Benchmarks pare losses on FM’s comments

Benchmarks have pared substantial losses as sentiments got a fillip from Finance Minister P. Chidambaram’s comments, who while addressing media, stated that he does not expect RBI’s recent liquidity steps to lead to increase in bank lending rates, notably a day ahead of RBI’s monetary policy review. Further, soothing some jittery nerves FM added that India is still the second fastest growing economy and expressed hope of achieving six per cent growth this fiscal. Meanwhile, a positive European markets start also provided some comfort. Benchmark indices, Sensex and Nifty, trading with loss of quarter of a percentage, were steadily inching towards the crucial 19,700 and 5900 psychological levels respectively.

On the global front, European stocks advanced for the first time in three days as companies from Danone to Reckitt Benckiser Group Plc reported results. However, Asian pacific shares continued to reel under pressure ahead of the US Federal Reserve's policy meeting, scheduled to take place on Tuesday and Wednesday, with the central bank widely expected to keep its bond-buying program in place for some time to come.

Closer home, stocks from Information Technology, Auto and Capital Goods were preventing the further slide of the bourses, while those from Fast Moving Consumer Goods, Public Sector Undertaking and Consumer Durable counters largely endorsing the underlying weakness. The overall market breadth on BSE is in the favour of declines which thumped advances in the ratio of 1177:768; while 89 shares remained unchanged.

The BSE Sensex is currently trading at 19695.50, down by 52.69 points or 0.27% after trading in a range of 19,751.03 and 19,625.26. The broader indices too pruned down some losses; the BSE Mid cap and Small cap indices were trading lower by 1% and 0.66% respectively.

The top gaining sectoral indices on the BSE were, IT up by 1.06%, Teck up by 0.70%, Auto up by 0.43% and Capital Goods up by 0.15%, while FMCG down by 2.13%, PSU down by 0.86%, Consumer Durables down by 0.81%, Realty down by 0.67% and Metal down by 0.65% were the top losers on the BSE.

On the BSE Sensex, 15 stocks were advancing and 15 were declining. The top gainers on the Sensex were Wipro up by 6.11%, Jindal Steel up by 3.26%, Sun Pharma up by 2.02%, Hero MotoCorp up by 1.66% and Tata Motors up by 1.60%. On the flip side, Hindalco Industries down by 3.87%, Hindustan Unilever down by 3.72%, Dr Reddy’s Lab down by 3.21%, Sterlite Industries down by 2.42% and Maruti Suzuki down by 1.99% were the top losers on the Sensex.

Meanwhile, in order to boost the growth of Micro, Small and Medium Enterprises (MSME) sector, MSME minister K H Muniyappa is in favour of increasing the investment cap to $2 million in these units, from which global retailers have to source 30 percent of items under the multi-brand retail policy. This would imply that multi brand retailers would be able to source a minimum of 30% of materials from MSMEs with investments in plant and machinery of $2 million instead of $1 million.

As per the current retail FDI policy, multi-brand retailers mandated to source a minimum of 30% of inputs from small and medium enterprises (SMEs) with a maximum investment in plant and machinery at $1 million and sourcing would be considered only with reference to the front-end store and no other form of distribution would be permitted. On the other hand, Retail giants like Tesco, Carrefour and Walmart have asked the government to relax 30 percent mandatory sourcing condition and suggested to make it preferable requirement for the single-brand retailing. However, the MSME ministry is not in favour of diluting this norm.

Further, the MSME ministry said that there must be a time limit for the retailers to continue sourcing from units that have grown beyond the investment limit. By adding further, he stated that, a three-year period from the day an MSME outgrows the investment limit of $2 million would provide required space to equip itself to independently supply the retailer without being covered under the 30 percent procurement.

The CNX Nifty is currently trading at 5,865.95, down by 20.25 points or 0.34% after trading in a range of 5,886.00 and 5,843.95.

On Nifty, 19 stocks were advancing and 31 were declining. The top gainers of the Nifty were Jindal Steel up by 3.47%, Hero MotoCorp up by 1.79%, Tata Motors up by 1.66%, Tata Steel up by 1.19% and TCS up by 0.87%. On the flip side, Ambuja Cement down by 4.61%, Hindalco down by 3.76%, Hindustan Unilever down by 3.70%, Dr Reddy’s Lab down by 3.01% and Sesa Goa down by 2.74% were the major losers on the index.

The Asian equity indices were trading in red; Shanghai Composite declined 1.68%, Hang Seng dropped 0.43%, Jakarta Composite shed 1.61%, KLSE Composite slipped 0.50%, Nikkei 225 tumbled 3.32%, Straits Times dipped 0.20%, Seoul Composite decreased 0.57% and Taiwan Weighted was down by 0.80%.

European markets have got off to a positive start; with CAC 40 adding 0.57%, DAX rising by 0.77% and FTSE 100 gaining 0.17%.