Selling pressure recedes at D-street; Nifty at striking distance of 5700 level

Selling pressure receded at D-street, with few bargain hunters entering the markets at lower levels. Uptrend of Information Technology (IT), HealthCare (HC) and Auto counters too were limiting the downtrend of the Indian equity markets, with Sensex and Nifty, now at striking distance of 19350 and 5700 levels respectively. However, broader indices extending their freefall are down and out with loss of over one and a half percent. Though, negative global leads continue to spell pessimism for local equity markets, with European markets too getting off to a negative start. Meanwhile, Asian pacific shares too are trading downbeat ahead of the outcome of Federal Reserve’s policy meeting later in the day. Closer home, sentiment too got some lift from the uptrend of ICICI Bank, which reported 25.30% rise in Q1FY14 net profit at Rs 2274.21 crore, as against Rs 1815.05 crore for Q1FY13. However, the cruel selling pressure in Realty, Power and Banking counters continue to weigh on the markets. The overall market breadth on BSE is in the favour of declines which have outnumbered advances in the ratio of 1441:505; while 114 shares remain unchanged.

The BSE Sensex is currently trading at 19348.34, down by 141.98 points or 0.73% after trading in a range of 19325.39 and 19126.82.  The broader indices too added losses; BSE Mid cap and Small cap indices were trading lower by 2.09% and 1.70% respectively.

The top gaining sectoral indices on the BSE were, Teck up by 1.45%, IT up by 1.01%, Healthcare up by 0.06% and Auto up by 0.04%, while Realty down by 3.41%, Power down by 2.80%, Bankex down by 2.69%, FMCG down by 2.44% and Public Sector Undertaking (PSU) down by 1.79%, were the top losers on the BSE.

On the Sensex, 12 stocks were advancing and 18 were declining. The top gainers on the Sensex were Bharti Airtel up by 5.52%, Dr. Reddy Lab up by 3.24%, Wipro up by 2.94%, Coal India up by 2.35% and TCS up by 1.42%. On the flip side, NTPC down by 6.05%, Gail India was down by 3.52%, ICICI Bank down by 3.14% ITC down by 2.92%, and Jindal Steel down by 2.45% were the top losers on the Sensex.

Meanwhile, the Cabinet Committee on Economic Affairs (CCEA) will soon consider a new definition of 'control' in the foreign direct investment (FDI) policy that would prevent backdoor entry of foreign companies in the prohibited sectors. The issue of control had become contentious after the government modified the FDI policy in 2009 through Press Notes 2 and 3.

The move is aimed to provide better mechanism for calculating direct and indirect investment in a company and once approved, will replace the existing definition given in the Consolidated FDI Policy. Further, the new definition of control will include the right to appoint majority of directors and will also be expanded to include control over the management or policy decisions, instead of just the right to appoint majority of the shareholders. 

Presently, a company is said to be controlled by an Indian resident if the Indian investor holds more than 51% stake and can appoint the majority directors in the firm. As per the new guidelines, an Indian company will be considered a foreign entity if the major stake in the firm is held by foreign investors or is a foreign controlled and any investment by such a company will also be considered as foreign investment. After the Cabinet approval, the Reserve Bank of India (RBI) is expected to issue a notification to effect the required changes to Press Notes 2 and 3 of FDI policy 2009 from the date of issuance of the notice. The new definition will be applicable with prospective effect, which is the date of notification.

The CNX Nifty is currently trading at 5,699.20, down by 55.85 points or 0.97% after trading in a range of 5,742.10 and 5,675.75.

On Nifty, 15 were advancing and 35 declining, the top gainers of the Nifty were Bharti Airtel up by 5.59%, Dr Reddy up by 3.45%, Lupin up by 2.70%, Coal India up by 2.47%, and HCL Technologies up by 1.85%. On the flip side, DLF down by 7.25%, NTPC down by 5.92%, Axis Bank down by 4.94%, Power Grid Corporation down by 4.50% and JP Associate down by 4.37% were the major losers on the index.

The Asian equity indices were trading in red; Hang Seng down  by 0.12%, Jakarta Composite down by 0.54%, Nikkei 225 down by 1.45%, KLSE Composite slipped 1.01%. Straits Times down by 0.03%, Taiwan Weighted down by 0.68%, while, Shanghai Composite up by 0.12% was the sole gainer amongst Asian pack.

European markets have got off to a cautious start; with CAC 40 shedding 0.40%, DAX sliding by 0.41% and FTSE 100 adding 0.11%.