Volatility creeps up ahead of F&O expiry; benchmarks trade in red

A bout of volatility was witnessed in the early trade and key benchmarks turned red and fell by over half a percent after opening on a positive note on Thursday hitting a two-year low of 15,617.79, as funds and retail investors offloaded their positions ahead of F&O expiry. Moreover, an overnight plunge at the US markets also impacted the trading sentiment while, most of the Asian peers were trading in the green at this point of time. Back home, the opening is mildly better as compared to some of the previous sessions as Asian markets have not fallen as hard as their US and European counterparts did overnight following a rare failure at a German bond auction. The broader indices too were struggling to get some traction while, the market breadth has made a negative start; there were 609 shares on the gaining side against 924 shares on the losing side while 63 shares remained unchanged. The Realty index is the top loser so far followed by metal and software. The FMCG index is the biggest winner so far owing to some strength in ITC. Meanwhile, retail sector stocks like Koutons, Vishal Retail, Shoppers Stop and Pantaloon Retail went up 2-8 percent as the Union Cabinet is scheduled to meet today to decide on allowing foreign direct investment in the multi-brand retail.

The BSE Sensex opened at 15,715.81; about 16 points higher compared to its previous closing of 15,699.97, and has touched a high and a low of 15,729.01 and 15,617.79 respectively.

The index is currently trading at 15,618.23, down by 81.74 points or 0.52%. There were 7 stocks advancing against 23 declines on the index.

The overall market breadth has made a negative start with 38.16% stocks advancing against 57.89% declines. The broader indices too were trading in the negative terrain; the BSE Mid cap and Small cap indices were down by 0.52% and 0.34% respectively. 

The only gaining sectoral indices on the BSE were, FMCG up by 0.38% and Auto up by 0.01%. While, Realty down by 1.61%, Metal down by 1.32%, IT down by 1.08%, CD down by 0.93% and CG down by 0.87% were the top losers on the index.

The top gainers on the Sensex were Maruti Suzuki up by 1.16%, Bharti Airtel up by 1.14%, ITC up by 0.88%, Coal India up by 0.47% and M&M was up by 0.42%.

On the flip side, Tata Steel down by 2.46%, DLF down by 2.09%, BHEL down by 2.03%, NTPC down by 1.56% and Jindal Steel down by 1.49% were the top losers on the index.

Meanwhile, the central government made it clear that it has no plans to reduce the Securities Transaction Tax (STT) charged on equity trades, as collections dipped by around 18% in the first seven months of the 2011-12. In a question whether government proposes to lower STT in country, the Minister of State for Finance S S Palanimanickam said, ‘No Sir’.

Earlier, finance ministry has indicated that government may reduce the STT, in order to reduce the transaction cost.  In 2004, the government had introduced STT on transactions in different types of securities. Currently, the rate varies from 0.0025% to 0.25% depending upon the type of security traded and transaction i.e. whether sale or purchase.

The collections from STT have declined by 17.9% to Rs 2,958 crore in the April-October 2011 compared to Rs 3,602 crore in the April-September 2010.  This fall in the collections is mainly because of the fall in transactions on the bourses.

The stack exchanges had asked the ministry of finance to remove the STT, arguing that such a step would help boost investments in the stock market and promote an equity culture in the India. The bourses also asked simpler compliance procedures and imposition of lower costs on brokers to facilitate grater retail participation in the market.

The S&P CNX Nifty opened at 4,707.55; about a point higher compared to its previous closing of 4,706.45, and has touched a high and a low of 4,714.25 and 4,681.65 respectively.

The index is currently trading at 4,681.90, down by 24.55 points or 0.52%. There were 13 stocks advancing against 37 declines on the index.

The top gainers of the Nifty were GAIL up by 1.86%, Bharti Airtel up by 1.14%, Axis Bank up by 1.05%, Maruti up by 0.84% and RCom up by 0.50%.

SAIL down by 3.13%, Sesa Goa down by 2.94%, Tata Steel down by 2.55%, Ranbaxy down by 2.24% and DLF was down by 2.12%, were the major losers on the index.

Most of the Asian equity indices were trading in the green; Shanghai Composite was up 6.79 points or 0.28% to 2,401.85, Hang Seng was up 80.29 points or 0.45% to 17,944.72, KLSE Composite was up 5.62 points or 0.39% to 1,438.79, Straits Times was up 3.84 points or 0.14% to 2,680.41, Seoul Composite was up 11.13 points or 0.62% to 1,794.23 and Taiwan Weighted was up by 46.17 points or 0.68% to 6,852.60.

On the flip side, Jakarta Composite was down 18.40 points or 0.50% to 3,668.61 and Nikkei 225 was down by 114.88 points or 1.38% to 8,199.86.