Benchmarks continue to trade under pressure in late morning

Selloff continued on the benchmarks in late morning trade triggered by weaker-than-expected U.S. data, as well as concerns over growth in China and the outlook for some emerging economies. 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.

On the global front, 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, traders were buying, IT, Realty and Healthcare while, selling was seen in FMCG, Oil & Gas and Bankex on the BSE.

The market breadth on BSE remains positive with advances to declines in the ratio of 1087:626. BSE Sensex and NSE Nifty were comfortably trading near their psychological 20,100 and 5,950 levels respectively.

The BSE Sensex is currently trading at 20131.85 down by 80.08 points or 0.40% after trading in a range of 20254.82 and 20076.10. There were 12 stocks advancing against 18 declines on the index. The broader indices were trading in red; the BSE Mid cap index was down by 0.33% and Small cap index lost 0.78%.

The top gaining sectoral indices on the BSE were, IT up by 0.57%, Realty up by 0.46%, Healthcare up by 0.42%, Teck up by 0.37% and Metal up by 0.30% while FMCG down by 1.16%, Oil & Gas down by 0.68%, Bankex down by 0.32%, Power down by 0.29% and Capital Goods down by 0.17% were the top losers on the sectoral index. 

The top gainers on the Sensex were Tata Steel up by 1.75%, Mahindra & Mahindra up by 1.43%, Wipro up by 1.03%, Coal India up by 0.94% and TCS up by 0.82%. On the flip side, BHEL was down by 2.05%, ITC was down by 1.88%, NTPC  was down by 1.73%, Tata Motors was down by 1.13% and RIL was down by 0.97% were the top losers on the Sensex.

Meanwhile, amid differences of opinion between Food and Agriculture Ministries for providing incentives for raw sugar export, the Cabinet Committee on Economic Affairs (CCEA) has deferred decision on Food Ministry’s proposal for fixing subsidy for exports of raw sugar. Food Ministry has proposed cash subsidy of Rs 2,000 per tonne to the beleaguered sugar industry for export of four million tonnes of raw sugar for a period of two years. On the other hand, Agriculture Ministry is in favour of a reasonable subsidy not less than Rs 3,500 per tonne in order to provide major boost to the exports of raw sugar.

Food Minister K V Thomas stated that Committee of Secretaries of food, agriculture, commerce and finance ministries would meet soon to re-calculate the subsidy of raw exports. As per the Food Ministry proposal, total subsidy outgo will be around Rs 800 crore that will be adjusted from the Sugar Development Fund (SDF), while the government would have to bear Rs 1,400 crore if Agriculture Ministry’s demand is considered. Meanwhile, the government had already given subsidy of Rs 1,450 per tonne in 2007-08 to export six million tonnes of sugar and the current incentive is being worked on the same procedure.

However it would be difficult for India to export raw sugar as global prices are ruling much lower as against the domestic production cost of Rs 26,500 per tonne. Further, domestic sugar mills are facing cash crunch as sugar prices have come down below the cost of production in view of surplus supplies. Meanwhile, the government has been taking measures to improve cash flow of sugar mills. During December’2013, the government had approved Rs 6,600 crore interest-free loans to sugar industry for making payment to sugarcane farmers.

The CNX Nifty is currently trading at 5,980.90 down by 20.00 points or 0.33% after trading in a range of 6,012.85 and 5,962.05. There were 19 stocks advancing against 30 stock declines while 1 stock remains unchanged on the index.

The top gainers of the Nifty were Tata Steel up by 1.78%, M&M up by 1.67%, Wipro up by 1.14%, Jindal Steel up by 0.99% and TCS up by 0.98%. On the flip side, ITC down by 1.91%, BHEL down by 1.78%, NTPC down by 1.65%, Tata Motors down by 1.11% and Kotak Bank down by 1.10% 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.