Indian equities trim most of their losses but trade continue in red

Indian equities have trimmed most of their losses but continue to trade in red. However, market participants’ mood remained optimistic on growing speculations that central banks globally could make further moves to stimulate the world economy and spur more rapid jobs growth. On the global front, the Asian markets were trading in green barring Straits Times Index. Traders were seen piling up position in HC, FMCG and Metal sector while selling was witnessed in Auto, Bankex and Realty sector. Meanwhile, telecom stocks were trading in green as the Reserve Bank of India has approved the proposal to allow mobile phone companies to mortgage airwaves that will allow the companies to use spectrum as collateral and raise funds from banks for the upcoming auctions. The NSE Nifty and BSE Sensex were trading above their psychological 5,100 and 16,800 levels respectively.

The BSE Sensex is currently trading at 16852.78, down by 10.02 points or 0.06%. The index has touched a high 16876.48 and low 16819.36 of respectively. There were 15 stocks advancing against 15 declines on the index.

The broader indices were trading on a positive note; the BSE Mid-cap index was up by 0.47% and Small-cap index was up by 0.71%.

The top gaining sectoral indices on the BSE were HC up 0.83%, FMCG up 0.66%, Metal up 0.43%, TECK up 0.34% and PSU up 0.34%. While, Auto down by 1.12%, Bankex down by 0.09%, Realty down by 0.08%, Oil &Gas down by 0.08% and CD down by 0.04% were the losers on the index.

The top gainers on the Sensex were Bharti Airtel up 1.21%, Sun Pharma up 1.16%, Jindal Steel up 1.01%, Hindunilvr up 0.99% and Coal India up 0.89%.On the flip side, Maruti down 2.99%, M&M down 1.70%, Tata Motors down 1.63%, STER down 1.15% and Hero Moto Co down 0.99% remained the top losers on the Sensex.

Mean while, Indian government, which remains in a tight spot over doing away with the subsidies on prices of petroleum products especially that of widely used diesel, is now contemplating the idea of taxing automobiles fuelled by it. The government is believed to be favorably considering the Union Minister for Petroleum & Natural Gas, Jaipal Reddy's recommendation that a special tax on diesel cars be imposed in order to discourage their excessive usage which has resulted due to widening gap between petrol and diesel prices.

The oil minister in his recommendations has insisted on imposing an additional tax of Rs 170,000 on small diesel vehicles and Rs 2,55,000 on medium and large diesel vehicles like sedans and SUVs to check dieselization of the economy. With the revenues from additional levies, the oil ministry plans to meet part of the revenue losses of state oil firms in selling fuels below market rates.

The move comes as demand for diesel powered automobiles has jumped to over 55% of the total 1.63 lakh units sold in May 2012 when compared to a growth rate of 38% last year. Sales of diesel cars have soared because they are more fuel efficient as they give around 30% higher mileage compared to petrol fuelled cars. Moreover, the cost of running the vehicle too remains substantially skewed in favor of diesel, prices of which due to political compulsions remain unmoved in the country for almost a year.

However, the development does not seems to have gone down well with car manufacturers who have been busy lobbying hard against any such move as it would be a double whammy for them. On one hand the demand for petrol powered cars has already waned owing to the decontrol of petrol and recent steep hikes in its prices while on the other, imposing additional taxes on diesel fuelled cars would adversely impact demand and also take away the lucrativeness of the Indian automobile industry.

A recent SIAM report showed that domestic car sales in May registered a growth of 3.10 percent, the slowest growth since October as higher borrowing costs and fuel prices dissuaded buyers from owning new four wheelers. With no aggressive softening of interest rates by RBI, higher running cost and recent price hikes owing to the excise duty hike in Budget, it has increasingly become difficult for car manufacturers to keep up the sales momentum as demand has been adversely impacted.  

The S&P CNX Nifty is currently trading at 5,117.35, up by 1.45 points or 0.03%. The index has touched a high and low of 5,122.45 and 5,103.80 respectively. There were 29 stocks advancing against 21 declines on the index.

The top gainers of the Nifty were JP Associates up 1.38%, HUL up 1.35%, Sun Pharma up 1.22%, IDFC up 1.20%, and PNB up 1.18%. On the flip side, Maruti down 2.72%, STER down 1.72%, M&M down 1.68%, Tata Motors down 1.34% and Hero Moto Corp down 0.78% were the major losers on the index.

The Asian equity indices were trading mostly in green; Jakarta Composite up 0.32%, Taiwan Weighted up 0.31%, Nikkei 225 up 0.63%, KLSE Composite up 0.24%, KOSPI Composite Index up 0.26%, Shanghai Composite up by 0.90%and Hang Seng Index was up 0.47%.

On the flip side, Straits Times Index down 0.40% was only the loser on the index.