Benchmarks trade slightly lower in early deals

Indian equity benchmarks, after witnessing jubilation in previous session, are trading slightly in the red in early deals on Tuesday as investors booked most of their previous session’s profit amid weak global cues. The US markets went for a sharp correction overnight, reacting to the disappointing non- farm payroll data, traders were also worried about the ensuing earnings season. Moreover, most of the Asian equity indices were trading in the red at this point of time led by Japanese Nikkei, which tumbled over two percent as the yen hovered near a four-week high against the dollar after last week's surprisingly weak jobs report raised concerns about the U.S. growth outlook.

Back home, losses remained capped as some support came in with international credit rating agency, Fitch Ratings saying that Government efforts to achieve the fiscal deficit target of 4.8 percent of the GDP in 2013-14, are supportive for the country’s credit rating. Moreover, sentiments also got some support after the Consumer Price Inflation for December fell sharply to 9.87% compared with 11.16% in November on account of decline in vegetable prices. Food inflation decreased to 12.16% compared with 14.72 in November.

On the sectoral front, capital goods witnessed the maximum gain in trade followed by FMCG and banking, while software, technology and auto remained the top losers on the BSE sectoral space. The broader indices, however, were trading with some traction, while the market breadth on the BSE was positive; there were 823 shares on the gaining side against 627 shares on the losing side while 67 shares remain unchanged.

The BSE Sensex opened at 21115.00; about 19 point lower compared to its previous closing of 21134.21, and has touched a high and a low of 21154.76 and 21080.42 respectively. The index is currently trading at 21106.36, down by 27.85 points or 0.13%. There were 14 stocks advancing against 16 declines on the index.

The overall market breadth has made a strong start with 54.04% stocks advancing against 41.13% declines. The broader indices were trading in green; the BSE Mid cap and Small cap indices up by 0.17% and 0.32% respectively. 

The top gaining sectoral indices on the BSE were, Capital Goods up by 1.04%, FMCG up by 0.34%, Bankex up by 0.20%, Power up by 0.20% and Metal up by 0.19%, while IT down by 0.90%, Teck down by 0.69%, Auto down by 0.41%, Oil & Gas down by 0.23% and Realty down by 0.21% were the top losers on the sectoral index. 

The top gainers on the Sensex were L&T up by 1.39%, Coal India up by 1.15%, Hindalco Industries up by 0.77%, HDFC up by 0.75% and ITC up by 0.66%. On the flip side, TCS was down by 1.59%, ONGC was down by 1.54%, Tata Motors was down by 1.24%, Wipro was down by 1.09% and Bajaj Auto was down by 1.07% were the top losers on the Sensex.

Meanwhile, in a move to attract foreign investments through Foreign Portfolio Investors (FPI) framework rather than participatory notes (P-notes) route, the Securities and Exchange Board of India (SEBI) has tightened the rules for issue of P-notes, which are currently used by foreign investors to invest in the Indian markets without registering with SEBI.

Bearing in mind that Indian regulators including SEBI do not have direct jurisdiction over foreign instruments such as P-notes, the market regulator is making foreign investors to invest directly into India by registering as FPIs. Although, SEBI had earlier barred Category-III FPIs from issuing P-notes, it has now barred certain unregulated entities under Category-II from issuing P-notes. So far, unregulated entities could issue P-notes if their investment manager was regulated. However, SEBI has allowed only regulated entities to issue/subscribe to P-notes, ensuring that such entities can be easily reached through foreign regulators. Until November 2013, the notional value of P-notes on equity, debt and derivatives stood at Rs 1.82 lakh crore, or 13 percent of assets under custody of foreign institutional investors.

SEBI has divided FPIs into three categories based on their risk profile. The Category I FPIs include lowest risk entities such as foreign governments and government related foreign investors. Category II FPIs include appropriately regulated broad based funds and regulated entities, university related endowments and pension funds etc. Meanwhile, Category III FPIs include all others not eligible under the first two categories.

The CNX Nifty opened at 6,260.25; about 12 points lower as compared to its previous closing of 6,272.75, and has touched a high and a low of 6,280.35 and 6,258.85 respectively. The index is currently trading at 6,268.70, down by 4.05 points or 0.06%. There were 27 stocks advancing against 23 declines on the index.

The top gainers of the Nifty were L&T up by 1.28%, Cairn up by 1.20%, Coal India up by 1.00%, IDFC up by 0.85% and JP Associate up by 0.84%. On the flip side, ONGC down by 1.83%, TCS down by 1.61%, Ranbaxy down by 1.60%, Tata Motors down by 1.28% and HCL Tech down by 1.27% were the major losers on the index.

Most of the Asian equity indices were trading in red; Hang Seng declined 37.88 points or 0.17% to 22,850.88, Nikkei 225 tumbled 355.48 points or 2.23% to 15,556.58, Straits Times shed 12.49 points or 0.40% to 3,123.00, Seoul Composite decreased 1.77 points or 0.09% to 1,947.15 and Taiwan Weighted was down by 14.67 points or 0.17% to 8,551.53.

On the flip side, Shanghai Composite was up by 11.38 points or 0.57% to 2,020.94.