Indian equities continue its weak trade in the late afternoon session

Indian equities trimmed their gains further in the late afternoon session as investors have started booking profits in the frontline blue chip counters. The benchmarks are trading weak in red as sentiments remain bleak across the Asian region as investors pondered over the disappointing employment reports from the US and Euro-zone intensifying concerns over slowing down global economic recovery. Traders were seen piling up position in IT, TECk and Health Care sector while selling was being witnessed in Auto, Bankex and Metal sector. Banking stocks were trading under pressure after RBI’s recent Basel III guidelines as it mandates the banks over up-keeping of their total capital adequacy ratio at 9 percent, higher than the minimum recommended requirement of 8 percent. In the scrip specific development, aviation firms SpiceJet, Kingfisher Airlines and Jet Airways (India) were seen trading weak in red after reports emerged that the Parliament is unlikely to take a decision on the 49% foreign direct investment in the ongoing session. IRB Infrastructure Developers slipped on reports that the chairman of the company was being investigated for possible involvement in a murder case. Pipavav Defence and Offshore Engineering Company was trading firm in green on LIC of India buying 2.15 crore shares of the company as of yesterday.

On the global front, the Asian markets were trading on a mix note while the European markets were trading in green on optimistic note. Investors are eagerly awaiting an interest rate decision from the European Central Bank due later in the day. Besides, Spain will be in focus today as it will attempt to raise up to €2.5 billion in three- and five-year paper. On the home turf, the NSE Nifty and BSE Sensex were trading below their psychological 5,250 and 17,200 levels respectively. The market breadth on BSE was negative in the ratio of 965:1653 while 115 scrips remained unchanged.

The BSE Sensex is currently trading at 17,192.84 down by 109.07 points or 0.63% after trading as high as 17,271.77 and as low as 17,148.66. There were 9 stocks advancing against 21 declines on the index.

The broader indices were trading on a negative note; the BSE Mid cap index plunged 0.82% while Small cap sank 0.75%.

On the BSE sectoral space, IT up 0.61%, TECk up 0.39%, Health Care up 0.22% and Consumer Durable up 0.14% were the only gainers, while Auto down 2.12%, Bankex down 1.35%, Metal down 1.33%, PSU down 1.17% and Realty down 0.82% were the major laggards in the space.

HUL up 1.88%, BHEL up 1.85%, Wipro up 1.67%, Sun Pharma up 0.86% and HDFC  Bank up 0.84% were the major gainers on the Sensex, while Hero MotoCorp down 7.44%, Coal India down 3.08%, ICICI Bank down 2.46%, Tata Steel down 2.14% and Maruti Suzuki down 1.96% were the major losers in the index.

Meanwhile, Confederation of Indian Textile Industry (CITI) has raised a red flag over exports of cotton stating that allowing further exports of the fiber could lead to shortage of the commodity in the domestic market. If this happens Indian traders will be forced to buy cotton from abroad at a higher price. This observation is based on the fact that demand for textile items in the domestic market is now recovering which would demand more consumption of cotton in the coming times.

The government has recently decided to allow further exports of cotton in 2011-12 marketing year as production estimates have been revised upwards by the Cotton Advisory Board (CAB) and the Agriculture Ministry.

The government has banned further exports of cotton on Mach 5 fearing domestic shortages. However the ban received a lot of criticism from all quarters. Hence the ban was first partially lifted wherein exports of already registered orders was allowed. Subsequently the government has lifted the ban completely and new registrations are expected to start soon.

However CITI is of the opinion that the textile is already under pressure due to rising raw-material prices and high interest rates which have hit silk, spinning, handloom and powerloom units hard. Infact majority of textiles mills in the country have already registered huge losses and they are finding it difficult to repay loans.

Therefore, CITI has requested the government and the Reserve Bank to restructure loans to help the cash-starved textiles units to tide over the crisis. Earlier this month, the CAB had revised production estimates upwards to 347 lakh bales from 345 lakh bales for the current season. It had also revised domestic consumption estimates downwards to about 250 lakh bales from 260 lakh bales earlier. The Agriculture Ministry too had revised upwards cotton output to 352 lakh bales from 340.8 lakh bales.

The S&P CNX Nifty is currently trading at 5,203.55, lower by 35.60 points or 0.68% after trading as high as 5,217.30 and as low as 5,189.45. There were 17 stocks advancing against 33 declines on the index.

The top gainers on the Nifty were HUL up 2.09%, Asian Paints up 1.87%, Wipro up 1.84%, BHEL up 1.83% and Ranbaxy up 1.46%.

Hero MotoCorp down 7.48%, Axis Bank down 3.17%, Coal India down 3.12%, IDFC down 2.85% and Bank of Baroda down 2.82% were the major losers on the index.

In the Asian space, Hang Seng declined 0.28%, KOSPI Composite dropped 0.20% and Taiwan Weighted shed 0.23%. On the flipside Shanghai Composite gained 0.07%, Straits Times Index rose 0.05%, Jakarta Composite added 0.02% and KLSE Composite ascended 0.09%.

The European markets were trading in green with France’s CAC 40 climbed 1.00%, Germany’s DAX rose 0.98% and Britain’s FTSE 100 gained 0.47%.