Benchmarks trim losses; Nifty still below 6,250 mark

Indian equities trimmed losses but continued to trade weak in the late afternoon session on account of selling in frontline counters. The sentiment was weak despite finance minister P Chidambaram exuded confidence that the country’s current account deficit will be contained below $60 billion in the current financial year. Traders were seen piling positions in Power, IT and TECK stocks while selling was witnessed in Bankex, Realty and Consumer Durables sector stocks. IT stocks were trading in a jubilant mood after the global IT major Cognizant Technology Solutions Corp reported a better-than-expected 22 percent rise in revenue. In scrip specific development, State Bank of Travancore was trading under pressure after it registered a fall of 59.20% in its net profit for the quarter ended September 30, 2013. Shares of companies like Kohinoor Foods, KRBL and LT Foods which sell rice as a finished products was trading in green on reports that a decline in paddy production in eastern states and Andhra Pradesh has triggered rise in price of the food commodity.

On the global front, most of the Asian markets were trading in red while the European markets were trading on optimistic note. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 6,250 and 21,000 levels respectively. The market breadth on BSE was positive in the ratio of 1246:1043 while 122 scrips remained unchanged.

The BSE Sensex is currently trading at 20940.46, down by 34.33 points or 0.16% after trading in a range of 21045.38 and 20882.64. There were 13 stocks advancing against 17 declines on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.18% while Small cap index was up by 0.82%.

The gaining sectoral indices on the BSE were Power up by 1.67%, IT up by 1.50%, TECK up by 1.28%, Health Care up by 0.81% and PSU up by 0.20%. While, Bankex down by 1.29%, Realty down by 1.21%, Consumer Durables down by 0.73%, Oil and Gas down by 0.69% and Metal down by 0.67% were top losing indices on BSE.

The top gainers on the Sensex were NTPC up by 3.80%, TCS up by 2.66%, Sun Pharma up by 1.96%, Infosys up by 1.23% and Coal India up by 1.21%. On the flip side, HDFC down by 2.44%, SBI down by 2.11%, SSLT down by 1.90%, Hindalco Industries down by 1.44% and Jindal Steel down by 1.29% were the top losers on the Sensex.

Meanwhile, an expert panel, headed by the Prime Minister's Economic Advisory Council chairman C Rangarajan, will soon examine the proposal of financially stressed highway developers seeking a bailout in the form of deferral of the premium payment from the government. The panel will  also scrutinize the moral hazard of allowing such post-contract concessions which the road ministry and National Highways Authority of India (NHAI) are expected to benefit to around 40 stalled projects in this case. The panel, expected to be formally constituted this week, will submit its report in a month.

Earlier in October, the government had decided to set up the committee under Rangarajan to work out the modalities of the highly contentious bailout policy. Meanwhile, the opinions regarding the policy are still divided between the highway ministry and NHAI. The NHAI has demanded that the discount rate should be kept at 10%, no penalty should be imposed and no corporate guarantee should be taken from developers. On the other hand, road ministry is in favour of a 12% discount rate as well as imposition of penalty to avoid any undue advantage to a handful of developers. The government wants to decide soon on bailout policy as it is cautious over the adverse impact of the delay in decision-making, which has already stagnant investment flows in the highways sector. In the previous fiscal, road ministry awarded only 1,400 km of projects against a target of 9,500 km and had cited reasons like lukewarm response by the bidders owing to a number of factors including delay in clearances. For the current fiscal, road ministry has set a target of 5,000 km highway roads.

Further, in order to boost country’s infrastructure sector, the government is also formulating a plan to determine the way in which bad assets are recognized, which will give lenders more leeway to rescue projects and will give a strong push to infrastructure investment. The government has identified the development of infrastructure a most critical prerequisite for sustaining the present growth momentum of the economy. The government has set the $1-trillion investment target for the infrastructure sector for the 12th Five Year Plan (2012-17).

The CNX Nifty is currently trading at 6,237.20, down by 15.95 points or 0.26% after trading in a range of 6,269.70 and 6,218.80. There were 18 stocks advancing against 32 declining on the index.

The top gainers of the Nifty were NTPC up by 3.97%, TCS up by 2.65%, Sun Pharma up by 1.82%, Ranbaxy Laboratories up by 1.59% and Power Grid up by 1.21%. On the flip side, JP Associate down by 2.73%, HDFC down by 2.61%, DLF down by 2.49%, Ambuja Cement down by 2.36% and SBI down by 2.34% were the major loser on the index.

Most of the Asian equity indices were trading in red; Straits Times down by 0.09%, Hang Seng down by 0.01%, Shanghai Composite down by 0.82%, Seoul Composite down by 0.01% and KLSE Composite down by 0.31%. On the other hand, Nikkei 225 up by 0.79%, Taiwan Weighted up by 0.24% and Jakarta Composite up by 0.21%.

The European markets were trading in green; France’s CAC 40 was up 0.74%, Germany’s DAX added 0.47% and UK’s FTSE 100 gained 0.27%.