Benchmarks pare gains; Nifty below 6700 mark

Benchmarks pared gains and edged marginally down in red in the late afternoon session on account of profit booking in front line counters. The markets started the trade on optimistic note but the street turned cautious after official data showed that foreign direct investment (FDI) in India dipped by 3 percent to $22.03 billion in 2013. According to the data by Department of Industrial Policy and Promotion (DIPP), the country attracted $22.78 billion of FDI in 2012. Traders were seen piling positions in Consumer Durables, Metal and Realty stocks while selling was witnessed in Power, FMCG and Capital Goods sector stocks. In scrip specific development, Jain Irrigation Systems was trading in green as the company is likely to sell 30-35 percent stake in its food processing unit for $80-100 million to private equity funds. Hectic activity was witnessed in power stocks after Central Electricity Regulatory Commission’s (CERC's) order allowing Tata Power and Adani Power higher tariffs to compensate for increased cost of coal imports was challenged in the Appellate Tribunal for Electricity (APTEL).

On the global front, most of the Asian markets were trading in green, while the European markets were trading on mixed note. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 6,700 and 22,300 levels respectively. The market breadth on BSE was positive in the ratio of 1486:1080 while 154 scrips remained unchanged.

The BSE Sensex is currently trading at 22287.04, down by 52.93 points or 0.24% after trading in a range of 22,467.21 and 22253.78. There were 15 stocks advancing against 15 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.22%, while Small cap index up by 0.49%.

The gaining sectoral indices on the BSE were Consumer Durables up by 2.60%, Metal up by 2.23%, Realty up by 1.07% and Auto up by 0.79%. While, Power down by 1.20%, FMCG down by 0.91%, Capital Goods down by 0.83%, PSU down by 0.63% and Bankex down by 0.58% were the losing indices on BSE.   

The top gainers on the Sensex were Hindalco Industries up by 5.56%, Tata Steel up by 2.30%, Hero MotoCorp up by 1.58%, Mahindra & Mahindra up by 1.42% and Bharti Airtel up by 1.42%. On the flip side, Tata Power down by 2.08%, ONGC down by 2.04%, Dr. Reddy’s Lab down by 1.82%, ITC down by 1.82% and Wipro down by 1.70%.

Meanwhile, in order to avoid the confusion among stakeholders and to bring consistency in its recent regulation, the Corporate Affairs Ministry has made changes in the depreciation schedule under the new company law.

The ministry has notified that there will not be two classes of companies for depreciation purposes as was indicated in the new company law schedule. Clearing air on depreciation schedule for firms, the Corporate Affairs Ministry noted that all companies need to follow the ‘useful life’ mentioned for various tangible assets in the depreciation schedule whereas the residual value of an asset cannot exceed 5 percent. Further, companies need to disclose the justification in their financial statement if they deviate from these norms.

Regarding the continuous process plants, the Corporate Affairs Ministry has changed the useful life of continuous process plants to 25 years from 8 years specified in the depreciation schedule under the new law which is likely to boost the net profits of companies in industries, such as cement and chemicals. Furthermore, the Ministry has restored revenue-based amortisation for toll roads built under public-private partnerships and has clarified that amortisation of intangible assets must be in accordance with the applicable accounting standards.

The CNX Nifty is currently trading at 6,673.35, down by 22.55 points or 0.34% after trading in a range of 6,730.05 and 6,662.40. There were 20 stocks advancing against 30 declining stocks on the index.

The top gainers of the Nifty were Hindalco Industries up by 3.21%, Jindal Steel up by 2.99%, Tata Steel up by 1.86%, ACC up by 1.66% and Ultratech Cement up by 1.61%. On the flip side, IDFC down by 3.46%, Bank of Baroda down by 2.88%, ONGC down by 2.78%, Power Grid down by 2.37% and Dr. Reddy’s Lab down by 2.21% were the major losers on the index.

Asian equity indices were trading mostly in green; Straits Times was up by 0.64%, Jakarta Composite was up by 0.96%, Nikkei 225 up by 0.90%, Hang Seng up by 0.39% and Taiwan Weighted was up by 0.85%. On the other hand, Shanghai Composite down by 0.41% was the lone loser on the index.

The European markets were trading on a mixed note; France’s CAC 40 was down 0.06%, Germany’s DAX added 0.11% and UK’s FTSE 100 gained 0.35%.