Indian equities pare gains to trade in red

Indian equities pare gain to continue its weak trade below neutral line in the late afternoon session on back of selling in front line counters and taking clues from European counterparts coupled with weak IIP numbers, which exerted pressure on the street. Traders were seen piling up position in FMCG, Metal and IT sector while selling was witnessed in Oil & Gas, Capital Goods and Bankex sector. However with the release of sluggish June IIP figure, investors started anticipating that these figures will provide some policy direction to world’s most aggressive central Bank, Reserve Bank of India, in its monetary policy meet in September. In the scrip specific development, Crompton Greaves was seen trading under pressure after Fitch Ratings revised the outlook on the company to negative from stable. Industry heavyweight RIL was trading weak with cut of around one percent after the company slashed natural gas reserves in its main production gas fields in the KG basin D6 block by 70% to 3.10 trillion cubic feet due to unforeseen geological surprises. Bharti Airtel was trading in red hovering near to two-year low, extending yesterday’s fall after banks including Goldman Sachs and Standard Chartered downgraded their ratings for the company following its poor earnings results this week. M&M was trading in green extending its gains for the second straight session as the utility vehicle maker posted much better-than-expected first quarter result.

On the global front, the Asian markets were trading in green while the European markets were trading on pessimistic note. The Bank of England has lowered its growth outlook for the year and stated that output declined in the second quarter to 0.7% and the growth in the third quarter is likely to be weaker than earlier estimate. The central bank also stated output is not likely to increase to pre-crisis level until 2014. Also, rating agency Standard & Poor’s lowered its outlook on Greece's long-term credit rating to negative from stable. On the home turf, the NSE Nifty and BSE Sensex were trading below their psychological 5,350 and 17,600 levels respectively. The market breadth on BSE was negative in the ratio of 1027:1578 while 149 scrips remained unchanged.

The BSE Sensex is currently trading at 17,545.34, down by 55.22 points or 0.31% after touching a high of 17,702.98 and a low of 17,522.62. There were 16 stocks advancing against 14 declines on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.32%, while Small cap index declined by 0.45%.

The top gaining sectoral indices on the BSE were, FMCG up by 1.11%, Metal up by 0.67%, IT up by 0.29% and Auto up by 0.03%. While, Oil & Gas down by 1.06%, Capital Goods down by 0.72%, Bankex down by 0.62%, TECk down by 0.54% and Realty down by 0.52% were top losers on the sectoral space.

The top gainers on the Sensex were Sterlite Industries up by 3.60%, M&M up by 2.19%, Coal India up by 2.11%, Hindustan Unilever up by 2.03% and Bajaj Auto up by 1.35%.

On the flip side, Bharti Airtel down by 5.27%, SBI down by 3.64%, HDFC down by 3.11%, Tata Motors down by 2.34%, RIL down by 1.36% were the top losers on the Sensex.

Meanwhile, favoring a go-slow approach in the implementation of the controversial General Anti-Avoidance Rules (GAAR), Finance Minister P Chidambaram, affirmed that the delay in implementation of rules will not significantly impact measures against black money generation and tax evasion as they are handled efficiently by various anti-evasion measures such as surveys, search and seizure operations and also collation of information is tracked and received from various sources.

The GAAR was proposed in the Budget 2012-13, and was postponed till April 2013 following strong opposition by foreign investors. However, the provisions would now be applicable for assessment year 2014-15 and subsequent years. The implementation was postponed by a year for wider consultation before bringing it into force. The first draft GAAR guidelines, prepared by the finance ministry, were placed in the public domain on June 29 to facilitate comments from various stakeholders.

The ministry has also confirmed that following the placement of the draft guidelines, it had got about 14 representations from individuals and institutions, including those from the US Council for International Business, PricewaterhouseCoopers, Bombay Chambers of Commerce and Industry and ALSTOM. The industry chambers favored delaying the implementation of GAAR, till apprehensions on the guidelines are removed, it added.

The S&P CNX Nifty is currently trading at 5,323.75 down by 14.25 points or 0.27% after trading in a range of 5,368.20 and 5,312.80. There were 21 stocks advancing against 29 declines on the index.

The top gainers of the Nifty were Sterlite Industries up by 3.26%, M&M were up by 2.41%, Coal India up by 2.38%, HUL up by 1.91% and Sesa Goa up by 1.76%. On the flip side, Bharti Airtel down by 5.43%, SBI down by 3.87%, HDFC down by 3.18%, Cairn India down by 2.79% and Tata Motors down by 2.59% were the major losers on the index.

All the Asian indices were trading in green; Kospi Composite Index up 1.96%, Nikkei 225 surged 1.10%, Jakarta Composite added 0.90%, KLSE Composite rose 0.24%, Taiwan Weighted spurted by 1.56%, Shanghai Composite gained 0.61% and Hang Seng advanced 1.02%.

Straits Times remained closed on account of National Day holiday.

The European markets were trading in red with, France’s CAC 40 descended 0.09%, Germany’s DAX dropped 0.45% and the United Kingdom’s FTSE 100 lost 0.06%.