Benchmarks trade lower in early deals on Wednesday

Indian equity benchmarks are trading lower with a cut of over half a percent, breaching their crucial 20,100 (Sensex) and 6,000 (Nifty) levels amid lingering worries about the outlook for the global economy on the back of recent weak data from the U.S. and China. Sentiments also remained dampened on report that foreign institutional investors (FIIs) sold shares worth a net Rs 1234.02 crore on February 4, 2014, as per provisional data from the stock exchanges. However, losses remained capped as some support came in from Reserve Bank of India’s Governor Raghuram Rajan’s statement that the country is better prepared for 'any eventuality' in the economy now than it was six months ago.

Global cues remained supportive with US markets ending slightly higher mainly on the back of bargain buying but were unable to offset all the sell-off seen in the previous session due to report of drop in new orders for manufactured goods in the month of December. Asian markets too were trading mostly higher at this point of time and Japanese market was showing good momentum on getting some good earnings announcements.

Back home, stocks related to sugar space like, Shree Renuka Sugars, Bajaj Hindusthan, Balrampur Chini, Triveni Engineering etc. edged lower, as the Cabinet Committee on Economic Affairs (CCEA) deferred a decision on fixing subsidy for exports of raw sugar, amid differences between food and agriculture ministries. On the sectoral front, software and technology witnessed the maximum gain in trade, while fast moving consumer goods, oil and gas and power 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 812 shares on the gaining side against 524 shares on the losing side while 79 shares remain unchanged.

The BSE Sensex opened at 20241.12; about 29 points higher compared to its previous closing of 20211.93, and touched a high and a low of 20254.82 and 20083.98 respectively.  The index is currently trading at 20098.59, down by 113.34 points or 0.56%. There were 7 stocks advancing against 23 declines on the index.

The overall market breadth has made a strong start with 57.39% stocks advancing against 37.03% declines. The broader indices were trading in green; the BSE Mid cap up by 0.10% and Small cap indices trading up by 0.43%.

The top gaining sectoral indices on the BSE were, IT up by 0.28% and Teck up by 0.04%, while FMCG down by 1.16%, Oil & Gas down by 0.90%, Power down by 0.72%, Bankex down by 0.59% and PSU down by 0.53% were the top losers on the sectoral index. 

The top gainers on the Sensex were Tata Steel up by 1.25%, Wipro up by 0.88%, Mahindra & Mahindra up by 0.55%, Sun Pharma up by 0.37% and TCS up by 0.27%. On the flip side, NTPC  was down by 2.15%, BHEL was down by 1.87%, ITC was down by 1.66%, Tata Motors was down by 1.39% and Hindustan Unilever was down by 1.38% were the top losers on the Sensex.

Meanwhile, Finance Minister P Chidambaram has indicated that the government might make minor adjustments in excise duties and service tax rates in the vote-on-account (interim budget) to be presented in Parliament on February 17. The vote-on-account is not a full-fledged Budget and no major changes by way of amendments could be made to it.

By adding further, Chidambaram added that changes required in the excise rates or service tax rates will be made without an amendment. The prevailing economic slowdown may prompt the government to experiment with indirect tax cuts in the hope that resultant savings could boost the margins of companies.

It is expected that government can cut excise and service tax rates from the current 12% to 10% proposed earlier in order to provide some impetus to industrial growth. However, during the first nine months of 2013-14, Indirect tax collection grew just 6.2% to Rs 3,55,003 crore as compared to the year earlier. The government had projected a 20% growth in indirect taxes this fiscal to Rs 5.65 lakh crore. Domestic industries also expect a five-year extension of the excise duty exemption given to the industry in states such as Himachal Pradesh and J&K that expires in May 2014.

The CNX Nifty opened at 6,004.25; about 4 points higher as compared to its previous closing of 6,000.90, and has touched a high and a low of 6,012.85 and 5,964.60 respectively. The index is currently trading at 5,965.30, down by 35.60 points or 0.59%. There were 10 stocks advancing against 39 declines and one stock remains unchanged on the index.

The top gainers of the Nifty were Tata Steel up by 1.17%, Wipro up by 0.85%, M&M up by 0.66%, Sun Pharma up by 0.50% and TCS up by 0.44%. On the flip side, NTPC down by 2.07%, BHEL down by 1.87%, ITC down by 1.69%, Grasim down by 1.47% and Hindustan Unilever down by 1.45% were the major losers on the index.

Most of the Asian equity indices were trading in green; Jakarta Composite rose 16.95 points or 0.39% to 4,369.20, KLSE Composite increased 6.07 points or 0.34% to 1,784.90, Nikkei 225 surged 216.39 points or 1.54% to 14,224.86, Straits Times spurted 12.42 points or 0.42% to 2,978.22 and Seoul Composite was up by 7.14 points or 0.38% to 1,893.99.

On the flip side, Hang Seng slipped 3.87 points or 0.02% to 21,393.90 and Taiwan Weighted was down by 200.61 points or 2.37% to 8,261.96.