Benchmarks continue weak trade in afternoon session

Indian equity benchmarks continued their weak trade in afternoon session amid selling pressure witnessed in capital goods, realty and banking stocks. The weakness in rupee due to dollar buying by Oil companies continued to weight on the investors’ sentiments. The rupee breached the 63 mark against the US dollar for the first time since September 30. Investors were also concerned over better than expected jobs data from US, which could lead to the US Fed taper its stimulus sooner than expected. On sector front, banking stocks continued their downward journey amid rising concerns over the assets quality. Capital goods was the top loser among the sectoral indices on the BSE down by around 2.50% along followed by realty and banking indices. Meanwhile, IT stocks were trading higher amid a weakening rupee. On stock specific movement, Tata motors was trading lower as the traders were booking profit after recent gains in the run-up to its second quarter earnings. United Bank of India has dipped over 8% on BSE after reporting a net loss of Rs 490 crore for the quarter ended September 30, 2013 due to higher provisioning for bad loans.

On the global front, Asian markets were trading mixed with Japanese indices Nikkei up by 1.20% and Seoul Composite down by 0.57% amid rising fears over US Federal Reserve tapering. Back home, the NSE Nifty and BSE Sensex were trading down their psychological 6,150 and 20,600 levels respectively. The market breadth on BSE was negative, out of 2,064 stocks traded, 870 stocks advanced, while 1,067 stocks declined on the BSE.       

The BSE Sensex is currently trading at 20,550.17 down by 115.98 points or 0.56% after trading in a range of 20,623.83 and 20,482.41. There were only 8 stocks advancing against only 23 declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.48%, while Small cap index down by 0.23%.

The gaining sectoral indices on the BSE were IT up by 0.66%, Teck up by 0.53%, Healthcare up by 0.30%. While, Capital Goods down by 2.52%, Realty down by 2.21%, PSU down by 1.48%, Bankex down by 1.41% and Metal down by 1.23% were the losing indices on BSE.

The top gainers on the Sensex were Dr. Reddy’s Lab up by 1.46%, TCS up by 1.29%, Maruti Suzuki up by 1.01%, Cipla up by 0.71% and ITC up by 0.56%. On the flip side, L&T down by 3.45%, Hindalco Inds down by 2.66%, Hero Moto Corp down by 2.00%, ONGC down by 1.91% and Tata Motors down by 1.77% were the only losers on the Sensex.

Meanwhile, the fertilizer ministry has circulated a proposal to the cabinet in order to remove guaranteed buyback clause in the urea investment policy approved by the Cabinet Committee on Economic Affairs (CCEA) in December last year in order to incentivise manufacturers for raising domestic urea output. The New Investment Policy (NIP) 2012 guaranteed buy-back of urea for eight years from start of production, which has encouraged fertiliser firms applying for setting up new plant or expanding capacity of existing plant led to a flood of applications for expanding capacities.

The present domestic urea production stands at about 22 million tonnes, while the country needs an additional capacity of only 8 million tonnes of urea to become self-sufficient. Therefore, the ministry wants to give approval to some selected applicants so that only as much capacity is added as is required to meet the demand and supply gap.

Fertilizer ministry has received applications from 13 fertiliser firms for setting up new plants or for expanding capacities, which would increase capacities by about 16 million tonnes. Meanwhile, the ministry has introduced bidding process for shortlising 4-5 applicants from among the 13 on the basis of cost of production. The government has currently fixed subsidy at Rs 5,360 per tonne, which is the difference between MRP and production cost. By sorting and allowing low cost fertilizers producers, the government aims to reduce the subsidy bill projected at Rs 66,000 crore for this fiscal.

Among the applications, the major players who have approached the Department of Fertilizers (DoF) for greenfield or brownfield expansion under the NIP include, Tata Chemicals, Indo Global Fertilisers, IFFCO, Chambfal Fertilisers and Chemicals, Rashtriya Chemicals and Fertilisers, National Fertilisers Ltd.

The CNX Nifty is currently trading at 6,100.65 down by 40.10 points or 0.65% after trading in a range of 6,121.35 and 6,070.85. There were 11 stocks advancing against 39 declining on the index.

The top gainers of the Nifty were Cairn up by 2.51%, TCS up by 1.39%, Dr. Reddy’s Lab up by 1.31%, Maruti Suzuki up by 0.84% and Cipla up by 0.66%. On the flip side, L&T down by 3.62%, Indusind Bank down by 3.01%, NMDC down by 2.85%, Hindalco Inds down by 2.75% and DLF down by 2.75% was the major loser on the index.

The Asian equity indices were trading mixed; Straits Times up by 0.21%, KLSE Composite up by 0.04%, Hang Seng up by 0.43%, Nikkei 225 up by 1.20% and Shanghai Composite up by 0.20%. While, Jakarta Composite down by 0.78%, Taiwan Weighted down by 0.57% and Seoul Composite down by 0.57%.