Weak global cues drag markets lower in early deals on Wednesday

Indian equity benchmarks are trading slightly lower in early deals on Wednesday tailing weak global cues. US markets continued their weak trend overnight, dropping from record levels in a broad decline as investors took profits amid signs of a weak holiday shopping season. Moreover, most of the Asian benchmarks were trading lower at this point of time as the prospects of a reduction in the US Federal Reserve’s stimulus early next year prompted investors to cash in gains from their recent rallies. Meanwhile, the Japanese stock market plunged by one and half a percent, with investors indulging in some heavy selling after recent strong gains and yen strengthening.

Back home, sentiments also remained dampened on report that Foreign Direct Investment (FDI) into the country declined by about 38 percent, year-on-year, to $2.91 billion in September. However, the losses remained capped as some support came in after industry body Assocham said that narrowing of the current account deficit will help arrest depreciation of the rupee and ease inflation concerns and that may soothe some nerves. Meanwhile, Prime Minister Manmohan Singh has said that market-based pricing and technology are essential as India is expected to become world's third largest energy consumer in seven years. He also said that, in order to bridge the gap between supply and demand, the government is encouraging domestic and global companies to explore onshore and offshore regions.

On the sectoral front, metal witnessed the maximum gain in trade followed by technology and power, while capital goods, banking and fast moving consumer goods remained the top losers on the BSE sectoral space. The broader indices, however, managed to get some traction, while the market breadth on the BSE was positive; there were 637 shares on the gaining side against 566 shares on the losing side while 58 shares remain unchanged.

The BSE Sensex opened at 20839.45; about 15 point lower compared to its previous closing of 20854.92, and has touched a high and a low of 20839.45 and 20789.44 respectively. The index is currently trading at 20805.44, down by 49.48 points or 0.24%. There were 13 stocks advancing against 17 declines on the index.

The overall market breadth has made a strong start with 50.52% stocks advancing against 44.89% declines. The broader indices were trading in green; the BSE Mid cap and Small cap indices were up by up by 0.03% and 0.34% respectively. 

The top gaining sectoral indices on the BSE were, Metal up by 0.46%, Teck up by 0.41%, Power up by 0.40%, IT up by 0.32% and Consumer Durables up by 0.17%, while Capital Goods down by 0.87%, Bankex down by 0.68%, FMCG down by 0.36%, Oil & Gas down by 0.25% and PSU down by 0.22% were the top losers on the sectoral index.

The top gainers on the Sensex were SSLT up by 1.68%, Bharti Airtel up by 1.33%, Jindal Steel up by 1.83%, Tata Power up by 1.00% and Dr Reddys Lab up by 0.66%. On the flip side, ICICI Bank was down by 1.73%, L&T was down by 1.40%, Sun Pharma was down by 0.91%, Hindustan Unilever was down by 0.87% and ITC was down by 0.56% were the top losers on the Sensex.

Meanwhile, Encouraged over the better-than-expected growth in GDP and a significant contraction in country’s current account deficit (CAD), Finance Minister P Chidambaram expressed confidence that the economy would expand by 5 percent and CAD would remain below the set target of 3.7 percent of GDP in current financial year. The CAD narrowed sharply to $5.2 billion, or 1.2 percent of GDP, in the July-September quarter of this fiscal, while, Gross Domestic Product (GDP), a measure of the country's total economic output, grew by 4.8% for the reported quarter.

Hoping things will become better in the second half of the current fiscal, Chidambaram has said that Indian economy is passing through a ground of optimism and the government is looking forward to better performance in Q3 and Q4 as the recent improvement in some important sectors like manufacturing, better performance of exports as well as certain steps taken by the government will give boost to economic growth. Meanwhile, Government's forecast for economic growth is above the estimation of several global institutions including World Bank, International Monetary Fund (IMF) and Asian Development Bank (ADB) that have projected growth rate of below 5 percent for 2013-14.

Furthermore, amid rising concerns over country’s widening fiscal deficit, which has already reached 84.4 percent for the full-year Budget estimates in the first seven months of 2013-14, Chidambaram said that the government will be able to achieve the disinvestment target of Rs 40,000 crore and contain the fiscal deficit within 4.8 percent of the GDP. However, during the first seven months, the government was able to garner only about Rs 1,150 crore through disinvestment.

The CNX Nifty opened at 6,187.95; about 13 points lower as compared to its previous closing of 6,201.85, and has touched a high and a low of 6,196.55 and 6,180.05 respectively. The index is currently trading at 6,186.05, down by 15.80 points or 0.25%. There were 18 stocks advancing against 32 declines on the index.

The top gainers of the Nifty were SSLT up by 1.60%, Tata Power up by 1.31%, Bharti Airtel up by 1.28%, Jindal Steel up by 1.16% and Dr. Reddy's Laboratories up by 0.61%. On the flip side, ICICI Bank down by 1.74%, L&T down by 1.44%, BPCL down by 1.43%, Sun Pharmaceuticals down by 0.96% and Hindustan Unilever down by 0.92% were the major losers on the index.

Most of the Asian equity indices were trading in red; Hang Seng declined 83.41 points of 0.35% to 23,827.06, Jakarta Composite dropped 31.25 points or 0.73% to 4,257.51, Nikkei 225 tumbled 257.86 points or 1.64% to 15,491.80, Straits Times slipped 2.53 points or 0.08% to 3,185.14 and Seoul Composite was down by 14.92 points or 0.74% to 1,994.44.

On the flip side, Shanghai Composite surged 28.16 points or 1.27% to 2,250.83, KLSE Composite rose 2.24 points or 0.12% to 1,826.53 and Taiwan Weighted was up by 32.01 points or 0.38% to 8,424.56.