Markets pare early losses; bank stocks recover

Indian equity markets pared some early losses but continued trading in the red during the late morning session on Wednesday. The Sensex, which tumbled to 18,551.35 in early trade, was down 82 points, while Nifty index of the National Stock Exchange is down 22 points. Benchmark indices were also weighed down by weak Asian markets. In currency market, rupee resumed southward journey against greenback amid increasing dollar demand from domestic importers. Moreover, Investors were anticipating central bank intervention as it was seen earlier to prevent the rupee losses in the previous session. On sectoral front, FMCG, automobile and capital goods sectors trading lower on sustained selling pressure, while metal stocks were off their lows. Information technology stocks have come off earlier high levels and realty stocks have rebounded after previous session's sharp setback.

On the global front, Asian markets were trading lower on US stimulus withdrawal fears. Nikkei was down over 2.5 percent as yen hits a 6-week high and Kospi trades at a 2 week low. China bucks the trend and holds up in the green. Back home, the market breadth was favoring the negative trend; there were 926 shares on the losing side against 925 shares on the gaining side, while 111 shares remained unchanged.

The BSE Sensex is currently trading at 18,650.69 down by 82.35 points or 0.44% after trading in a range of 18,771.77 and 18,551.35. There were 14 stocks advancing against 16 declines on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.29%, while Small cap index up by 0.62%.

The top gaining sectoral indices on the BSE were, Realty up by 2.77%, Power up by 1.50%, PSU up by 1.36% and Oil and Gas up by 1.28%. While, FMCG down by 1.37%, IT down by 0.63%, Auto down by 0.59% and Teck down by 0.31% were the top losers indices on the BSE.

The top gainers on the Sensex were Tata Power up by 4.06%, SBI up by 3.37%, Jindal Steel up by 2.28%, BHEL up by 2.12% and Sterlite Inds up by 1.75%. On the flip side, HDFC down by 3.50%, ITC down by 2.10%, TCS down by 1.52%, Hindustan Unilever down by 1.13% and Sun Pharma down by 1.11% were the top losers on the Sensex.

Meanwhile, concerned over the widening current account deficit (CAD) of the country, the government said that it has taken several steps to contain CAD, which had widened to a record high of 4.8 per cent of GDP in the previous fiscal. The minister of State for Finance Namo N Meena said that the high CAD mainly reflected widening of the trade deficit on account of subdued external demand and relatively inelastic imports of petroleum, oil, lubricants, gold, silver and lower invisible surplus.   

Namo N Meena said that in order to contain the high CAD, the government has taken a slew of initiatives to boost exports and reduce imports. Recently the government took measures to boost exports by increasing the interest subvention rate to 3 percent from 2 percent to benefit exporters in the small and medium enterprises segment and most labour-intensive sectors, it also widened the incremental exports incentivisation scheme and dollar-rupee swap facility. On the other hand, to reduce country’s imports, the government has raised duty on gold imports to 8 percent and inward shipments of the metal have been linked to their exports.

Further, the government has also taken steps to boost foreign investment into the country to facilitate the financing of CAD. It has allowed foreign direct investment (FDI) in multi-brand retail, telecom and civil aviation sectors and seeking legislative approval for increasing FDI cap in insurance and pension sectors. Meanwhile, FDI into India increased by 24.2 per cent to $3.95 billion in April-May period of 2013 from $3.18 billion received in the same period of previous year.

The CNX Nifty is currently trading at 5,519.85 down by 22.40 points or 0.40% after trading in a range of 5,553.90 and 5,486.85. There were 24 stocks advancing against 26 declines on the index.

The top gainers of the Nifty were JP Associate up by 5.05%, DLF up by 4.87%, BPCL up by 4.13%, Tata Power up by 4.06% and SBI up by 3.50%. On the flip side, Asian paints down by 3.51%, HDFC down by 3.38%, Grasim down by 2.96%, ITC down by 2.20% and Axis Bank down by 1.87% were the major losers on the index.

The Asian equity indices were trading in red; Shanghai Composite down by 0.51%, Nikkei 225 was up by 4%, While, Hang Seng down by 0.91%, Taiwan Weighted down by 1.46%, KLSE Composite down by 0.30% and Seoul Composite down by 29.29 points or 1.48% and reached 1878.33. While, Jakarta Composite was up by 0.36% and Straits Times was up by 0.15%.