Benchmarks trade lower in noon deals amid profit booking

Indian equity benchmarks continued to trade in red in noon deals as investors opted to book profit after recent rallies. Traders also remained on sidelines ahead of August inflation numbers, inflation likely edged up to a sixth-month high in August, driven by higher food prices and as the battered rupee made key imports such as fuel costlier. However, markets managed to pare some of its losses supported by buying in select banking shares after the Reserve Bank of India (RBI) has allowed banks to borrow overseas up to 100% of their capital and swap it at a subsidized rate. European counterparts made a sluggish start with DAX and FTSE were trading in the red in early deals, while FTSE was slightly in the green. Moreover, most of the Asian equity indices were trading in the green with Shanghai Composite edging higher after data on Tuesday showed that Chinese auto sales, factory output and investment all improved in August.

Closer home, market regulator Securities and Exchange Board of India is planning to come out with notifications to minimise the know your customer (KYC) requirement for FIIs (foreign institutional investors) that have established a strong track record of compliance with Indian rules. On the sectoral front, Metal, Capital Goods and Realty remained the top gainers, while FMCG, Oil and Gas and Consumer Durables remained the top losers on the space. The overall market breadth on BSE continues to remain in the favour of advances which are outperforming declines in the ratio of 1149:885; while 133 shares remained unchanged.

The BSE Sensex is currently trading at 19904.21 down by 92.88 points or 0.46% after trading in a range of 20055.53 and 19820.24. 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 up by 1.31%, while Small cap index also up by 0.71%.

The top gaining sectoral indices on the BSE were, Metal up by 2.06%, Capital Goods up by 1.63%, Realty up by 1.34%, Health Care up by 0.70% and Teck up by 0.26%.While, FMCG down by 1.29%, Oil and Gas down by 0.87%, Consumer Durables down by 0.79%, Power down by 0.55% and Auto down by 0.20 were the losing indices on BSE.

The top gainers on the Sensex were, Hindalco Inds up by 3.72%, Maruti Suzuki up by 2.81%, Sesa Goa up by 2.68%, Tata Steel up by 2.58% and L&T up by 2.50%. On the flip side, ONGC down by 2.46%, Tata Motors down by 2.32%, Hindustan Unilever down by 2.14%, ITC down by 1.82% and NTPC down by 1.30% were the only losers on the Sensex.

Meanwhile, amid rising doubts over the widening country’s deficits, due to a huge depreciation in the rupee's value, global ratings agency Fitch has warned India of a downgrade if the country is unable to meet its fiscal deficit target. Adding that India's fiscal numbers look weak and the space to contain expenditure is very limited in the second half of the financial year.

The rating agency said that a slowdown in fiscal expenditure in the second half of the year will remain quite challenging for the country. Meanwhile, the government has set target to contain the CAD at 3.7 per cent and fiscal deficit at 4.8 percent of GDP in the current financial year. Referring to the rupee depreciation, Fitch said that falling rupee value may dent the country's foreign exchange reserves, adding that the total reserves could fall to $230 billion from the present level of around $278 billion. Recently, the rupee touched an all-time low of 65.56 against the dollar last week. However, last week, Fitch said that the rupee depreciation would not trigger a change in its ratings and will maintain a 'Stable Outlook' on India's sovereign rating mainly on the back of the country's sizable forex reserves, fiscal deficit management and structural reforms.

In the previous fiscal, the government had massively cut its expenditure to meet its fiscal deficit target owing to a pressure from international rating agencies threatening to cut the country's sovereign rating to junk status if the fiscal deficit worsens, the government was able to contain the fiscal deficit at 4.89 percent in FY13 as against a stated target of 5.2 percent of GDP.

The CNX Nifty is currently trading at 5,875.70 down by 21.05 points or 0.36% after trading in a range of 5,913.45 and 5,842.10. There were 27 stocks advancing against 23 declines on the index.

The top gainers of the Nifty were PNB up by 4.95%, Hindalco Industries up by 3.72%, JP Associate up by 3.67%, Bank of Baroda up by 3.38% and Maruti Suzuki up by 2.91%. On the flip side, Power Grid down by 3.47%, ONGC down by 2.63%, Tata Motors down by 2.57%, Cairn down by 2.07% and Hindustan Unilever down by 2.00% were the major losers on the index.

The Asian equity indices were trading in mixed; Seoul Composite up by 0.49%, KLSE Composite up by 0.03%, Shanghai Composite up by 0.19%, Taiwan Weighted up by 0.01% and Nikkei 225 was up by 0.01%. While, Jakarta Composite down by 0.56%, Straits Times down by 0.65% and Hang Seng down by 0.49%.

Most of the European markets were trading in red; France’s CAC 40 was down 0.34% and UK’s FTSE 100 dropped 0.07% and Germany’s DAX up by 0.05%.