Feeble global cues drag benchmarks lower in early deals

Extending their southward journey for fifth day in a row, key domestic benchmarks made a gap down opening and are trading with a cut of around a percent, declining below their crucial 6,100 (Nifty) and 20,500 (Sensex) levels amid weak global cues. Sentiments remained dampened after US Federal Reserve announced plans to scale back its bond purchases by another $10 billion to $65 billion a month. All the Asian equity markets were trading in the red at this point of time, with weak data on Chinese manufacturing activity too hurting sentiments to a notable extent.

Back home, sentiments also remained dampened with Reserve Bank Governor Raghuram Rajan saying that inflation is both a monetary and political issue and wanted the political establishment to understand the importance of curbing rising prices. Weakness in Indian rupee against too dampened the investors’ confidence. The rupee was trading at 62.82 per dollar in early deals as compared to previous close of 62.42 per dollar.

Selling was both brutal and wide based as none of sectoral indices on BSE were spared. Banking, fast-moving consumer goods, realty, consumer durables and metal remained the top loser on the BSE sectoral front. Capital goods, healthcare and power too shed significantly. The broader indices too were clobbered out of shape, while the market breadth on the BSE was negative; there were 381 shares on the gaining side against 1,061 shares on the losing side while 41 shares remain unchanged.

The BSE Sensex opened at 20491.74; about 155 points lower compared to its previous closing of 20647.30, and has touched a high and a low of 20501.92 and 20435.96 respectively. The index is currently trading at 20451.04, down by 196.26 points or 0.95%. There were 4 stocks advancing against 26 declines on the index.

The overall market breadth has made a weak start with 25.92% stocks advancing against 71.08% declines. The broader indices were trading in red; the BSE Mid cap and Small cap indices were down by 1.03% and 1.08% respectively. 

The top losing sectoral indices on the BSE were, Bankex down by 1.88%, FMCG down by 1.86%, Realty down by 1.60%, Consumer Durables down by 1.31% and Metal down by 1.30%, while there were no gainers on the sectoral front.

The top gainers on the Sensex were Bharti Airtel up by 2.07%, Tata Motors up by 0.90%, Gail India up by 0.78%and ONGC up by 0.11%. On the flip side, Hindalco was down by 2.37%, ICICI Bank was down by 2.21%, Tata Steel was down by 1.91%, Axis Bank was down by 1.72% and Tata Power was down by 1.71% were the top losers on the Sensex.

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 opened at 6,067.00; about 53 points lower as compared to its previous closing of 6,120.25, and has touched a high and a low of 6,072.95 and 6,053.70 respectively.

The index is currently trading at 6,057.25, down by 63.00 points or 1.03 %. There were 5 stocks advancing against 45 declines on the index.

The top gainers of the Nifty were Bharti Airtel up by 2.02%, Tata Motors up by 0.90%, Gail up by 0.62%, HCL Tech up by 0.40% and ONGC up by 0.04%. On the flip side, PNB down by 2.82%, JP Associate down by 2.56%, Bank of Baroda down by 2.48%, Hindalco down by 2.33% and BPCL down by 2.31% were the top losers on the index.

The Asian equity indices were trading in red; Shanghai Composite dropped 9.84 points or 0.48% to 2,040.08, Hang Seng shed 106.19 points or 0.48% to 22,035.42, Jakarta Composite contracted 38.99 points or 0.88% to 4,378.36, KLSE Composite slipped 0.32 points or 0.02% to 1,788.91, Nikkei 225 declined 386.58 points or 2.51% to 14,997.33 and Straits Times was down by 27.90 points or 0.92% to 3,020.03.

Markets in South Korea and Taiwan are closed for national holidays.