Markets surrender most of their gains after PM’s speech; Nifty trades a little above 5400 level

Reversing most of the early gains, benchmark equity indices are now just about managing to hold their neck in green, as investors positioned themselves for the month-end and the weekend, with Prime Minister’s Manmohan Singh’s speech acting as a trigger point. With no fresh-take away from PM’s speech, market-participants preferred taking profit from the table on account of underlying caution ahead of GDP data set to be released later in the day, which is expected to grow at 4.7% in the April-June quarter, lower than its decade-low growth of 5% seen in the last fiscal year.  Further, a negative start of European counterparts also pressurized the sentiment. Holding a little above neutral line, Sensex and Nifty are currently holding above the crucial 18,400 and 5,400 levels respectively. Meanwhile, broader indices too witnessing bout of selling pressure, had trimmed substantial gains.

On the global front, Asian pacific shares were trading mixed at the end of a month of brutal selling in Southeast Asia. Renewed concerns over if and when the U.S. Federal Reserve will start to roll back its bond-buying program, hit Southeast Asian markets especially hard. Meanwhile, European opened negative on Friday as the U.K. parliament rejects a military strike against Syria. After seven hours of debate, U.K. lawmakers voted 285 to 272 against a government motion on military intervention in Syria. Speaking after the result, U.K. Prime Minister David Cameron said he believed in the need for a tough response to the use of chemical weapons, but respected the will of parliament.

Closer home, markets reversed most of their gains after Prime Minister Manmohan Singh said in Parliament on Friday that the sharp depreciation in the Indian rupee was a matter of concern, but reiterated that the currency has overshot its true value, and promised a reversal. On the BSE sectoral front, Metal, Oil & Gas and Power counters were the weak spells of the trade, while Consumer Durable, Banking and Health Care were the major pockets of strength. The overall market breadth on BSE is in the favour of advances which thumped declines in the ratio of 1096:724; while 55 shares remained unchanged.

The BSE Sensex is currently trading at 18434.70, up by 33.66 points or 0.18% after trading in a range of 18632.23 and 18283.74. There were only 16 stocks advancing against 14 declines on the index.

The broader indices too cut back some of its gains; the BSE Mid cap and Small cap indices were trading higher by 0.17% and 0.40% respectively.

The top gaining sectoral indices on the BSE were, Bankex up by 1.68%, Healthcare up by 1.31%, FMCG up by 1.18%, Consumer Durables up by 1.12% and Realty up by 0.97%. While, Metal down by 1.47%, Oil & Gas down by 0.95%, Power down by 0.80%, Capital Goods down by 0.35% and  Auto down by 0.30% were the loser indices on the BSE.

The top gainers on the Sensex were, Cipla up by 3.73%, Sun Pharma up by 3.35% Wipro up by 2.68%, Tata Steel up by 2.53% and HDFC up by 2.29%. On the flip side, Jindal Steel down by 5.73%,  Sesa Goa down by 2.16%, Coal India down by 1.72%, Tata Power down by 1.62% and Tata Motors down by 1.55% were the top losers on the Sensex.

Meanwhile, in a bid to boost the country’s exports, the Commerce Ministry has asked the Finance Ministry to include export credit in priority sector lending of all banks, to boost overseas sales as the flow of credit to the export sector is declining. During FY08 to FY13, the share of export credit in total credit witnessed a sharp decline of 8 percent and has come down to 11.36 percent from 19.82 percent.

The broad categories of priority sector include Agriculture, Small Scale Industries, Small Business / Service Enterprises, Micro Credit, Education loans and Housing loans. Presently, only foreign banks are required to disburse 12 percent of their credit to export companies under the priority sector, while, for other banks export finance is outside the required 40 percent priority sector lending.

In July, country's merchandise exports grew 11.6 percent, however, overseas shipments from major sectors such as engineering and textiles were still in the negative zone. In the previous fiscal, Indian exports declined by 1.76% to $300.6 billion which were the first ever decline since 2009-10. Slowing growth in exports and increasing imports are putting pressure on the current account deficit (CAD), which widened to a record high of 4.8 percent of GDP in the previous fiscal. However, the government is making all efforts to boost country’s export and has recently announced a slew of measures including sops for Special Economic Zones (SEZs) and extension of the popular EPCG scheme to all sectors to boost shipments.

The CNX Nifty is currently trading at 5,413.45, up by 4.40 points or 0.08% after trading in a range of 5,469.10 and 5,367.35. There were 20 stocks advancing against 30 declines on the index.

The top gainers of the Nifty were Bank of Baroda up by 3.47%, Cipla up by 3.27%, Sun Pharma up by 2.87%, PNB up by 2.43% and TCS up by 2.24%. On the flip side, Jindal Steel down by 7.80%, Ranbaxy down by 2.94%, Sesa Goa down by 2.31%, Tata Motors down by 2.25%, and Power Grid down by 2.21%were the major losers on the index.

The most of the Asian equity indices were trading mixed; KLSE Composite up by 0.95%, Seoul Composite up by 0.99%, Jakarta Composite up by 0.94%,  Taiwan Weighted up by 1.32%  While, Hang Seng down by 0.11%, Straits Times down by 0.04%, Shanghai Composite down by 0.08% and Nikkei 225 was down by 0.53% were the losers.

European markets got off to a negative start; with CAC 40 declining by 0.16%, DAX sliding by 0.12%  and FTSE 100 trading flat with gains of 0.01%