Benchmarks continue to trade in narrow range with negative bias

Indian equity benchmarks remained volatile in a narrow range with negative bias in the afternoon session amid selling witnessed in telecom, FMCG and Auto stocks. Shares of telecom companies were trading lower by around 6% over concerns that possible high bidding prices at the spectrum auction next month after eight companies applied to bid, signaling much stronger competition than expected. However, market losses remained capped amid buying in metal and capital goods. Investors’ sentiments got some support as World Bank stated that Indian economy is likely to grow over 6 percent rate in 2014-15 and increase to 6.6 percent in FY2015-16 and 7.1 percent in FY2016-17 on the back of recovery in global demand and increasing domestic investments. Further, Finance Minister, P. Chidambaram's statement that India’s fiscal deficit will remain with budget target also added to optimistic sentiments. On stock specific movements, Tata Steel, SSLT and BHEL were trading up by over 1.50%, while, Bharti Airtel, ONGC and Tata Motors were trading down by over 1.50% on BSE. Among other stocks, Loveable Lingerie has surged around 5% to Rs 320 after the foreign investors bought an additional nearly 2% stake of the company for Rs 10 crore from open market. DCB Bank rallied nearly 6% to Rs 59.80 on BSE after reporting a strong 33% y-o-y jump in net profit at Rs 36 crore for Q3 FY14 on back of higher interest income.

On global front, Asian shares were trading mixed with Seoul Composite up by 0.31% and Nikkei 225 down by 0.37%. Back home, the NSE Nifty and BSE Sensex were trading up their psychological 6,300 and 21,000 levels respectively. The market breadth on BSE was negative, out of 2,247 stocks traded, 988 stocks advanced, while 1,112 stocks declined on the BSE.

The BSE Sensex is currently trading at 21,266.71 down by 22.78 points or 0.11% after trading in a range of 21,379.29 and 21,236.95. There were17 stocks advancing against only 13 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.08%, while Small cap index up by 0.09%.

The gaining sectoral indices on the BSE were Metals up by 1.49%, Capital Goods up by 0.66%, Power up by 0.44%, Consumer Durables up by 0.33% and Bankex up by 0.14%. While, FMCG down by 0.80%, Auto down by 0.74%, Teck down by 0.51%, Oil and Gas down by 0.18% and Realty down by 0.12% was the only losing index on BSE.  

The top gainers on the Sensex were Tata Steel up by 2.09%, SSLT up by 1.83%, BHEL up by 1.56%, Axis bank up by 1.39% and Coal India up by 1.22%. On the flip side, Bharti Airtel down by 4.34%, ONGC down by 1.60%, Tata Motors down by 1.59%, M&M down by 1.26% and ITC down by 1.10%.

Meanwhile, as per the World Bank’s Global Economic Prospects (GEP) report, Indian economy is likely to grow over 6 percent rate in 2014-15 and increase to 6.6 percent in FY2015-16 and 7.1 percent in FY2016-17 on the back of recovery in global demand and increasing domestic investments. The report noted that during the previous year, India, with large current account and fiscal deficits and weaker growth, was hit hard mainly due to withdrawal of foreign investments, resulting into steep fall in rupee value against the dollar. Back then, rupee had subsequently appreciated because of policy interventions to support foreign exchange markets, capital flows and equity markets and delayed QE tapering. However, World Bank cautioned that a sharp withdrawal of foreign capital in the future could increase risk of corporate debt distress, while recapitalization of public sector banks can put pressure on the Government’s fiscal positions.

Referring to the growth in South Asia, the report highlighted that weaker growth in India, several years of rising inflation and current account deficits have opened up a large negative output gap, which is projected to gradually close on account of the improving economy. The regional growth is expected to strengthen to 5.7 percent in 2014 and about 6.7 percent in 2016, however, growth in South Asia is estimated to remain weak at 4.6 percent in 2013. Further, the World Bank highlighted that the global economy is projected to strengthen this year, as growth will be picking up in developing countries and high-income economies, however, downside risks continue to threaten the global economic recovery. The report further added that the global economic indicators show improvement with the European countries looking out of recession.

Regarding the performance of advanced economies, the World Bank’s report noted that advanced economies are gaining momentum, which will also support the growth in developing countries in the coming future. However, the World Bank expressed the need for developing nations to adopt structural reforms that promote job creation, strengthen financial systems and shore up social safety nets.

The CNX Nifty is currently trading at 6,316.95 down by 3.95 points or 0.06% after trading in a range of 6,346.50 and 6,308.90. There were 31 stocks advancing against 19 declining on the index.

The top gainers of the Nifty were Jindal Steel up by 2.45%, HCL Tech up by 2.39%, Tata Steel up by 2.16%, SSLT up by 1.90% and BHEL up by 1.59%. On the flip side, Bharti Airtel down by 4.39%, Tata Motors down by 1.90%, ONGC down by 1.78%, M&M down by 1.49% and ITC down by 1.31% were the major losers on the index.

The Asian equity indices were trading mixed; Seoul Composite up by 0.31%, Taiwan Weighted up by 0.11%, Hang Seng up by 0.41% and Shanghai Composite up by 0.33%. While, KLSE Composite down by 0.51%, Jakarta Composite down by 0.08%, Nikkei 225 down by 0.37% and Straits Times down by 0.06%.