bureau of Statistics.

Meanwhile, global finance chiefs sought to buttress the global economic recovery with pledges to avoid spooking markets as China moved to scrap a lending rule that had constrained its banks. Group of 20 nations will pursue carefully calibrated and clearly communicated policy moves so that the US and Japan don’t cause cross-border damage when they start rolling back stimulus.