Markets recover after deep cuts in initial trading

Indian equity markets recovered some lost ground on account of short coverings, however have not yet surpassed the negative territory, as several frontline stocks reel under sustained selling pressure. The Sensex was down by 28.79 points, while the Nifty index of the National Stock Exchange was down by 12.70 points. In currency market, rupee recovered marginally from its record lows as Reserve Bank of India (RBI) has reportedly intervened in the foreign exchange market to stem the rupee slide, which touched fresh all time lows in early trade today. However, market sentiments were weak with rupee’s slide and the grim near term outlook for the economy. Investors remained cautious on expectation that government and the central bank will continue to come out with measures to curb forex outflow. FIIs have been selling heavily over the past few sessions, and if the trend continues, then the market might well see a sharp fall from current levels. On the sectoral front, healthcare, consumer durables, automobile and capital goods stocks were trading weak, although most of the stocks from these sectors are currently trading off their lows. Information technology stocks, which opened on a steady note, have retreated to lower levels now on selling pressure.

On the global front, Asian markets barring the Shanghai markets were trading in the red taking overnight cues from the US markets. The Indonesian markets extended their losses today following a 5.6% cut on Monday on macroeconomic concerns fueling foreign fund outflows. Back home, the market breadth was favoring the positive trend; there were 919 shares on the gaining side against 852 shares on the losing side, while 118 shares remained unchanged.

The BSE Sensex is currently trading at 18,278.73 down by 28.79 points or 0.16% after trading in a range of 18,279.28 and 17,970.98. There were only 13 stocks advancing against 17 declines on the index.

The broader indices were trading in green; the BSE Mid cap index was down by 0.12%, while Small cap index up by 0.19%.

The top gaining sectoral indices on the BSE were, Metal up by 1.67%, Realty up by 1.17%, FMCG up by 1.16% and Bankex up by 0.65%. While, Auto down by 1.89%, Consumer Durables down by 1.77%, IT down by 1.07% and Healthcare down by 1.07% were the top losers indices on the BSE.

The top gainers on the Sensex were Tata Steel up by 2.80%, Jindal Steel up by 2.12%, ITC up by 1.40%, Sterlite Inds up by 1.39% and ICICI Bank up by 1.21%. On the flip side, Tata Motors down by 3.18%, Mahindra and Mahindra down by 2.51%, Sun Pharma down by 2.36%, Maruti Suzuki down by 1.99% and TCS down by 1.72% were the top losers on the Sensex.

Meanwhile, in a move to contain widening current account deficit (CAD) of the country, the government recently banned duty-free import of high-end flat screen plasma television and slapped 36.05 percent duty on its imports. At present, the government is concerned over the high CAD, which widened to a record high of 4.8 percent of GDP in the previous fiscal because of high gold imports and crude oil prices. Further, high CAD is also putting pressure on the domestic currency, which recently depreciated to a record high of over 64 per dollar.  

The recent government move to rein in high CAD will also come as a relief for consumer electronics and appliances makers, which would boost demand for domestically produced sets. The Consumer Electronics and Appliances Manufacturers Association (CEAMA) said that despite enhancing demand of the domestically produced flat plasma TV sets, the move would also generate more employment in the country and better tax collections. According to CEAMA, out of the total demand of about 8 million flat panels in the country, 3-3.5 million sets (around 40% of demand) would have been imported mostly either through free baggage allowances or concessional rate of duties under free trade agreement (FTA). The state exchequer was losing around Rs 750 crore owing to the import of TVs as hand baggage.

Further, CEAMA said that domestic producers have invested more than Rs 1,500 crore in setting up manufacturing facilities for flat panel TVs. At present, the capacity utilisation of the industry is less than 70 per cent. Meanwhile, the amended rules to ‘disallow import of flat panel’ will be effective from August 26.

The CNX Nifty is currently trading at 5,402.20 down by 12.70 points or 0.23% after trading in a range of 5,404.15 and 5,306.35. There were 23 stocks advancing against 27 declines on the index.

The top gainers of the Nifty were JP Associate up by 5.02%, Tata Steel up by 2.73%, Jindal Steel up by 2.21%, DLF up by 2.18% and Reliance Infra up by 1.98%. On the flip side, Tata Motors down by 3.25%, HCL Tech down by 2.50%, Sun Pharma down by 2.49%, M&M down by 2.47% and Ambuja Cement down by 2.12% were the major losers on the index.

The Asian equity indices were trading in red; Straits Times down by 1.59%, Jakarta Composite down by 4.28%, KLSE Composite down by 2.03%, Seoul Composite down by 1.55%, Taiwan Weighted down by 0.86%, Shanghai Composite down by 0.54% and Nikkei 225 was down by 2.63%.