Markets witness another sluggish session of trade

Indian equity markets witnessed another sluggish session of trade on Tuesday in the absence of any major trigger. Investors opted to remain on the sidelines ahead of derivatives' expiry which is due later in the week, and to check how markets behave towards the end of the year. The Asian peers finished the day on a mixed note today while the European bourses were marginally in the green in trade. The Dow future was up by 16 points in screen trade indicating a flat-to-positive start on the Wall Street later in the day. The benchmark indices -- BSE Sensex and NSE Nifty -- spent the entire day within a range of 110 points and 30 points, respectively before ending the session around their previous close. Though the 30-share Sensex managed to hold on to the psychological 20,000-level in trade, the 50-share Nifty failed to regain the crucial 6,000-mark on closing basis. The gains in fast moving consumer goods, healthcare and technology counters was offset by losses in oil & gas, public sector undertaking and auto stocks. Telecom stocks were in action during the session. The Reliance Anil Dhirubhai Ambani Group (Rel-ADAG) companies also witnessed good traction in trade today. The small-cap space outperformed its larger peers throughout the session.

The markets started the session with modest gains this morning tracking mixed global cues. The bourses moved within a narrow range that too around the neutral line in the morning session. The similar trend continued in the mid-morning session. The markets witnessed some selling pressure in afternoon trades, which dragged them to day's low.The main indices recovered from their intraday lows in late trades to enter the positive terrain but all this action continued to happen in a very small range. The markets moved back and forth in last hour of trade as well before signing off the session around the neutral line. Despite being the futures and options' (F&O) expiry week, the volume hasn't picked up on the street. The turnover for the session stood at around Rs 1.01 lakh crore today. The market breadth on the BSE was positive; the gainers narrowly outnumbered the losers in a ratio of 1433:1391 while 190 shares remained unchanged.

From frontliners, HDFC Bank, Tata Power and RCom were the major gainers in trade today with an up-move in the range of 1.50% and 2.00%. IT majors -- Wipro, TCS and Infosys -- were also among the day's gainers.

On the other hand, Tata Motors, ICICI Bank and SBI languished at the bottom of the list. Index heavyweights, RIL and ONGC, lost over half a percent each in trade today.

On the charts: The S&P CNX Nifty failed to cross 6,048-mark during the session, which is a strong resistance for the index in the near future. If the index breaks 5,968-mark next major support will be around 5,938 level. On the other hand, resistance will be around 6,048, 6,080 and 6,242.

Finally, the BSE Sensex dipped 3.51 points or 0.02% to settle at 20,025.42 while the S&P CNX Nifty declined 2.10 points or 0.04% to end at 5996.

The BSE Sensex touched a high and a low of 20,090.41 and 19,981.76 respectively. HDFC Bank up 2.02%, Tata Power up 1.75%, RCom up 1.72%, Wipro up 1.31% and ITC up 0.94% were the major gainers on the Sensex.

On the other hand, Tata Motors down 2.53%, ICICI Bank down 0.92%, SBI down 0.90%, RIL down 0.75% and ONGC down 0.66% were the major laggards on the index.

The BSE Mid-cap and Small-cap indices rose 0.07% and 0.33%, respectively.

Meanwhile, the Planning Commission, top economic strategy maker of the country, has decided to review the Build, Operate and Transfer (annuity) model of building roads as it has failed to pick up in India despite being most accepted model globally.

In the BOT (annuity) mode, the government pays the cost of building the road to the private partner every year or biannually after the beginning of commercial operations of the project. The BOT (annuity) mode has been the most popular one in Europe as well as the US. However, in India, a large section of the political establishments have not favoured the model.

In India, the other BOT mode has been more popular under which the constructer is allowed to recover his costs by collecting a toll over a specified period of time. One advantage of this model is that under it the builder knows that in case the project fails due to poor quality of construction, he will not be able to recover his money and therefore there is an inherent accountability.

On the other hand, under the annuity mode, the cost for the government is much higher and there is no accountability for the developer once the project is completed. The Planning Commission while feels that annuity is expensive than other models, it also knows that there are many projects which can be completed only, because of say lower traffic. Therefore, it wants to improve the annuity model and a decision on the changes required will be taken after the review is complete.

