Benchmarks pare their initial gains in late morning deals

Benchmarks shed their initial gains in late morning deals as investors turned cautious at higher levels with IT shares leading the decline after conservative guidance from Cognizant. However, losses on down side remained capped as the Finance Minister P Chidambaram’s statement that the country can grow at a sustained rate of 8-9 percent annually over the next 10-30 years. Sentiments got some support on the buzz that the government allowed 26% foreign investment in activities related to insurance like broking, third party administrators and surveyors and permitted FIIs and NRIs to also invest in insurers within stipulated cap.

On the global front, Asian equity indices were rallying at this point of time, with investors indulging in some bargain hunting after recent steep losses. Japanese stocks bounced after skidding to four-month low this week. The market breadth on BSE remains positive with advances to declines in the ratio of 910:764. 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 20128.50 down by 132.53 points or 0.65% after trading in a range of 20358.19 and 20090.66. There were 9 stocks advancing against 21 declines on the index. The broader indices were trading mixed; the BSE Mid cap index was down by 0.06% and Small cap index gained 0.23%.

The top gaining sectoral indices on the BSE were, Healthcare up by 0.01%, while Capital Goods down by 1.17%, IT down by 1.12%, Realty down by 1.01%, TECK down by 0.83% and Bankex down by 0.82% were the top losers on the sectoral index.

The top gainers on the Sensex were Hindustan Unilever up by 1.39%, Tata Power up by 1.37%, Wipro up by 0.71%, Tata Steel up by 0.49%, and Sun Pharma up by 0.33%. On the flip side, BHEL was down by 2.93%, TCS was down by 1.65%, Bajaj Auto was down by 1.41%, L&T was down by 1.29% and  Tata Motors was down by 1.28% were the top losers on the Sensex.

Meanwhile, amid concerns over the rising fossil fuels subsidy burden on the government, Economic Affairs Secretary Arvind Mayaram has stated that India cannot afford fuel subsidy in the long run. Mayaram added that no country can sustain subsidy in perpetuity for anything and country’s growth business model will fail in future if it includes huge subsidy burden. Recently, the government has increased the LPG subsidy quota of cheaper cooking gas cylinders to 12 per household from 9 in a year that would raise the government's subsidy burden by around Rs 5,000 crore.

Currently, India is fourth largest consumer of energy, however, there are a large number of Indians having no access to energy. India is likely to become world's third largest energy consumer by 2020 and adequate energy supply at affordable price is critical for economic growth. At present, India imports around 80 percent of its oil needs and 25 percent of natural gas domestic demand. On domestic production front, India is currently world's seventh largest energy producer accounting for around 2.5 percent of world's total annual energy production. While, there is a need to increase its energy supply by 3 to 4 times over the next two decades to meet the growing country’s demand.

Presently, only 0.93 million sq km area in India is held under exploration and production in 19 basins as compared to total estimated sedimentary area of 3.14 million sq km, comprising 26 sedimentary basins. Meanwhile, Oil Ministry has formulated a roadmap for cutting India's dependence on imports to meet its energy needs. The Ministry wants domestic crude oil demand to be cut to 50 percent by 2020 and by 25 percent in 2025 through intensive exploration and exploitation of untapped reserves.

The CNX Nifty is currently trading at 5,979.70 down by 42.70 points or 0.71% after trading in a range of 6,048.35 and 5,977.05. There were 13 stocks advancing against 37 stock declines on the index.

The top gainers of the Nifty were Hindustan Unilever up by 1.58%, Tata Power up by 1.58%, Tata Steel up by 1.04%, Sun Pharma up by 0.51%, and Cipla up by 0.41%. On the flip side, BHEL down by 3.17%, TCS down by 2.14%, HCL Tech down by 1.98%, Indusind BK down by 1.69%, and ICICI Bank down by 1.58% were the top losers on the index.

Asian equity indices were trading in green; Hang Seng rose 109.05 points or 0.51% to 21,378.43, Jakarta Composite increased 12.87 points or 0.29% to 4,397.18, KLSE Composite jumped 3.58 points or 0.20% to 1,789.46, Nikkei 225 strengthened 36.30 points or 0.26% to 14,216.68, Straits Times surged 28.64 points or 0.97% to 2,988.73, Seoul Composite added 14.46 points or 0.76% to 1,905.78 and Taiwan Weighted was up by 49.42 points or 0.60% to 8,313.90.

Chinese Shanghai Composite remained closed on account of Lunar New Year.