Benchmarks pare losses; Nifty above 5,700 mark

Indian equity markets trimmed losses to trade near the highest point of the day in late afternoon session on account of value buying in beaten down blue chip counters. The mood was on pessimistic note from the start of trade due to fall in rupee value to over 61 per dollar due to month-end dollar demand from importers. The sentiments got some respite after chief economic advisor Raghuram Rajan stated that specific steps were on the anvil to contain the current account deficit and fund it stably and sustainably. Traders were seen piling position in TECK, IT and Metal stocks while selling was witnessed in Realty, Bankex and Power sector stocks. In scrip specific development, Yes Bank was trading in red after touching fresh 52-week low, after the private sector bank revised its base rate to 10.75%, an increase of 0.25% effective August 1, 2013. Hectic activity was witnessed in National Fertilisers (NFL) as the government’s disinvestment began on the bourses. Government holds 97.64% stake in the company and disinvestment is being done to make it compliant with SEBI norms.

On the global front, most of the Asian markets were trading in red barring Shanghai Composite while the European markets were trading on a mixed note. Back home, the NSE Nifty and BSE Sensex were trading above their psychological 5,700 and 19,300 levels respectively. The market breadth on BSE was negative in the ratio of 558:1487, while 127 scrips remain unchanged. 

The BSE Sensex is currently trading at 19343.56, down by 4.78 points or 0.02% after trading in a range of 19346.33 and 19126.82. 

The broader indices were too trading in red; BSE Mid cap and Small cap indices were trading lower by 1.81% and 1.64% respectively.

The top gaining sectoral indices on the BSE were, TECK up by 1.83%, IT up by 1.37%, Metal up by 0.68%, Consumer Durables up 0.67% and Auto up by 0.27%, while Realty down by 3.42%, Bankex down by 2.30%, Power down by 1.95%, Capital Goods down by 0.67% and Public Sector Undertaking (PSU) down by 0.59%, were the top losers on the BSE.

On the Sensex, 13 stocks were advancing and 17 were declining. The top gainers on the Sensex were Bharti Airtel up by 5.94%, Wipro up by 4.23%, Coal India up by 3.25%, Dr. Reddy’s Lab up by 2.69% and Tata Power up by 1.74%. On the flip side, NTPC down by 3.70%, Jindal Steel down by 3.44%, Gail India was down by 2.54%, Sun Pharma down by 2.48% and Hindustan Unilever (HUL) down by 2.10% were the top losers on the Sensex.

Meanwhile, the Reserve Bank of India (RBI) has opposed the issue of sovereign bonds to bridge a widening current account deficit (CAD) as the benefits of raising foreign exchange from such an instrument outweigh the costs. RBI Governor D Subbarao said that the central bank has done the cost-benefit analysis of the sovereign bond issue and made it clear that sovereign bond issue is not an appropriate option in the current circumstances as costs outweigh benefits. The country should issue sovereign bonds during its high growth phase and we are much vulnerable position right now, he added.

Citing the advantages of sovereign bonds, the RBI chief said that there are perceived benefits of sovereign bond issue as it will buffer reserves, lower interest rates, establish a benchmark for government borrowing and broaden the investor base. However, the high cost of this move would overcome all these benefits.

Earlier this month, the government had planned to come out with a sovereign bond issue to shore up the country’s foreign exchange reserves and strengthen the rupee, saying it was an option to tackle forex volatility. It is estimated that India can mop up $20 billion from NRI bonds. NRI bonds have helped the economy earlier, however the situation is a lot different now as the rupee has depreciated more than Rs 10 in this fiscal alone, languishing at Rs 61 against the dollar. The CAD is at a record high of 4.8 percent of the GDP or $88 billion making things worse and the economy lot vulnerable in the global environment now.

The CNX Nifty is currently trading at 5,728.95, down by 26.10 points or 0.45% after trading in a range of 5,742.10 and 5,675.75.

On Nifty, 16 were advancing and 34 declining, the top gainers of the Nifty were Bharti Airtel up by 6.09%, HCL Technologies up by 3.91%, Coal India up by 3.46%, Dr. Reddy’s up by 2.78% and Lupin up by 2.24%. On the flip side, DLF down by 7.09%, Axis Bank down by 6.01%, JP Associate down by 4.77%, IndusInd Bank down 4.31% and Power Grid Corporation down by 3.93% were the major losers on the index.

Majority of the Asian equity indices were trading in red; Hang Seng down  by 0.32%, Jakarta Composite down by 0.62%, Nikkei 225 down by 1.45%, KLSE Composite slipped 1.33%, Straits Times down by 0.20%, Taiwan Weighted down by 0.68%, while, Shanghai Composite up by 0.19% was the sole gainer amongst Asian pack.

The European markets were trading on a mixed note; France’s CAC 40 was down 0.01%, Germany’s DAX lost 0.01% and the United Kingdom’s FTSE 100 jumped 0.50 %.