In the BSE sectoral space, Fast Moving Consumer Goods (FMCG) up 0.63%, Healthcare (HC) up 0.47%, TECk up 0.34%, Information Technology (IT) up 0.29% and Power up 0.19% remained the major gainers.

On the flip side, Oil & Gas down 0.74%, Public Sector Undertakings (PSU) down 0.46%, Auto down 0.35%, Capital Goods (CG) down 0.28% and Bankex down 0.21% remained the major laggards on the BSE sectoral space. 

Chairman of the Prime Minister's Economic Advisory Council (PMEAC) C. Rangarajan said on Monday that India's inflation would come down to 5.5% by March next year. Addressing the 93rd annual conference of Indian Economic Association in Chandigarh, the former Reserve Bank Governor however added that an increase in fuel prices can raise inflation beyond forecasts.

Rangarajan said that while it was possible to lower inflation by augmenting supply through imports, it was a limited option. "Possibility of augmenting supply and cutting down inflation through imports is limited" he said. Also, with global commodity and food prices surging over last few months, such a move would entail large amount of subsidy that can in turn boost fiscal deficit and fuel inflation indirectly.

He also accepted that there were a number of upside risks to inflation. For instance, the potential increase in diesel prices in order to keep the under-recoveries of the government controlled oil marketing companies (OMCs) can also fuel inflation "If diesel and LPG prices are increased in the near future, certainly it will further augment inflation affecting commodity prices," he said, adding that letting the under-recoveries of OMCs surge beyond reasonable levels was not an option either.

With regard to the possibility of hardening of interest rate in the next quarter in wake of high inflation and further monetary tightening by the RBI, Rangarajan said it would depend on how inflation behaved in the coming weeks. "It (rate hike by RBI) all depends on how overall inflation behave in the coming weeks ... I think if there is further fall in WPI inflation then monetary policy would remain as it is now... we need to watch the behaviour of overall inflation before monetary authorities can take any decision," he opined. The Chief advisor also said that the first objective of a central bank should be price stability. 'Central banks need to be transparent and explicit with respect to their objectives ... among various objectives such as price stability, growth and financial stability, the dominant objective for central banks particularly in developing countries must be price stability,' he said. 

The S&P CNX Nifty touched a high and a low of 6,010.90 and 5,982.25, respectively.

Ranbaxy Laboratories up 2.67%, Suzlon Energy up 2.47%, HDFC Bank up 2.30%, Tata Power up 1.91% and HCL Tech up 1.47% were the major gainers on the Nifty.

On the other hand, Tata Motors down 2.64%, Axis Bank down 2.17%, ICICI Bank down 1.20%, Ambuja Cement down 1.18% and SBI down 0.90% were the major losers on the index.

Asian equity indices finished the day's trade on a mixed note on Tuesday. China's Shanghai Composite declined more than one and a half percent on concern over further tightening measures in the country. Japanese market too fell about one percent on the back of profit-taking by the investors. The trade in the region remained thin today as investors stayed cautious ahead of the release of key US home price data later in the day. Jakarta Composite and Straits Times led the gainers side while Shanghai Composite and Hang Seng edged lower in trade.

Shanghai Composite declined 48.41 points or 1.74% to 2,732.99, Hang Seng dropped 212.07 points or 0.93% to 22,621.73, Nikkei 225 slipped 63.36 points or 0.61% to 10,292.63 and Taiwan Weighted shed 21.55 points or 0.24% to 8,870.76.

On the flip side, Jakarta Composite surged 34.73 points or 0.96% to 3,659.99, KLSE Composite rose 5.72 points or 0.38% to 1,517.44, Straits Times jumped 24.34 points or 0.77% to 3,183.70 and Seoul Composite was up by 11.13 points or 0.55% to 2,033.32.

European markets were trading in the green on Tuesday. France's CAC 40 gained 0.45% and Germany's DAX jumped 0.13%. 

Unit-8, 3rd Floor, First Mall, The Mall, Ludhiana-141001, Punjab (INDIA).

To unsubscribe or change subscriber options visit: http://www.aweber.com/z/r/?TJzsLEwstCyc7OysHMyctEa0HGysHExs7A==