Benchmarks continue to reel under pressure in noon deals

Indian equity benchmarks continued to trade in red with both the frontline gauges trading with a cut of over half a percent as investors remained sidelines ahead of key macro economic data to be released by the government later in the day.  Sentiments remained down-beat since morning after Crisil cut India’s economic growth estimate to 4.8 percent for the current fiscal 2013-14 from its earlier estimate of 5.5 percent. Sentiments also got dampened after Indian rupee weakened in afternoon trade due to dollar demand from oil importers and defense related payments. The rupee was trading at Rs 63.62 compared with previous close of Rs 63.37 per dollar.

Global cues too remained subdued with European markets made a negative opening with CAC, DAX and FTSE all were trading  in red in early deals as investors remained sidelines awaiting the outcome of the Federal Reserve’s meeting next week. While, most of the Asian equity indices were trading in the green at this point of time on expectation that the US Federal Reserve’s impending stimulus reduction might be smaller than some had believed. However, Japanese Nikkei remained the lone loser among regional indices as the nation’s core machinery orders stayed flat in July from the previous month.

Back home, software stocks continue to be under pressure on the bourses owing to recovery of Rupee against the greenback. On the sectoral front, realty, power and healthcare remained the top gainers on the BSE sectoral index, while banking, software and consumer durables remained the top losers. The broader indices, however, outperforming benchmarks, while the overall market breadth on BSE is in the favour of advances which thumped declines in the ratio of 1135: 882; while 134 shares remained unchanged.

The BSE Sensex is currently trading at 19862.00 down by 135.45 points or 0.68% after trading in a range of 20052.05 and 19816.99. There were only 11 stocks advancing against 19 declines on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.72%, while Small cap index also up by 0.96%.

The top gaining sectoral indices on the BSE were, Realty up by 3.21%, Power up by 1.38%, Healthcare up by 0.74%, and Capital Goods up by 0.37%. While, Bankex down by 1.54%, IT down by 1.39%, Consumer Durables down by 1.09%, Metal down by 1.06 and Teck down by 1.04 were the losing indices on BSE.

The top gainers on the Sensex were, Tata Power up by 5.77%, Gail India up by 2.06%, NTPC up by 1.71%, Cipla up by 1.17% and BHEL up by 1.14%. On the flip side, Hero MotoCorp down by 2.76%, ONGC down by 2.48%, Sesa Goa down by 2.44%, Coal India down by 2.20% and ICICI Bank down by 2.00% were the top losers on the Sensex.

Meanwhile, in a move to enhance the overseas investment into the country, the government has notified changes in the Foreign Direct Investment (FDI) policy, widening the definition of the term 'control' for mergers and acquisitions involving overseas companies, a move that will provide more clarity to foreign investors and would also prevent backdoor entry of foreign companies in the prohibited sectors. The notification will have to be tabled in Parliament within 30 days of the commencement of the next session.

As per the revised FDI guidelines, the government had relaxed norms for multi-brand retail trading and eased the mandatory 30 per cent local sourcing norms for companies. The government is of the view that the move will help to enhance the FDI into the country. Meanwhile, FDI increased to $9 billion in April-June quarter from $5 billion in the same period of FY13.The foreign direct investment (FDI) policy is now notified under FEMA regulations and is effective from August 22.

The new definition of control will include the right to appoint majority of directors and will also be expanded to include control over the management or policy decisions, instead of just the right to appoint majority of the shareholders. Presently, a company is said to be controlled by an Indian resident if the Indian investor holds more than 51% stake and can appoint the majority directors in the firm. As per the new guidelines, an Indian company will be considered a foreign entity if the major stake in the firm is held by foreign investors or is foreign controlled and any investment by such a company will also be considered as foreign investment.

The CNX Nifty is currently trading at 5,874.15 down by 39.00 points or 0.66% after trading in a range of 5,932.00 and 5,859.95. There were 23 stocks advancing against 27 declines on the index.

The top gainers of the Nifty were IDFC up by 7.26%, Tata Power up by 6.86%, Ranbaxy up by 3.52%, Gail up by 2.29% and DLF up by 2.16%. On the flip side, JP Associate down by 6.34%, Ambuja Cemnet down by 3.04%, Hero MotoCorp down by 2.89%, Indusin Bank down by 2.68% and ONGC down by 2.63% were the top losers on the index.

Most of the Asian equity indices were trading in green; Seoul Composite up by 0.01%, KLSE Composite up by 0.14%, Shanghai Composite up by 0.64%, Taiwan Weighted up by 0.20%, Jakarta Composite up by 0.28% and Straits Times up by 0.34%, While Hang Seng up by 0.05% and Nikkei 225 was down by 0.26%.

All the European markets were trading in red; France’s CAC 40 was down 0.26%, UK’s FTSE 100 dropped 0.63% and Germany’s DAX down by 0.56%.