Benchmarks trade flat in early deals on Wednesday

Indian equity benchmarks are trading cautiously in early deals near their pre-close level, as traders remained cautious with the International Monetary Fund’s (IMF) World Economic Outlook update, where it has highlighted that India is likely to clock an economic growth rate of 4.6 percent this financial year and the expansion may improve to 5.4 percent in 2014-15. Investors also remained concerned on Urjit Patel committee’s report, which suggested that inflation should be the nominal anchor as far as the policy framework is concerned. The committee has suggested that the RBI should adopt the new CPI (consumer price index) as the measure of the nominal anchor for policy communication and the target for inflation should be set at 4 percent with a band of +/- 2 percent around it.

On the global front, the US markets coming out of a long weekend made a mixed closing on Tuesday and traders seemed reluctant to make any significant moves lacking any major economic data. Asian equity indices too struggled to get traction and were exhibiting mixed trade at this point of time, hampered by expectations of further reductions in the US Federal Reserve's stimulus and ahead of central bank meetings in Japan and Thailand.

Back home, sentiments also remained dampened after foreign institutional investors (FIIs) sold shares worth a net Rs 43.74 crore on January 21, 2014. On the sectoral front, metal witnessed the maximum gain in trade followed by healthcare and power, while FMCG, banking and software remained the top losers on the BSE sectoral space. The broader indices, however, were outperforming benchmarks, while the market breadth on the BSE was positive; there were 800 shares on the gaining side against 586 shares on the losing side while 82 shares remain unchanged.

The BSE Sensex opened at 21251.65; about 0.53 points higher compared to its previous closing of 21251.12, and touched a high and a low of 21268.51 and 21168.43 respectively.

The index is currently trading at 21259.54, up by 8.42 points or 0.04%. There were 16 stocks advancing against 14 declines on the index.

The overall market breadth has made a strong start with 54.50% stocks advancing against 39.92% declines. The broader indices too were trading in green; the BSE Mid cap index up was by 0.30% and Small cap gained 0.24%. 

The top gaining sectoral indices on the BSE were, Metal up by 0.66%, Healthcare up by 0.65%, Power up by 0.31%, Consumer Durables up by 0.29% and Oil & Gas up by 0.17%, while FMCG down by 0.57%, Bankex down by 0.15%, IT down by 0.12% and Realty down by 0.06% were the top losers on the sectoral index.

The top gainers on the Sensex were Tata Steel up by 1.79%, Bharti Airtel up by 1.64%, Hindalco Industries up by 1.20%, Cipla up by 1.02% and Mahindra & Mahindra up by 0.92%. On the flip side, ITC was down by 1.00%, SBI was down by 0.78%, Axis Bank was down by 0.51%, ICICI Bank was down by 0.39% and  Bajaj Auto was down by 0.32% were the top losers on the Sensex.

Meanwhile, in order to check possibility of speculation in the domestic capital markets, the Securities and Exchange Board of India (SEBI) has put in place a stronger monitoring mechanism to restrain the exposure of foreign institutional investors (FIIs) to Interest Rate Futures (IRF) within limits.

The marker regulator also asked the market participants to keep information on daily basis about aggregate gross long positions of FIIs in IRFs, which is a contract between a buyer and a seller agreeing to the future delivery of any interest-bearing asset such as government bonds. Referring to foreign investors’ adherence to prescribed regulatory limits, the SEBI has noted that exposure of overseas entities along with their investments in government securities should be taken into account for monitoring their adherence to prescribed regulatory limits. Presently, FIIs are allowed to investment a maximum of $25 billion in government securities.

Further, the SEBI in its circular stated that stock exchanges of the country should provide information regarding aggregate gross long position in IRF of all FIIs taken together at end of the day to the depositories including NSDL and CDSL and shall also publish the same on their website. Meanwhile, the depositories are also now required to aggregate the gross long position of FIIs in IRF in each stock exchange. As per the SEBI, in case the total of cash and IRF of all FIIs reaches 85 per cent of the permissible limit, the depositories would have to inform Reserve Bank of India (RBI), SEBI and stock exchanges. Once FIIs utilise the maximum exposure limit of 90 per cent of limit, they are not allowed to further increase their long position in IRF. Furthermore, SEBI noted that FIIs violating these norms would attract stringent action.

The CNX Nifty opened at 6,309.05; about 4 point lower as compared to its previous closing of 6,313.80, and has touched a high and a low of 6,315.85 and 6,287.45 respectively. The index is currently trading at 6,312.75, down by 1.05 points or 0.02%. There were 22 stocks advancing against 28 declines on the index.

The top gainers of the Nifty were Tata Steel up by 1.82%, Bharti Airtel up by 1.61%, Lupin up by 1.42%, Hindalco up by 1.15% and Cipla up by 1.14%. On the flip side, Asian Paint down by 1.32%, UltraTech Cement down by 1.16%, ITC down by 1.11%, HCL Tech down by 1.05% and SBI down by 0.79% were the top losers on the index.

The Asian equity indices were trading mixed; KLSE Composite dipped 5.21 points or 0.29% to 1,810.13, Nikkei 225 declined 141.69 points or 0.90% to 15,654.27, Straits Times slipped 1.65 points or 0.05% to 3,132.11 and Seoul Composite was down by 1.90 points or 0.10% to 1,961.99.

On the flip side, Shanghai Composite surged 33.53 points or 1.67% to 2,041.84, Hang Seng rose 17.61 points or 0.08% to 23,050.73, Jakarta Composite added 0.78 points or 0.02% to 4,453.28 and Taiwan Weighted was up by 25.00 points or 0.29% to 8,624.90.