Benchmarks enlarge losses; Nifty hovers near 5,850 mark

Indian equity markets enlarged losses to continuing their weak trade in the late afternoon session on account of selling in front line counters and taking weak cues from global counterparts. The sentiments remained cautious ahead of August inflation numbers, inflation is likely to edged up to six-month high in August, driven by higher food prices and as the battered rupee made key imports such as fuel costlier. Investors also took note of the Reserve Bank on India’s (RBI), which stated that corporate investments is likely to remain subdued this fiscal and may even fall below the level seen last year. Corporate investments in the last fiscal stood at Rs 263,400 crore. Traders were seen piling positions in Metal, Realty and Capital Goods stocks, while selling was witnessed in FMCG, Consumer Durables and Oil & Gas sector stocks.

In scrip specific development, JP Associates was trading in green on reports that the company is close to finalize the cement deal with UltraTech Cement. The debt ridden company is looking to sell its 4.8 million cement plant in Gujarat. Eros International Media was trading in green on news that its parent company Eros International Plc has filed an updated registration statement on form f-1 with Securities and Exchange Commission of United States relating to a proposed IPO. Britannia Industries was trading in green on reports that the company is planning to sell the prime property of Britannia Garden Estate in Bangalore and  8.5 acre property in Chennai. Sun Pharma Advanced Research Company was locked at the upper circuit limit after the company received approval from USFDA for a drug used to treat epilepsy.

On the global front, the Asian markets were trading mixed, while the European markets were too made a mixed start. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 5,900 and 19,900 levels respectively. The market breadth on BSE was positive in the ratio of 1181:962, while 137 scrips remained unchanged. 

The BSE Sensex is currently trading at 19821.86 down by 175.23 points or 0.88% after trading in a range of 20055.53 and 19777.63. There were only 15 stocks advancing against 15 declines on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.95%, while Small cap index also up by 0.63%.

The top gaining sectoral indices on the BSE were, Metal up by 1.91%, Realty up by 1.64%, Capital Goods up by 0.55%, Health Care up by 0.43% and PSU up by 0.35% while, FMCG down by 1.43%, Consumer Durables down by 1.40%, Oil and Gas down by 1.00%, Power down by 0.77% and Auto down by 0.72% were the losing indices on BSE.

The top gainers on the Sensex were, Hindalco Industries up by 3.32%, Tata Steel up by 2.28%, SBI up by 1.73%, Sun Pharma up by 1.51% and Maruti Suzuki up by 1.48%.

On the flip side, Tata Motors down by 2.92%, Bharti Airtel down by 2.24%, Cipla down by 2.19%, Hindustan Unilever down by 2.16% and HDFC down by 2.07% were the top losers on the Sensex.

Meanwhile, in a move to enhance the inflow of foreign capital into the country, the Reserve Bank of India (RBI) further relaxed norms that would encourage banks to raise funds in overseas market. Under new norms, the RBI allowed bank for swap facility for term deposits in dollar denomination at a concessional rate of 1 percent below the market rate for the period of 1 to 3 years. Banks can now borrow such funds from their head office, overseas branches and correspondents and overdrafts in nostro accounts up to a limit of 100 percent of their unimpaired Tier I capital as at the close of the previous quarter or $10 million, whichever is higher as against the existing limit of 50 percent.

The central bank said in its notification that during swap period a bank can sell dollars in multiples of a million to RBI and would have to buy the same amount of dollars at the end of the swap period. Central bank said that though the swaps would be for the entire tenor of the borrowing, the rate would be reset after every one year from the date of the swap at hundred basis points lower than the market rate prevailing on the date of reset. The concessional swap window shall be open till November 30, 2013. By adding further, RBI said that while the banks are allowed to borrow in any freely convertible currency, the swap will be available only for conversion of US dollar equivalent into rupees, which would be computed at the relevant cross rate prevailing on the date of the swap.

Further, in other amendment to overseas direct investment norms, the RBI has decided that issue of corporate guarantee on behalf of second generation will be considered under the approval route and on basis of current market conditions relating to excessive volatility in yields of government securities, the central bank has decided to increase the quantum of Held to Maturity (HTM) securities from 100 percent to 200 percent of the audited net owned fund of the bank as at end March.

The CNX Nifty is currently trading at 5,851.80 down by 44.95 points or 0.76% after trading in a range of 5,913.45 and 5,832.70. There were 26 stocks advancing against 24 declines on the index.

The top gainers of the Nifty were BPCL up by 4.31%, JP Associate up by 4.16%, PNB up by 4.13%, Bank of Baroda up by 4.12% and DLF up by 3.67%.

On the flip side, Power Grid down by 3.13%, Tata Motors down by 3.07%, BHEL down by 2.48%, Cipla down by 2.39% and HDFC down by 2.30% were the major losers on the index.

The Asian equity indices were trading mixed; Seoul Composite up by 0.49%, Shanghai Composite up by 0.15%, Taiwan Weighted up by 0.01% and Nikkei 225 was up by 0.01%. While, Jakarta Composite down by 1.33%, Straits Times down by 0.73%, Hang Seng down by 0.17% and KLSE Composite lost 0.02%.

The European markets were trading mixed; France’s CAC 40 was down 0.20%, Germany’s DAX added 0.38% and UK’s FTSE 100 lost 0.16%.