Indian equities trim losses; trade continues in lackadaisical note

Indian equities continued its lackadaisical trade below neutral line but pared off some losses in the late afternoon session as trade continues amid apprehension over India’s slowing growth, elevated inflationary pressure and swelling fiscal deficit. In the fight between bulls and bears to gain control over the market, bears have completely knocked out bulls giving them no chance to enter the market with bears however losing its momentum while marking its rally. Traders were seen piling up positions in HealthCare and Consumer Durables sector while selling was witnessed in Capital Goods, Oil & Gas and Power sector. BHEL and L&T from Capital Goods sector were trading with cut of around more than two percent pulling the markets down. Industry heavyweights RIL was down with cut off of around more than two percent putting pressures on the market. ONGC too from Oil & Gas space was trading weak in red. Bajaj Auto, M&M, Tata Motors and Hero MotoCorp from Auto pack was trading weak driving markets down. However, Hindalco, Dr Reddy, RCOM, Maruti and Coal India was trading firm in green helping prevent downfall.

On the global front, all Asian markets were seen trading in red while the European markets were trading on a mix note. Investors globally remained worried after reports of disagreement at the European Union summit. The French President, Nicolas Sarkozy, cautioned that there would be no second chance to rescue the European Union from a downturn amid growing divisions between the Euro-zone and non-euro states like Britain and Poland. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 4,900 and 16,300 levels, respectively. The market breadth on the BSE was in favour of declines in the ratio of 873:1691 while 126 scrips remained unchanged.

The BSE Sensex is currently trading at 16,296.93 down by 191.31 points or 1.16% after trading as high as 16,334.85 and as low as 16,142.32. There were 4 stocks advancing against 26 declines on the index.

The broader indices were trading on a pessimistic note; the BSE Mid cap index plunged 0.62% while Small cap sank 0.92%.

On the BSE sectoral space, the HealthCare index added 0.54% and Consumer Durables were up 0.38% was the only gainers while Auto down 1.95%, Capital Goods down 1.88%, Oil & Gas down 1.39%, Power down 1.29% and TECk down 1.03% were the major losers in the space.

Hindalco up 2.49%, Coal India up 1.15%, Maruti up 1.10% and SBI up 0.12% were the only gainers on the Sensex, while Bajaj Auto down 3.45%, M&M down 2.88%, Sterlite down 2.86%, Bharti Airtel down 2.72% and BHEL down 2.71% were the major losers in the index.

Meanwhile, the significant financial sector reforms are getting delayed despite the finance minister Pranab Mukherjee’s request to political parties to help government is passing legislations for the sector.

On December 8, the Parliament’s standing committee on finance rejected a clause in the Insurance Bill to raise Foreign Direct Investment (FDI) limit in private firms from current 26% to 49%. The change in the insurance law on FDI was introduced by Ex-Finance Minister Chidambaram in 2004-05, during the first 5-year term of UPA government.

The standing committee also rejected the clause of banking bill, which was tabled earlier this year to increase the limit on voting rights of single shareholder in public sector banks to 10% from existing 1% and in other banks from exiting 10% to a level proportionate to the stake. The banking bill which seeks to make it mandatory for any shareholder who acquires 5% or more stakes in a bank to get prior approval from the Reserve Bank of India. The Banking Bill also seeks to take away the power of scrutinizing mergers and acquisitions in the banking sector from the Competition Commission of India.

The standing committee also turned down the government’s suggestion to reduce the minimum paid-up capital in health insurance to Rs 50 crore from the present Rs 100 crore. The committee recommended retaining the current norms.

The government can brush aside these suggestions, provided it amasses crucial numbers of opposition parties to pass these bills. Earlier, the standing committee, on the pension reform bill, had rejected government’s desire to keep the FDI out of the purview of legislation.

These bills are vital from the policy reform point of view, as these sectors are expected to be the next growth drivers of Indian economy. However, these vital policy reforms have been getting delayed over political disagreement.

The S&P CNX Nifty is currently trading at 4,888.85, lower by 54.80 points or 1.11% after trading as high as 4,902.10 and as low as 4,841.75. There were 12 stocks advancing against 38 declines on the index.

The top gainers on the Nifty were Hindalco up 2.72%, Dr Reddy’s up 2.50%, RCOM up 1.32%, Maruti up 1.00% and Coal India up 0.91%.

Bajaj Auto down 3.48%, SAIL down 3.14%, Bharti Airtel down 3.09%, JP Associates down 3.01% and Sterlite down 2.96% were the major losers on the index.

Asian markets traded on a discouraging note, Shanghai Composite slipped 0.62%, Hang Seng tanked 2.73%, Jakarta Composite plunged 0.88%, KLSE Composite sank 0.89%, Nikkei 225 dropped 1.48%, Straits Times plummeted 1.23%, Seoul Composite plunged 1.97% and Taiwan Weighted decreased 1.28%.

The European markets were trading on a mix note with, France’s CAC 40 plunged 2.13%, Germany’s DAX inched higher 0.05% and Britain’s FTSE 100 ascended 0.16%.