Benchmarks trim gains; trade continues in green

Indian equities pared gains but continued to trade in green in the late afternoon session taking cues from global counterparts. Investors were seen piling up positions in fundamentally strong stocks available at cheaper valuation after last three sessions of hammering. Investors paid no attention towards Reserve Bank of India (RBI) forecast, which stated that Indian economic growth will fall below 5 percent in 2013-14 as the prospects of a pick-up in real GDP growth in the second half of 2013-14 have been dampened by negative growth witnessed in industrial production over two consecutive months. Traders were seen piling positions in Capital Goods, HealthCare and IT stocks while selling was witnessed in Metal, FMCG and Bankex sector stocks. Hectic activity was witnessed in steel stocks after government imposed a five percent export duty on iron pellets, a critical raw material for the steel industry. In scrip specific development, Maruti Suzuki India was trading firm as most global brokerages have maintained their ‘Buy’ recommendation on the stock even as the parent firm company decided to set up a 100% subsidiary for the new Gujarat unit. The market may remain volatile today as traders may roll over positions in the Futures & Options (F&O) segment from the near month i.e. January 2014 series to next month i.e. February 2014 series. The near month January 2014 derivatives contract expires on Thursday i.e. January 30, 2014.

On the global front, the Asian markets barring Straits Times were trading in green, while the European markets were too trading on optimistic note. Back home, the NSE Nifty and BSE Sensex were trading above their psychological 6,100 and 20,700 levels respectively. The market breadth on BSE was positive in the ratio of 1260:1123 while 153 scrips remained unchanged.

The BSE Sensex is currently trading at 20733.08, up by 49.57 points or 0.24% after trading in a range of 20,828.68 and 20,710.66. There were 15 stocks advancing against 15 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.57%, while Small cap index up by 0.38%.

The gaining sectoral indices on the BSE were Capital Goods up by 1.64%, HealthCare up by 1.35%, IT up by 0.87%, Auto up by 0.87% and TECK up by 0.78%. On the other hand, Metal down by 0.92% and FMCG down by 0.07% were the losing indices on BSE.   

The top gainers on the Sensex were Maruti Suzuki up by 7.87%, BHEL up by 3.80%, Hero MotoCorp up by 2.33%, Sun Pharma up by 2.24% and L&T up by 1.75%. On the flip side, SSLT down by 2.08%, Tata Steel down by 1.72%, Hindalco Industries down by 1.62%, Bharti Airtel down by 1.29% and SBI down by 1.15%. 

Meanwhile, Finance Minister P Chidambaram has asserted that the restrictions on gold imports will be reviewed by March end. Chidambaram further expressed confidence that the government will be able to revisit some of the restrictions on gold import by the end of this year after assuring firm grip on the current account deficit (CAD). There has been about 1-3 tonnes of gold smuggled into India every month following the restrictions imposed on gold shipment last year, he added.

By adding further, Finance Minister emphasized that restraining imports of gold could not be the long-term policy to control the CAD adding that India’s long-term goal is to increase exports which will earn dollars and strengthen the country to pay for imports. Recently, the National Advisory Council (NAC) chairperson Sonia Gandhi has also asked the government to take steps for reviving the growth of gems and gewellary industry. The industry players, in a letter to NAC chairperson, had strongly pitched for four policy measures, which included lifting the 80/20 rule, reducing import duty to 2 per cent, revoking restrictions on gold and mandating banks to restrict imports in 2013-14 to 80 per cent of their imports in 2012.

High gold import has become one of the major contributors to high CAD of the country. In order to restrain high gold imports, the RBI introduced 80/20 rule under which 20% of all gold imports by importers has to be re-exported. The rule has made import of gold difficult, resulting in lower imports, and consequently, a lower CAD. The government has also raised the imports duty on gold to 10%. The steps taken by the Reserve Bank and the government have resulted in a sharp decline in gold and silver imports as during the first nine months (April-December) of the current year, gold and silver imports declined by 30.3% to $27.3 billion from $39.2 billion recorded in same period of last year. India’s gold import is expected to plunge between 800-850 tonnes in current fiscal from 950 tonnes in FY13.  

The CNX Nifty is currently trading at 6,148.05, up by 21.80 points or 0.36% after trading in a range of 6,170.45 and 6,139.45. There were 29 stocks advancing against 21 declining on the index.

The top gainers of the Nifty were Maruti up by 7.66%, BPCL up by 4.56%, BHEL up by 3.80%, Ranbaxy up by 3.05% and Sun Pharma up by 2.50%. On the flip side, SSLT down by 2.05%, Hindalco down by 1.76%, Tata Steel down by 1.73%, IndusInd Bank down by 1.55% and Jindal Steel down by 1.36% were the major losers on the index.

The Asian equity indices were trading in green; Seoul Composite up by 1.26%, Hang Seng up by 0.82%, KLSE Composite up by 0.61%, Jakarta Composite up by 1.91%, Shanghai Composite up by 0.56% and Nikkei 225 up by 2.70%.

On the other hand, Straits Times down by 0.55% was the lone loser amidst Asian pack. Taiwan Weighted remained closed for the trade today.

The European markets were trading in green; France’s CAC 40 was up 1.03%, Germany’s DAX added 1.33% and UK’s FTSE 100 gained 1.07%.