Weak global cues drag benchmarks lower in early deals

Pressurized by weak global cues, Indian equity benchmarks are trading slightly in the red in early morning deals on Monday. The US markets mostly made a lower closing in last session on some weak earnings and economic data. Moreover, most of the Asian equity indices were trading in the negative terrain at this point of time as Chinese gross domestic product (GDP) expanded 7.7% last year, its slowest rate in 14 years at a time of concern about the strength of the world’s number two economy. Growth for the December quarter also came in at 7.7%, slowing from 7.8% in the previous three months.

Back home, sentiments remained somber with public sector oil marketing companies edging lower in early deals after Oil Minister M Veerappa Moily has announced that the quota of subsidised cooking cylinders will be hiked to 12 from 9 per household. Increasing the limit to 12 would result in an additional fuel subsidy burden of Rs 3,300 crore-5,800 crore for the government. Sentiments also remained dampened after Indian rupee was trading lower on global dollar strength, with the pair at 61.58 per dollar versus its Friday’s close of 61.54/55 per dollar. However, losses remained capped on report that FII’s remained on their buying spree and increased their stake in major companies in the December quarter.

On the sectoral front, software witnessed the maximum gain in trade followed by technology and auto, while oil and gas, realty and fast moving consumer goods remained the top losers on the BSE sectoral space. The broader indices, however, outperforming benchmarks, while the market breadth on the BSE was positive; there were 853 shares on the gaining side against 635 shares on the losing side while 115 shares remain unchanged.

The BSE Sensex opened at 21083.53; 20 points higher compared to its previous closing of 21063.62, and has touched a high and a low of 21093.00 and 21001.13 respectively. The index is currently trading at 21042.51, down by 21.11 points or 0.10%. There were 16 stocks advancing against 13 declines and one stock remains unchanged on the index.

The overall market breadth has made a strong start with 53.80% stocks advancing against 39.48% declines. The broader indices were trading in green; the BSE Mid cap up by 0.30% and Small cap indices trading up by 0.48%.

The top gaining sectoral indices on the BSE were, IT up by 0.60%, Teck up by 0.53%, Auto up by 0.44%, Power up by 0.27% and Bankex up by 0.18%, while Oil & Gas down by 0.66%, Realty down by 0.27%, FMCG down by 0.25%, Metal down by 0.23% and Capital Goods down by 0.15% were the top losers on the sectoral index. 

The top gainers on the Sensex were Wipro up by 2.17%, Hindalco Industries up by 1.21%, Tata Motors up by 0.77%, TCS up by 0.60% and BHEL up by 0.55%. On the flip side, RIL was down by 1.30%, Axis Bank was down by 1.08%, Tata Power was down by 0.96%, Tata Steel was down by 0.914% and SSLT was down by 0.90% were the top losers on the Sensex.

Meanwhile, concerned over acute liquidity crunch faced by the Indian fertiliser sector, The Fertiliser Ministry has sought an additional subsidy of Rs 20,000 crore. Non-allocation of subsidy fund to fertilizer industry on time has left it with no money to pay subsidy bills for the third and fourth quarters in the current financial year.

So far this fiscal, the government has allocated Rs 70,586 crore funds to Department of Fertiliser (DoF) as against the total demand of Rs 1,05,497 crore for the 2013-14 fiscal. Commodity wise, a subsidy of Rs 41,158.85 crore was allocated for urea and Rs 29,426.88 crore for P&K fertilisers. The DoF has been able to pay subsidy dues till May to fertiliser firms manufacturing urea locally, while for non-urea fertilizers, it can pay subsidy only till this month.

Meanwhile, in order to help fertiliser companies tide over the cash crunch, The Finance Ministry has approved a special banking arrangement of Rs 9,000 crore. Earlier in September, the Finance ministry had agreed to pay only Rs 5,500 crore subsidy under a special banking arrangement (SBA) as against Rs 12,000 crore sought by the Department of Fertilisers (DoF).

Backlog of Rs 32,000 crore for the year 2012-13 has to be paid from this year's allocations. The government has agreed to bear interest of 8 per cent per annum with 2.7 per cent interest to be borne by the industry. For this repayment, Finance Ministry provided a cash outgo of Rs 2,000 crore as additional subsidy in the second supplementary demand for grants approved in December. 

The CNX Nifty opened at 6,261.75; about 0.10 points higher as compared to its previous closing of 6,261.65, and has touched a high and a low of 6,271.70 and 6,243.35 respectively. The index is currently trading at 6,256.65, down by 5.00 points or 0.08%. There were 22 stocks advancing against 28 declines on the index.

The top gainers of the Nifty were HCL Tech up by 1.91%, Wipro up by 1.59%, Hindalco up by 1.26%, BHEL up by 1.11% and HDFC Bank up by 1.04%. On the flip side, BPCL down by 1.72%, Reliance down by 1.37%, UltraTech Cement down by 1.29%, NMDC down by 1.20% and Axis Bank down by 1.12% were the major losers on the index.

Most of the Asian equity indices were trading in red; Shanghai Composite declined 8.48 points or 0.42% to 1,996.47, Hang Seng decreased 118.59 points or 0.51% to 23,014.76, KLSE Composite dipped 4.09 points or 0.23% to 1,808.92, Nikkei 225 shed 99.17 points or 0.63% to 15,635.29 and Straits Times was down by 10.80 points or 0.34% to 3,136.53.

On the flip side, Jakarta Composite rose 16.28 points or 0.37% to 4,428.51, Seoul Composite increased 5.39 points or 0.28% to 1,949.87 and Taiwan Weighted was up by 27.56 points or 0.32% to 8,623.56.