Markets swing between red and green after a flat start

Indian equity markets made a flat start amid apprehension that the spillover effects of the regional counterparts will keep the local indices too under pressure. However, after surging to the day’s high the trade has turned choppy and the major indices have started swinging between red and green. Rupee that made a positive start, recovering from its two months low in last session, too has given up gains and weighed on the sentiments of the equity markets. While, IT and tech continued their momentum going, healthcare, auto and realty too were supporting the markets. On the other hand the major drags were the consumer durables, capital goods and banking stocks. The telecom stocks were under pressure after the Telecom Commission suggested a hike of 15-25% more than what the telecom regulator Telecom Regulatory Authority of India (Trai) had proposed for the reserve price, in select circles. However, there was some buzz in the smaller private sector banks after RBI come out with its detailed guidelines on how foreign banks will operate in the country. Karnataka bank was up by about 5%, City Union Bank was up by 2.12% and Federal Bank too was up by 2%.

The market breadth on the BSE was positive; there were 706 shares on the gaining side against 503 shares on the losing side while 49 shares remain unchanged.

The BSE Sensex opened at 20896.13; about 1 point higher compared to its previous closing of 20894.94, and has touched a high and a low of 20944.29 and 20866.88 respectively. The index is currently trading at 20878.95, down by 15.99 points or 0.08%. There were 16 stocks advancing against 14 declines on the index.

The overall market breadth has made a strong start with 56.12% stocks advancing against 39.98% declines. The broader indices were trading in green; the BSE Mid cap up by 0.40% and Small cap indices up by 0.16%. 

The top gaining sectoral indices on the BSE were, IT up by 0.85%, Teck up by 0.63%, Health Care up by 0.50%, Auto up by 0.32% and Realty up by 0.09%, while Consumer Durables down by 1.62%, Capital Goods down by 0.87%, Bankex down by 0.82%, FMCG down by 0.56% and PSU down by 0.50% were the top losers on the sectoral index.

The top gainers on the Sensex were Mahindra & Mahindra up by 1.06%,  Sun Pharma up by 0.99%, Infosys up by 0.97%, TCS up by 0.86% and Tata Steel up by 0.85%. On the flip side, BHEL was down by 4.41%, Coal India was down by 1.42%, ITC was down by 1.19%, ICICI Bank was down by 0.98% and Jindal Steel was down by 0.86% 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 opened at 6,228.90; about 13 points higher as compared to its previous closing of 6,215.15, and has touched a high and a low of 6,232.15 and 6,207.35 respectively. The index is currently trading at 6,209.30, down by 5.85 points or 0.09%. There were 23 stocks advancing against 27 declines on the index.

The top gainers of the Nifty were HCL Tech up by 1.47%, Ambuja Cements up by 1.24%, M&M up by 1.10%, Sun Pharmaceuticals up by 1.09% and Infosys up by 1.02%. On the flip side, BHEL down by 4.52%, Bank of Baroda down by 3.00%, IndusInd Bank down by 2.11%, DLF down by 1.60% and PNB down by 1.59% were the major losers on the index.

Most of the Asian equity indices were trading in red; Shanghai Composite was down by 5.34 points or 0.25% to 2,134.27, Hang Seng slumped by 152.43 points or 0.66% to 22,884.51, Nikkei 225 shed 96.16 points or 0.67% to 14,241.45, Seoul Composite was down by 11.49 points or 0.57% to 2,003.17 and Taiwan Weighted lost 23.48 points or 0.28% to 8,256.98.

On the other hand, Jakarta Composite was up by 42.03 points or 0.94% to 4,488.49, KLSE Composite was up by 0.93 points or 0.05% to 1,803.98 and Straits Times gained 1.24 points or 0.04% to 3,206.71.