Indian equities pare losses; trade continues on lackadaisical note

Indian equities continued their lackadaisical trade in late afternoon session but pared off some losses as investors started hunting for beaten down but fundamentally strong bargains after the colossal damage witnessed in the day. Market participants were cautious and were seen squaring off hefty positions all across the board, a day ahead of November series derivative contract expiry. Traders were seen selling in Technology, Banking and Metal sector stocks. HDFC Bank, ICICI Bank, SBI, Kotak Bank, Axis Bank and PNB from banking sector were seen trading with cut off around one and half to four and half percent putting pressure on the markets. Index heavyweight RIL is seen trading with a cut of more than three percent. Also BPCL, HPCL, IOC, ONGC and Cairn from Oil & Gas pack were seen trading in red dragging the markets lower. Sesa Goa, Jindal Steel, Hindalco, Tata Steel, SAIL and Sterlite from Metal stable were down pulling the markets down. L&T and BHEL from capital Goods sector were down exerting pressure on the market. TCS, Wipro, Infosys and HCL Technologies from IT pack were down pulling the markets down. Tata Motors, M&M, Hero MotoCorp, Bajaj Auto and Maruti from Auto sector too were trading weak in red driving the market down.

However, Reliance Communication from ADA Group Company is trading firm in green and the sole stock in index to be in green. In scrip specific development, Amtek Auto is firm in green extending last two days rally triggered by the company's announcement that the proposed buyback offer will commence from December 08, 2011. Reliance Communications, DB Realty and Unitech are trading in green on reports that Supreme Court, granted bail to five corporate executives facing prosecution for their alleged involvement in the 2G case. Thomas Cook (India) is trading in red for the second consecutive session today after deterioration in cash and liquidity position of its parent company listed on London Stock Exchange. On the global front, all Asian markets were seen trading in red while the European markets too were trading in red on pessimistic note. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 4,700 and 15,700 levels, respectively. The market breadth on the BSE was negative in the ratio of 607:2083 while, 87 scrips remained unchanged.

The BSE Sensex is currently trading at 15,667.80 down by 397.62 points or 2.48% after trading as high as 15,969.60 and as low as 15,478.69. All 30 stocks were declining on the index.

The broader indices were trading on somber note; the BSE Mid cap index plunged 1.97% while Small cap dived 1.86%.

On the BSE sectoral space, there were no gainers while TECk down 2.84%, Bankex down 2.79%, Metal down 2.63%, IT down 2.58% and Oil & Gas down 2.53% were the major losers in the space.

There were no gainers on the Sensex, while Bharti Airtel down 4.87%, JP Associates down 4.73%, HDFC Bank down 4.48%, Jindal Steel down 4.04% and BHEL down 3.77% were the major losers in the index.

Meanwhile, an expert committee appointed by the Planning Commission and headed by Srinath Reddy president, Public Health Foundation of India has asked for an urgent reversal of the present position of Foreign Direct Investment (FDI) in the Pharma sector. The expert committee wants the foreign drug multinationals to bring down their stake in the Indian subsidiaries to 49%.

The final report of Srinath Reddy committee to be submitted to Montek Singh Ahluwalia, Deputy Chairman of Planning Commission on November 28 has stressed on the urgent need to “revisit India’s FDI regulations to amend the present rules of an automatic route of 100% share of foreign players in the Indian industry to less than 49%, so as to retain predominance of Indian pharmaceutical companies and preserve self-sufficiency in drug production”.

However, another committee, headed by Planning Commission member Arun Maira formed in June this year, which had the mandate to see the impact of FDI in pharmaceuticals in the context of increasing mergers and acquisitions in the domestic drug industry and the need to turn India into a global pharma manufacturing and research hub, had sought for continuance of 100% FDI in the pharmaceutical sector. The government had accepted the Maira committee report and decided to maintain a status quo on its FDI policy in pharma sector. On the Maira panel suggestion, the government also decided to route all pharmaceutical M&A clearances through the Competition Commission of India, irrespective of the size of the deal.

Meanwhile, the Reddy committee vows to strengthen the capacity of the Public Sector for the manufacturing of domestic drug and vaccines and has recommended that the central and state governments should assist and revive public sector units that manufacture generic drugs and vaccines, limit the voting rights of foreign investors in Indian companies, and take other measures to retain and ensure self-sufficiency in drug production.

The Reddy committee also talks about the importance of issuing compulsory licenses to make available, at affordable prices, all essential drugs relevant to India’s disease profile. The committee has further recommended a national package for all citizens, irrespective of their financial status through public sector as well as contracted in private facilities, which includes Non-Profit Organizations and Non-Government Organization.  Under the proposed package, citizens will be permitted to supplement free of cost service both in patient and out-patient care offered under the Universal Health Coverage (UHC) system by paying out-of-pocket or directly purchasing additional private voluntary medical insurance from regulated insurance companies.

However, for financing the proposed UHC system it will require public expenditure on health to be increased from around 1.2% of current gross domestic product (GDP) to minimum 2.5% by 2017 and to 3% of GDP by 2022.

The S&P CNX Nifty is currently trading at 4,690.65, lower by 121.70 points or 2.53% after trading as high as 4,779.50 and as low as 4,640.95. There was just 1 stock advancing against 49 declines on the index.

The lone gainer on the Nifty was RCOM up 1.57%. IDFC down 5.06%, Bharti Airtel down 4.94%, HDFC Bank down 4.65%, JP Associates down 4.42% and Sesa Goa down 4.37% were the major losers on the index.

Asian markets continued to trade on a bleak note, Shanghai Composite dropped 0.73%, Hang Seng plummeted 2.12%, Jakarta Composite sank 1.72%, KLSE Composite shed 0.49%, Straits Times shaved-off 1.61%, Seoul Composite got battered by 2.36% and Taiwan Weighted nosedived 2.77%.

Japanese markets remained closed on Wednesday on account of Labor Thanksgiving day.

The European markets were trading in red with, France’s CAC 40 down 0.12%, Germany's DAX descended 0.34% and Britain’s FTSE 100 shed 0.46%.