Market remains in consolidation mood; loses another half a percent

Indian markets remained in consolidation mood on Wednesday, though the start was in green and the major indices managed to hold the gains till noon but later the profit booking dragged the markets lower and despite some small attempts, markets could not recover till the end. There was profit booking reported by FIIs that has led the markets lower from their all time highs. Benchmark indices lost their traction in second half and closed near the lows of the day, broader markets that have shown good resistance till long, too gave up and ended mixed.

The global cues remained sluggish with the US markets ending mostly in red, while the Asian markets too, after swinging between red and green made a mixed closing with the Japanese markets showing a big turnaround, ending higher by about a percent on getting some good corporate earnings. Though, the European markets made a good start as companies from Alstom SA to ING Groep NV reported earnings that beat analysts’ estimates, while UK’s September Industrial Production rose by 0.9%, better than estimated.

Back home, Indian markets were unable to get any respite with the positive trade in European counterparts, instead selling intensified in the last leg of trade on getting mixed set of earnings, while BHEL disappointed, ABB came with an extremely good set of numbers. Earlier the major indices bucking the global sluggishness made a positive start and it seemed that markets will recover from their last sessions fall, taking cues from the statement of Finance Minister P Chidambaram that India’s current account deficit (CAD) will be contained below $60 billion this financial year as against an earlier estimate of $70 billion. But the indices started showing fatigue and selling came on fore with the progress of trade and traders opted to take their profits off the table. The weakness in rupee too weighed on the sentiments that remained lower since morning and once again breached the 62 per dollar mark on concern of state-owned refiners resuming dollar purchases, which will limit the positive impact of overseas dollar inflows. Sectorally the day was of IT, which remained in upbeat mood since morning after the global IT major Cognizant Technology Solutions Corp reported a better-than-expected 22 percent rise in revenue, helped by contracts from insurers setting up online exchanges as part of President Barack Obama's healthcare reforms and raised its full-year forecast for both profit and revenue. The pack also got the advantage of rupee weakness. However, the banking stocks remained one of the major laggards despite two of the major banks SBI and HDFC bank increasing their base lending rate, a move other banks are also likely to follow. Power stocks too were in demand with all the major stocks gaining 2-4 percent for the day. The telecom gauge also kept buzzing after a government panel recommended raising the reserve price for mobile phone spectrum auctions by 15 percent more than the price suggested by Trai in the 1800 megahertz band, and by 25 percent in the 900 megahertz band.     

Finally, the BSE Sensex lost 79.85 points or 0.38%, to settle at 20894.94, while the CNX Nifty plunged by 38.00 points or 0.61% to settle at 6,215.15.

The BSE Sensex touched a high and a low of 21045.38 and 20861.42, respectively. The BSE Mid cap index was down by 0.17% while Small cap index was up by 0.76%.The top gainers on the Sensex were NTPC up 3.50%, TCS up 2.43%, Sun Pharma up 1.74%, Infosys up 1.25% and Cipla up 0.94%, on the flip side SBI down 3.40%, SSLT down 2.50%, Jindal Steel down 2.01%, Hindalco Inds down 1.87%, and HDFC down 1.54%, were the top losers on the index. 

On the BSE Sectoral front, IT up by 1.39%, Power up by 1.23%, Teck up by 1.00%, and Healthcare up by 0.86%, were the only gainers, while Consumer Durables down by 2.19%, Bankex down by 1.87%, Realty down by 1.80%, Metal down by 1.31%, and Oil & Gas down by 0.87%, were the top losers on the sectoral front.

Meanwhile, in a move to seek better discipline from companies on unclaimed investor funds, the government will issue guidelines on unclaimed dividends that the companies may hold on account of deposits or dividends.

As per the Companies Act of 1957, the dividend not paid or claimed within 30 days is transferred to a separate bank account from which the investor can claim his amount up to a period of 7 years. After that, the amount is transferred to the Investor Education and Protection Fund (IEPF) managed by the ministry of corporate affairs. As the penalties for non-compliance under this Act are not severe, companies are mostly tempted to transfer funds from the unpaid dividend account back to their balance sheets.

The ministry of corporate affairs will identify companies that have such funds but have not disclosed it to the Registrar of Companies. At present, companies credit dividends to investor accounts electronically, but this information is not completely provided by them. Further, most of the investors leave this amount unclaimed. At the end of FY13, unpaid and unclaimed amounts with companies stood at Rs 700 crore.

The CNX Nifty touched a high and low of 6,269.70 and 6,208.70 respectively.

The top gainers on the Nifty were NTPC up by 3.46%, TCS up by 2.45%, Sun Pharmaceuticals Industries up by 1.88%, Ranbaxy Laboratories up by 1.50% and Infosys up by 1.26%. On the other hand, State Bank of India down by 3.52%, PNB down by 3.52%, Jaiprakash Associates down by 3.34%, DLF down by 3.14%, and Ambuja Cements down by 2.90%, were the top losers.

The European markets were trading in green, France's CAC 40 was up by 0.82%, Germany's DAX was up by 0.35%, and United Kingdom's FTSE 100 was up by 0.07%.

The Asian markets concluded Wednesday’s trade mostly in red following a weak lead from Wall Street. Stocks in Hong Kong ended flat ahead of the beginning of a Communist Party plenum at the weekend. Indonesia’s economy continued to slow in the third quarter after Bank Indonesia tightened its monetary stance to rein in inflation and shrink the country’s current-account deficit. Southeast Asia’s largest economy expanded by 5.62% in the July-September quarter from a year earlier, slowing from the 5.81% increase in the second quarter and marking the slowest growth rate in nearly four years. Indonesia’s gross domestic product rose 2.96% on-quarter, compared with a 2.6% increase in the previous quarter.

Manufacturing activity in Singapore rose unexpectedly last month. In a report, SIPMM Central Office stated that Singaporean PMI rose to 51.2, from 50.5 in the preceding month. Japan’s monetary base fell unexpectedly last month. Bank of Japan stated that Japan’s Monetary Base fell to 45.8%, from 46.1% in the preceding month.