Benchmarks trim losses; trade continues in red

Indian equities trimmed losses but continued their weak trade in the late afternoon session on account of selling in front line counters and taking cues from European counterparts. The sentiments remained on cautious note after foreign brokerage firm Barclays lowered India’s FY14 GDP forecast for the current fiscal to 4.7%, saying the growth and fiscal health of the country are likely to remain under pressure, with 2014 election dynamics adding to uncertainties. It added that India’s economic growth had slumped to decade low of 5% in 2012-13. It had slid to 4.4% during April-June quarter, the lowest in past several years, pulled down by drop in mining and manufacturing output. The hawkish comments from the Reserve Bank of India governor Raghuram Rajan that inflation continued to remain high. too exerted pressure on the bourses. Traders were seen piling positions in Oil & Gas, FMCG and Auto stocks, while selling was witnessed in Bankex, Realty and Metal sector stocks. In scrip specific development, Bharti Airtel was trading in red on reports that the telecom department may slap a fine of Rs 725 crore on the company for offering 3G services in the circles where it does not have spectrum. Havells India was trading firm after Bank of America Merrill Lynch stated that the electrical equipment manufacturer is likely to see better second quarter earnings.

On the global front, Asian markets were trading in green barring Nikki 225 the European markets were trading on pessimistic note. 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 1118:1022 while 150 scrips remained unchanged. 

The BSE Sensex is currently trading at 19830.14, down by 63.71 points or 0.32% after trading in a range of 19,981.57 and 19757.20. There were only 9 stocks advancing against 21 declines on the index.

The broader indices were trading in green; the BSE Mid cap and Small cap indices were trading up by 0.36% and 0.65% respectively.

The gaining sectoral indices on the BSE were Oil and Gas up by 0.97 %, FMCG up by 0.48%, Auto up by 0.37%, Health Care up by 0.20% and IT up by 0.19%. While Bankex down by 0.95%, Realty down by 0.79%, Metal down by 0.51%, Power down by 0.39% and Capital Goods down 0.32% were the losing indices on BSE.

The top gainers on the Sensex were HeroMoto Corp up by 2.62%, Sun Pharma up by 1.57%, Reliance Industries up by 1.40%, Coal India up by 1.09% and Jindal Steel up by 0.70%. On the flip side, Tata Steel down by 2.27%, Bharti Airtel down by 2.20%, ICICI Bank down by 2.17%, BHEL down by 1.96% and Hindalco Industries down by 1.37% were the top losers on the Sensex.

Meanwhile, the government is likely to announce 10th round of auction of oil and gas blocks in January, 2014. Oil Minister M Veerappa Moily said that 10th round of auction will be a perfect one as hindrances faced in the previous rounds would be removed as country looks to attract foreign investors to boost domestic production. During the previous nine rounds, the government had awarded 254 blocks for exploration of oil and gas, which had received tepid response with global majors staying away.

In the 10th round of New Exploration Licensing Policy (NELP), Oil Ministry is looking at offering as many as 68 blocks or areas for exploration of oil and gas. Out of 68 blocks considered for offering in NELP-10, 25 blocks are deep water, 20 shallow water and 23 on land blocks. It will be the second highest offering of blocks since the advent of NELP in 1999 and will be free from obstructions facing exploration and production. At present, the Directorate General of Hydrocarbons (DGH) and the Oil Ministry are in process of getting various clearances for offering oil and gas blocks.

As per the government, 10th round of auction is likely to be held on new terms wherein a bidder shall be asked to quote the amount of oil or gas output it is willing to offer to the government from the first day of production. Presently, oil companies are allowed to share the profit with the government only after recovering the entire cost of exploration and production.

Meanwhile, oil ministry has formulated a roadmap for cutting India's dependence on imports to meet its oil needs. India currently imports around 79 percent of its oil needs and the Ministry wants this to be cut to 50 percent by 2020 and by 25 percent in 2025 through intensive exploration and exploitation of untapped reserves. Presently, only 0.93 million sq km area in India is held under exploration and production in 19 basins as compared to total estimated sedimentary area of 3.14 million square kilometres, comprising 26 sedimentary basins.

The CNX Nifty is currently trading at 5,868.90, down by 13.35 points or 0.23% after trading in a range of 5,909.20 and 5,846.40. There were 18 stocks advancing against 32 declines on the index.

The top gainers of the Nifty were BPCL up by 5.42%, Hero Moto Corp up by 2.32%, HCL Tech up by 1.84%, Sun Pharma up by 1.55% and Reliance Industries up by 1.52%. On the flip side, Tata Steel down by 2.45%, BHEL down by 2.29%, ICICI Bank down by 2.08%, Asian Paints down by 1.92% and Bharti Airtel down by 1.49% were the major losers on the index.

The Asian equity indices were trading in green barring Nikki 225 down by 0.26% which was sole loser amongst Asian pack. Straits Times up by 0.51%, Jakarta Composite up by 0.58%, Seoul Composite up by 0.22%, KLSE Composite up by 0.27%, Taiwan Weighted up by 0.56%, Hang Seng up by 0.35% and Shanghai Composite up by 0.20%.

The European markets were trading in red; France’s CAC 40 was down 0.12%, Germany’s DAX lost 0.20% and UK’s FTSE 100 dropped 0.33%.