Benchmarks pare early gains: trade near intra-day low level in afternoon session

Indian equity benchmarks pared all early gains and were trading near the intra-day low level in afternoon session on account of selling witnessed in consumer durables, auto and power stocks. Sentiments turned pessimistic after HSBC Services PMI reported at 48.8 points in February, a reading below 50 points indicates contraction. However, the services PMI improved as against 48.3 points in January. Further the Election Commission announced that the Lok Sabha polls would be conducted in 9 phases between 7 April and 12 May 2014. Healthcare was top gainer on BSE up by around 0.42% followed by IT and Tech stocks both up by over 0.30%. Stocks related to infra space remained higher, as the government has cleared a long pending bailout policy for financially-stressed highway developers that would allow them to defer the premium that they had committed to pay the government.

On stock specific movement, NTPC, Mariti Suzuki and ICICI Bank were trading up by over 1.10%, while, Tata Power, Bharti Airtel and M&M were trading down by over 1.40% on BSE. Nucleus Software Exports surged around 9% to its 5-year high level at Rs 248 after the company has launched its transaction banking product suite FinnAxia for the global market. Autoline Industries has soared around 9% to Rs 70.30 after the company said its board will meet on March 11 to consider fund-raising options, including selling stake in U.S. unit.

On global front, Asian equity indices were trading in green with Nikkei 225 up by 1.20% and  Hang Seng surged by 0.18% as Russia and Ukraine concerns eased. Back home, the NSE Nifty and BSE Sensex were trading above their psychological 6,200 and 21,000 levels respectively. The market breadth on BSE was positive, out of 2,345 stocks traded, 1,205 stocks advanced, while 1,010 stocks declined on the BSE.

The BSE Sensex is currently trading at 21,184.77 down by 24.96 points or 0.12% after trading in a range of 21,333.20 and 21,184.77. There were 13 stocks advancing against 17 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.36%, while Small cap index up by 0.06%.

The gaining sectoral indices on the BSE were Healthcare up by 0.42%, IT up by 0.34%, Teck up by 0.30% and Capital Goods up by 0.33%. While, Consumer Durables down by 2.41%, Auto down by 0.51%, Power down by 0.43%, FMCG down by 0.13% and Oil and Gas down by 0.10% were the losing indices on BSE.   

The top gainers on the Sensex were NTPC up by 1.25%, Mariti Suzuki up by 1.25%, ICICI Bank up by 1.13%, Tata Steel up by 1.09% and Coal India up by 0.93%. On the flip side, Tata Power down by 3.06%, Bharti Airtel down by 1.74%, M&M down by 1.46%, SSLT down by 1.15% and BHEL down by 0.99%.

Meanwhile, in a big sigh of relief for financially-stressed highway developers, the government has cleared a long awaiting bailout policy for financially-stressed developers which would also allow the developers to defer the premium that they have committed to pay the government.

As per the bailout policy, relief would be offered for highway developers through a mechanism called revenue shortfall loan under an article of the model concession agreement between developers and the government. Highway projects that are facing economic stress would now be eligible for this article which allows developers to reschedule the cash shortfall between necessary expenses and toll revenue in case of political events or default by the National Highway Authority of India (NHAI). Further, under this provision, the money that the developers need to pay the government would be considered as an expense.

The move is likely to benefit started highway projects facing difficulty in servicing debt. Now, the developers can service debt fully as it will be given priority over premium. Highway projects involving expansion from two lane to four lane are likely to benefit more as their debt servicing commences with tolling. On the other hand, projects involving expansion to six lane may not benefit so much owing to the fact that these projects have a moratorium period for servicing debt but toll collections commence from the beginning, thus, they would have to bring in equity on their own. Furthermore, debt flow to sector is also expected to improve as bankers will get more comfort and stressed projects could be prevented from turning into non-performing assets.

The CNX Nifty is currently trading at 6,292.90 down by 5.05 points or 0.08% after trading in a range of 6,333.90 and 6,289.35. There were only 22 stocks advancing against 28 declining on the index.

The top gainers of the Nifty were Bank of Baroda up by 1.46%, BPCL up by 1.41%, Maruti Suzuki up by 1.39%, ONGC up by 1.32% and Tata Steel up by 1.08%. On the flip side, Tata Power down by 3.19%, Ambuja Cement down by 2.14%, JP Associates down by 2.00%, Bharti Airtel down by 1.60% and Jindal Steel down by 1.59% were the major losers on the index.

Most of the Asian equity indices were trading in green; Nikkei 225 soared 176.15 points or 1.20% to 14,897.63, Hang Seng surged by 41.01 points or 0.18% to 22,698.64, Straits Times was up by 4.50 points or 0.23% to 3,109.07, KLSE Composite up by 0.12% to 1,826.89, Taiwan Weighted was down by 1.00% to 8,640.03 and Jakarta Composite rose by around 1.07% to 4,650.49. On the flip side, Shanghai Composite declined by 8.39 points or 0.42% to 2,062.19,