Weakness mellows down at Dalal Street; Sensex holds 16k psychological level

Global rally seems to have some mellowing effect on the Indian equity markets as the barometer gauges after shrugging off the previous session gains in early deals, have pruned down willowy losses. Looming caution ahead of the release of the GDP, which seen at its weakest pace in more than two years, amidst European finance ministers meet today to thrash out details on how to boost the European Financial Stability Facility, has mainly kept traders finicky. However, short covering in the rate sensitive Auto counter, coupled with some selective bets in defensive counter- Fast Moving Consumer Goods- has improved the fragile sentiment of Dalal Street.

On the global front, positive leads from Asian pacific markets which albeit failing to match the magnitude of Wall Street's sharp rally on Monday, gained substantial traction in trade in order to uplift the sentiment of Dalal Street. Overnight, on Wall Street, US stocks posting their best day in at least a month surged on Monday, after US Thanksgiving weekend retail sales jumped to a record amidst rife speculation that European leaders will do more to tame the debt crisis. However, US future indices too were showing a downtick in the screen trade.

Back on the home turf, stint of weakness in early deals came from the index bellwether -Reliance Industries- which slipped more than 1.50% on reports of slamming arbitration notice on Oil Ministry. Reliance Industries (RIL), India’s biggest gas producer, has initiated an arbitration process against the Petroleum & Natural Gas Ministry owing to the latter's intention to restrict some of the expenditure that can be recouped by the company from the flagging KG-D6 gas fields. However, Oil & Gas major- ONGC- also declining over 0.50% added to the pessimistic milieu.

30 share barometer index- Sensex- on BSE despite offloading over 75 points is managing to trade over the crucial 16k level. In the similar way, 50 share widely followed index on NSE-Nifty-despite knocking over 25 points is trading over 4800 mark. However, the broader indices showcasing perplexed nerves are trading on a mixed note. The overall market breadth on BSE is in the favour of advances which have outnumbered declines in the ratio of 1016:1010, while 94 shares remained unchanged.

The BSE Sensex is currently trading at 16,077.33, down by 89.90 points or 0.56%. The index has touched a high and low of 16,210.37 and 15,995.57 respectively. There were 12 stocks advancing against 18 declining ones on the index.

The broader indices were trading on a mixed note; the BSE Mid cap index was down by 0.01% while, Small cap index gained 0.10%.

HC up by 0.67%, Auto up by 0.26%, FMCG up by 0.24%, CG up by 0.08% were the top gainers in the sectoral indices on the BSE. While, Oil and Gas down by 1.80%, IT down by 0.86%, TECK down by 0.75%, Realty down by 0.56% and CD down by 0.35% was the top losers on the index.

The top gainers on the Sensex were Tata Steel up by 2.05%, HUL up by 1.56%, Cipla up by 1.55%, Bajaj Auto up by 1.23% and BHEL up by 1.16%.

On the flip side, RIL down by 2.31%, Hindalco down by 1.93%, Infosys down by 1.80%, Bharti Airtel down by 1.60% and ONGC down by 1.49% were the top losers on the index.

Meanwhile, the Empowered Group of State Finance Ministers after a meeting has indicated that the Centre's failure to compensate states on Central Sales Tax (CST) among other pending issues would delay the rolling out of indirect tax reforms - Goods and Services Tax (GST). The Group chaired by Bihar deputy CM Sushil Modi expressed its displeasure and said that there is little chance of GST rollout by April 1, 2012, following a discord between the Centre and states over several issues. 'All the states are angry as still we have not received compensation, while Centre continues to deduct CST.'

‘We will meet Finance Minister (Pranab Mukherjee). We will seek time... I appeal to the Union Finance Minister that when a congenial atmosphere is being created for GST, this (CST compensation) should not become a bone of contention between the Centre and states,’ Modi said.

The empowered group also expressed disagreement with the Centre's proposal to include natural gas and LNG in the declared goods list. Barring Tamil Nadu, all states opposed inclusion of the two items in the declared list in a bid to cap the value added tax on these items to 5 per cent. The group said that it would tantamount to encroachment of autonomy of the states hence states want this subject to be left to them to levy. 

The empowered group had also made its stand clear on taxing the Aviation Turbine Fuel last year that it should be out of GST. Goods like cereals, coal and coke, cotton, crude oil, sugar, textiles, jute, iron and steel, tobacco products, oil seeds, pulses, LPG have been declared as goods of special importance or declared goods. States cannot levy more than 4 per cent tax on these items. On natural gas and LNG, many states charge as high as 12 per cent tax.

The S&P CNX Nifty is currently trading at 4,827.50, down by 23.80 points or 0.49%. The index has touched a high and low of 4,864.4 and 4,802.85 respectively. There were 19 stocks advancing against 31 declining one’s on the index.

The top gainers of the Nifty were Ranbaxy up by 2.28%, Tata Steel up by 1.95%, HUL up by 1.74%, Dr Reddy’s Lab up by 1.66% and Bajaj Auto up by 1.16%.

On the other hand, RIL down by 2.31%, Hindalco down by 1.93%, Infosys down by 1.80%, Bharti Airtel down by 1.60% and ONGC down by 1.49% were the major losers on the index.

Most of the Asian equity indices were trading in the green; Shanghai Composite gained 0.56%, Hang Seng added 0.46%, Jakarta Composite spurted 1.15%, KLSE Composite soared 1.57%, Nikkei 225 accumulated 1.41%, Seoul Composite rallied 1.98% and Taiwan Weighted rose 1.25%.

On the flip side, Straits Times shed 0.07% was the lone loser amongst the Asian pack.