Benchmarks end lackluster session in red

Indian equity markets snapped the lackluster day of trade, slightly in the red with frontline gauges ending below their crucial 21,150 (Sensex) and 6,300 (Nifty) levels in absence of any major trigger. Markets, after a positive opening, entered into red terrain as traders opted to unwind their position approaching the end of the turbulent year. Afterwards, both the bourses traded in tight band throughout the session as investors remained on sidelines ahead of April-November fiscal deficit reading, due on December 31, and the manufacturing Purchasing Managers’ Index (PMI) for December, due on January 2, which will help them gain insights into the extent of the economic slowdown.

However, losses remained capped with the CII Business Confidence Index (BCI) rising sharply to 54.9 during the October-December period of 2013-14 fiscal, from 45.7 in the previous quarter. Some support also came in after Reserve Bank of India (RBI), painting an optimistic picture on the external front, underscored that the country was ready for the US Federal Reserve’s tapering, while pegging the current account deficit at below 3% for this fiscal in its eighth Financial Stability Report.

Global cues remained mixed with most of the European markets opening in the red terrain, consolidating in holiday-thinned trade after two weeks of strong gains that have pulled markets to five-year highs. However, Asian markets shut shop mostly in the green and Japanese market ended higher by over half a percent as the yen touched a five-year low versus the dollar.

Back home, public sector oil marketing companies (OMCs) like BPCL, HPCL and IOC remained under pressure on talks of increasing the subsidized cylinder cap for households. Selling in banking counter too dampened the sentiments after RBI in its ‘Financial Stability Report-December 2013’, highlighted that risks to the banking sector have increased during the past half-year and that all the risks dimensions captured in the banking stability indicator show increase in vulnerabilities in the banking sector. Additionally, telecom stocks witnessed mixed trend after the government delayed the planned mobile phone spectrum auction in the 900 and 1800 megahertz frequency bands by 10 days from the original schedule, it will now start on February 3.

On the flip side, Rail stocks, viz Kalindee Rail, NELCO, Titagarh Wagaon, Hind Rectifiers Texmaco Rail, BEML etc. remained on buyers’ radar on reports that the government is likely to allow foreign direct investment in railways early next month. The original proposal had mooted 100% FDI in the railways, but this cap could be lowered to 74% in some areas. Also, foreign money would be allowed only in construction and maintenance of railway projects, and not in operations.

The NSE’s 50-share broadly followed index Nifty slipped by over twenty points to end below its psychological 6,300 level, while Bombay Stock Exchange’s sensitive Index -- Sensex declined by over fifty points to end below the psychological 21,150 mark.

Broader markets too struggled to get some traction and ended the session mixed. Moreover, the market breadth remained in favour of advances, as there were 1,368 shares on the gaining side against 1,145 shares on the losing side, while 152 shares remained unchanged.

Finally, the BSE Sensex declined by 50.57 points or 0.24%, to settle at 21143.01, while the CNX Nifty lost 22.70 points or 0.36% to settle at 6,291.10.

The BSE Sensex touched a high and a low of 21304.70 and 21089.21, respectively. The BSE Mid cap index was down by 0.10%, while the Small cap index gained 0.22%.

The top gainers on the Sensex were BHEL up 3.52%, Coal India up 2.30%, HDFC up 0.99%, Tata Motors up 0.92%, and RIL up 0.76%, on the flip side Infosys down 1.70%, Bajaj Auto down 1.65%, Mahindra & Mahindra down 1.56%, L&T down 1.24%, and ICICI Bank down by 1.13%,were the top losers on the index.

On the BSE Sectoral front Metal up by 0.68%, FMCG up by 0.33%, and Oil & Gas up by 0.15%, were the only gainers, while Realty down by 1.59%, IT down by 0.85%, Bankex down by 0.67%,Teck down by 0.63%, and Auto down by 0.45%,were the top losers on the sectoral front.

Meanwhile, in order to deal with insider trading menace, the Securities and Exchange Board of India (SEBI) will soon put in place a new set of norms, which would clearly demarcate mistakes from serious violations committed by top corporate executives and other connected entities while trading in shares of listed companies. New regulations would replace nearly two-decade old insider trading norms currently in operation. SEBI chairman U K Sinha stated that new norms will be finalized on the basis of an expert panel's suggestions and public comments on this issue, which would strengthen the system for controlling and preventing insider trading, besides providing more clarity to the company executives, promoters and others on their trading activities.

Further, new guidelines for insider trading are likely to put in place stricter penalties for those found to be indulging in insider trading activities. While, the draft has already proposed that public servants, regulators and persons holding statutory positions should be brought under its purview if they are handling share price-sensitive information about listed companies. Moreover, expert panel has also suggested to put in place a new concept for providing a pre-decided or pre-scheduled trading calendar, which is already functioning in many advanced markets.

U K Sinha further added that it is difficult to stop trading by company’s management such as CEO or CFO, who have some exclusive information around the year. Presently, SEBI has a closing window for trading by such persons. Therefore, in order to check insider trading, SEBI has also planned to introduce a pre-scheduled trading pattern for such persons. Further, proposed regulations would put in place a very clear definition for connected persons and thereby prohibit top corporate executives from trading having access to unpublished price sensitive information (UPSI).

The CNX Nifty touched a high and low of 6,344.05 and 6,273.15 respectively.

The top gainers on the Nifty were BHEL up by 4.13%, Coal India up by 2.72%, HDFC up by 1.22%, Reliance Industries up by 0.76%, and Hindustan Unilever up by 0.75%, On the other hand, DLF down by 3.38%, ACC down by 2.56%, Ranbaxy Laboratories down by 2.42%, Jaiprakash Associates down by 2.32%, and UltraTech Cement down by 2.23%, were the top losers.

The European markets were trading in red, France's CAC 40 was down by 0.11%, Germany's DAX was down by 0.21%, and United Kingdom's FTSE 100 was down by 0.14%.

The Asian markets, barring Shanghai Composite concluded Monday’s trade in green. A weaker Japanese currency helped to propel stock prices higher, boosting profits in Japan’s export-oriented corporate sector. Policies that have spurred yen weakness are part of Prime Minister Shinzo Abe’s plan to revive the country’s long-stagnant economy. Bank Indonesia sees the country’s foreign debt level, public and private, as still being within safe levels. South Korean Industrial Production fell to a seasonally adjusted annual rate of -1.3%, from 3.3% in the preceding month whose figure was revised up from 3.0%.

In Hong Kong, mortgage loans drawn down in November decreased 0.4% to $11.2 billion compared with October, the Monetary Authority stated. Mortgage loan approvals decreased 2.1% to $14.6 billion. Mortgage loans financing primary market transactions decreased 2.3% to $3.5 billion, and those financing secondary market transactions decreased 6.2% to $8 billion. The number of mortgage applications in November decreased 11.9% month-on-month to 7,567. Hong Kong Trade Balance fell to a seasonally adjusted -44.6B, from -38.5B in the preceding month.