Benchmarks drift lower in early deals; Nifty tumbles below 5,700 mark

Indian equity benchmarks, extending their southward journey for sixth continuous day, have made a negative start with frontline gauges tumbling below their crucial 5,700 (Nifty) and 19,200 (Sensex) levels on the back of feeble global cues. Overnight, the US markets made a flat closing as economic news remained mixed and hardly gave any cue to the markets, though the strength in technology stocks led Nasdaq to a nearly thirteen-year closing high. Most of the Asian equity indices were trading in the red at this point of time as investors opted away from piling up positions in risky assets ahead of outcome of a Federal Reserve policy meeting for clarity on US economic stimulus.

Back home, weakness in rupee too dampened the sentiments as it approached a record low today on doubts about whether the central bank can defend the currency with its existing cash-draining measures unless policy makers take additional steps. The rupee fell to as low as 61.12 to the dollar, not far from its record low of 61.21 hit on July 8. It closed trade at 60.47/48 on July 30. However, the losses remained capped as some respite came in from Chief Economic Adviser Raghuram Rajan’s statement that government will announce measures to help narrow the current account deficit in the next few weeks, including looking at ways of bringing in foreign investments.

On the sectoral front, software and technology remained the few gainers, while realty, public sector undertaking and banking remained the top losers on the BSE sectoral space. The broader indices were butchered badly in early deals, while the market breadth on the BSE was positive; there were 218 shares on the gaining side against 1032 shares on the losing side while 45 shares remain unchanged.

The BSE Sensex opened at 19304.07; about 44 points lower compared to its previous closing of 19348.34, and has touched a high and a low of 19325.39 and 19126.82 respectively. The index is currently trading at 19175.73, down by 172.61 points or 0.89%. There were 10 stocks advancing against 20 declines on the index.

The overall market breadth has made a weak start with 16.24% stocks advancing against 80.80% declines. The broader indices too were trading in red; the BSE Mid cap and Small cap indices were down by 2.41% and 1.62% respectively. 

The few gaining sectoral indices on the BSE were, IT up by 1.11% and Teck up by 1.08%, while Realty down by 3.69%, PSU down by 2.90%, Bankex down by 2.82%, Power down by 2.71% and FMCG down by 2.09% were the top losers on the sectoral index.

The top gainers on the Sensex were Bharti Airtel up by 3.44%, Dr Reddys Lab up by 2.78%, TCS up by 2.08%, Coal India up by 1.40% and Wipro up by 1.13%. On the flip side, ONGC was down by 4.56%, NTPC was down by 4.31%, Gail India was down by 3.96%, ICICI Bank was down by 3.01% and Jindal Steel was down by 2.82% were the top losers on the Sensex.

Meanwhile, the Foreign Investment Promotion Board (FIPB) has cleared six proposals envisaging investments of Rs 855 crore in the pharmaceutical sector. The main proposal approved by FIPB, chaired by Department of Economic Affairs Secretary Arvind Mayaram include Singapore based healthcare firm Fresenius Kabi Oncology to bring in FDI worth Rs 349 crore and Calyx Chemicals & Pharmaceuticals to bring in foreign investment of Rs 200 crore.

India is one of the world's biggest markets for generic drugs and allows 100 percent FDI through automatic route in pharma for new projects and as for existing firms it must be approved by the FIPB. Last year, the government had decided that all foreign investments in existing domestic pharma firms should be allowed only after clearance by the FIPB, keeping in view the availability of affordable essential drugs in the wake of multinationals acquiring local companies.

Further, the government was of the view that pharma is a growing industry and there is a need to protect the domestic players from multinationals particularly generics so that Indian pharmaceutical industry continue to grow. There are too many pharma proposals pending with the FIPB as several global pharma companies are looking to buy stake in Indian firms. Meanwhile, the government is likely to soon revise the FDI policy with regard to existing pharma companies.

The CNX Nifty opened at 5,738.35; about 16 points lower as compared to its previous closing of 5,755.05, and has touched a high and a low of 5,742.10 and 5,678.80 respectively.

The index is currently trading at 5,688.70, down by 66.35 points or 1.15 %. There were 16 stocks advancing against 34 declines on the index.

The top gainers of the Nifty were Bharti Airtel up by 3.11%, Dr. Reddy's Laboratories up by 2.56%, Tata Consultancy Services up by 2.12%, HCL Technologies up by 2.11% and Coal India up by 1.53%. On the flip side, IndusInd Bank down by 6.57%, DLF down by 6.37%, BPCL down by 5.48%, ONGC down by 4.56% and NTPC down by 4.14% were the major losers on the index.

Most of the Asian equity indices were trading in red; Jakarta Composite declined 40.84 points or 0.89% to 4,567.65, KLSE Composite dropped 17.75 points or 0.99% to 1,777.33, Nikkei 225 shed 84.37 points or 0.61% to 13,785.45, Straits Times dipped 10.62 points or 0.33% to 3,234.83, Seoul Composite slipped 0.66 points or 0.03% to 1,916.39 and Taiwan Weighted was down by 34.25 points or 0.42% to 8,129.30.

On the flip side, Shanghai Composite surged 11.60 points or 0.58% to 2,001.66 and Hang Seng was up by 48.28 points or 0.22% to 22,002.24.