Benchmarks pare gains; trade continues in green

Indian equities pared gains but continued to trade in green in the late afternoon session on taking cues from Asian counterparts. Investors have taken a cautious approach and were reluctant to take any fresh position on expectation that RBI would hike rates by at-least 25 bps in policy review tomorrow. Traders were seen piling positions in Health Care, TECK and FMCG stocks, while selling was witnessed in Bankex, PSU and Power sector stocks. In scrip specific development, Mahindra & Mahindra Financial Services, a non-banking finance company, was trading firm after the company’s inclusion in National Stock Exchange’s derivatives market. HDFC Bank was trading in red following the restriction placed by the RBI on fresh overseas investors’ buying in the stock as their holding has reached the maximum limit.

On the global front, the Asian markets were trading in green barring Hang Seng and Shanghai Composite, while the European markets were trading on pessimistic note. Back home, the NSE Nifty and BSE Sensex were trading above their psychological 6,150 and 20,600 levels respectively. The market breadth on BSE was positive in the ratio of 1170:1041 while 177 scrips remained unchanged.

The BSE Sensex is currently trading at 20675.63, up by 16.11 points or 0.08% after trading in a range of 20,784.03 and 20667.15. There were 19 stocks advancing against 11 stocks declining on the index.

The broader indices too trimmed gains; with BSE Mid cap and Small cap indices were trading up by 0.32% and 0.29% respectively.

The gaining sectoral indices on the BSE were Health Care up by 1.55%, TECK up by 0.94%, FMCG up by 0.68%, IT up by 0.62%, and Capital Goods up by 0.44%. While, Bankex was down by 0.85%, PSU down by 0.39%, Power down .0.24% and Realty down by 0.06% were the only losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 4.54%, Cipla up by 2.76%, Sun Pharma up by 2.15%, TCS up by 1.99% and SSLT up 1.52%. On the flip side, HDFC Bank down by 3.54%, Coal India down by 2.79%, HDFC down by 1.48%, NTPC down by 1.41% and Bajaj Auto down by 0.91%.

Meanwhile, in order to provide boost to the country’s manufacturing sector, the committee of manufacturing, chaired by Prime Minister Manmohan Singh, is likely to consider tax incentives and subsidies soon for making the manufacturing sector more competitive. The committee is likely to focus on manufacturing, especially in labour-incentive sectors, which leads to job creation in the country.

Furthermore, the committee is expected to consider measures needed to substitute imports in sectors such as telecom equipment and shipbuilding. Prime Minister Manmohan Singh had already expressed the need to develop a strong domestic manufacturing base in electronics and telecommunications in order to mitigate burden of growing imports for these sectors. India is expected to import electronics products worth $300 billion, which will be more than the value of the country's imports of petroleum products.

The domestic shipbuilding industry, which is even more labour intensive and skill intensive, is import dependent. Meanwhile, the government is of the view that the country is well placed to supply cheap skilled labour that can compete with the best in the world. Present market size of the Indian shipbuilding industry is estimated to be worth $92 billion. Indian manufacturing sector has grown by only 1 percent in Q2 FY14 and industry growth in the first eight months of 2013-14 was recorded at zero percent, reflecting the need of more measures for government to recover the domestic manufacturing sector. Further, sluggish growth in manufacturing and high imports has become main cause for widening current account deficit (CAD) of the country.

The CNX Nifty is currently trading at 6,157.40, up by 2.70 points or 0.04% after trading in a range of 6,190.55 and 6,156.35. There were 29 stocks advancing against 21 declining ones on the index.

The top gainers of the Nifty were Bharti Airtel up by 4.68%, Ranbaxy up by 4.05%, Cipla up by 3.21%, Sun Pharma up by 2.32% and JP Associates up by 2.05%. On the flip side, HDFC Bank down by 3.82%, Coal India down by 2.96%, NTPC down by 1.59%, HDFC down by 1.50% and Power Grid down by 0.96% were the major losers on the index.

The Asian equity indices were trading in green barring Hang Seng down by 0.20% and Shanghai Composite down by 0.45% while Nikkei 225 up by 0.83%, Taiwan Weighted up by 0.47%, KLSE Composite up by 0.53%,  Seoul Composite up by 0.23%, Straits Times up by 0.44% and Jakarta Composite up by 1.49%.

The European markets were trading in red; France’s CAC 40 was down 0.92%, Germany’s DAX lost 0.47% and UK’s FTSE 100 inched lower by 0.60%.