Benchmarks pare losses; trade continues in red

Indian equities trimmed losses but have continued to trade weak in the late afternoon session on account of buying at lower levels. The sentiments were on pessimistic mood despite Moody’s statement that India’s rating downgrade is not on the cards. Moody's has given India an investment grade rating of Baa3 with a stable outlook. Traders were seen piling positions in Metal, Realty and PSU stocks while selling was witnessed in FMCG, Auto and Health Care sector stocks. In scrip specific development, shares of telecom companies such as Bharti Airtel, Idea Cellular and Reliance Communications were trading weak on concerns over the possibility of high bidding prices at the spectrum auction, slated for next month, after eight companies submitted applications, signaling a stronger-than-expected competition. HCL Technologies was trading firm after the company reported a 58.4 percent rise in consolidated net profit for the second quarter ended December 31, 2013.

On the global front, the Asian markets were trading mixed, while the European markets were too trading on a mixed note. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 6,350 and 21,300 levels respectively. The market breadth on BSE was negative in the ratio of 1049:1454 while 170 scrips remained unchanged.

The BSE Sensex is currently trading at 21255.56 down by 33.93 points or 0.16% after trading in a range of 21379.29 and 21199.65. Gainers and losers were unevenly distributed with 15 stocks trading in green, while 14 trading in red and 1 stock remained unchanged on the index.

The broader indices too were marginally in red; the BSE Mid cap index was down by 0.01%, while Small cap index was lower by 0.14%.

The gaining sectoral indices on the BSE were Metal up by 1.76%, Realty up 0.57%, PSU up 0.41%, Capital Goods up by 0.32% and IT up by 0.30%. On the other hand, top losers included FMCG down by 0.90%, Auto down by 0.84%, Health Care down by 0.42%, TECK index down by 0.27% and Bankex down by 0.14%.

The top gainers on the Sensex were Coal India up by 2.32%, BHEL up by 2.11%, Tata Steel up by 1.92%, Hindalco Industries up by 1.53% and SSLT up by 1.34%. On the flip side, Bharti Airtel down by 3.86%, Tata Motors down by 2.06%, Sun Pharma down by 1.49%, ONGC down by 1.24% and Mahindra & Mahindra down by 1.10% were the major losers.

Meanwhile, in order to secure Indian banks from the impact of unhedged foreign currency exposure of corporate, the Reserve Bank of India (RBI) has asked the domestic lenders to calculate the incremental provisioning for them to entities with unhedged exposure at least once in a quarter. Meanwhile, the calculation should be done on monthly basis during periods of high US Dollar-INR volatility.

Highlighting that unhedged foreign currency exposures of the entities has become an area of concern not only for an individual entity but also for the entire financial system, the central bank has noted that extent of corporates’ unhedged foreign currency exposures continues to be significant and is increasing the probability of default in times of high currency volatility. Conversely, Reserve Bank also suggested the entities to hedge foreign currency exposure as unhedged exposure can lead to significant losses for them due to exchange rate movements. Corporates’ losses reduce their capacity to service the loans taken from the banking system and thereby affect the health of the banking system.

However, the RBI had earlier also issued norms suggesting banks to closely monitor the unhedged foreign currency exposures of their borrowing clients and also factor this risk into the pricing.

The CNX Nifty is currently trading at 6,317.40, down by 3.50 points or 0.06% after trading in a range of 6,346.50 and 6,299.85. There were 29 stocks advancing against 20 declining ones while 1 stock remained unchanged on the index.

The top gainers of the Nifty were HCL Tech up by 3.55%, NMDC up by 2.66%, Ultratech Cement up by 2.45%, BHEL up by 2.40% and Coal India was up by 2.20%. On the flip side, Bharti Airtel down by 3.79%, Tata Motors down by 2.36%, Sun Pharma down by 1.62%, ONGC down by 1.47% and JP Associates down by 1.35% were the major losers on the index.

The Asian equity indices were showing mixed trend; Hang Seng was up by 0.37%, Shanghai Composite gained 0.02%, Seoul Composite was up by 0.21% and Taiwan Weighted gained 0.11%. On the flip side, Jakarta Composite was down by 0.55%, Nikkei 225 lost 0.39%, KLSE Composite dropped 0.49% and Straits Times declined by 0.16%.

The European markets were trading on mixed note; France’s CAC 40 was down 0.33%, Germany’s DAX lost 0.11% and UK’s FTSE 100 gained 0.01%.