Benchmark indices continue to trade lower: S&P CNX Nifty trimmed 45.30 points

The benchmark equity indices continues to  trade lower  in  late morning session on the back of profit booking witnessed in frontliners. Banking stocks succumbed to the relentless selling pressure due to tight liquidity concern and increasing cost of funds. Meanwhile as the inflation remains above the tolerance level of Reserve Bank of India (RBI) and may rise further due to high food prices and the impact of recent petrol price hike. The inflation rate based on the wholesale price index (WPI) was 7.48% in November 2010, well above the RBI`s estimate of 5.5% by March 2011-end. This is an indicative that RBI may hike term rates in the upcoming monetary policy and a likely reason why banking stocks were down. On the other hand regional peers are also not supportive, majority of them trading in negative and Dow futures was also showing down tick on the screen trade. Back home in the BSE sectoral space banking, realty and metal stocks inched lower, while healthcare and oil & gas gauges gained. The broader indices were also trading in negative terrain. The market breadth on the BSE is negative; there were 1510 shares on the loser's side against 1138 shares on the gainers side, while 95 shares were unchanged. The S&P CNX Nifty may face resistance around 6148, 6180 and 6242 levels whereas support will be around 6080 and 6030 mark for the day.

The BSE Sensex shed 142.63 points or 0.70% at 20,356.09. The index touched a high and a low of 20,509.95 and 20,349.37, respectively.

The BSE Mid-cap index and Small-cap index were down by 0.60% and 0.34% respectively.

The main losers in the BSE sectoral space were Bankex down by 1.78%, Reality 0.99%, Capital Goods (CG) down 0.79%, Auto down by 0.68% and Metal down by 0.68%.

On the other hand, Health Care up by 0.10% and Oil and Gas up by 0.08% were the only gainers in the BSE sectoral space.

The major gainers on the Sensex were Tata Power 1.43% Hindalco Industries up 1.01% Wipro up 0.55% M&M up 0.54% and JP associates up 0.51%.

On the flip side,  ICICI Bank down by 2.64% Bajaj Auto down by 2.56%, Sterlite Industries down by 2.35%, HDFC down by 1.87% DLF down1.82% were the major losers in the BSE sectoral space

Even as the Indian economy remains in the bullish zone with strong growth outlook, the foreign direct investment (FDI) into the country has gone down by 7% in the month of November. FDI in Nov stood at $1.6 billion compared with $1.72 billion in the same month a year ago.

The November decline was the second consecutive month of downturn after a brief uptic seen in September, and has only confirmed a poor trend in the FDI this fiscal. The cumulative FDI inflows in the current fiscal so far (April- November 2010) now stand at just $14 billion, registering a decline of 27.4% when compared with FDI of $19.32 billion in the corresponding year-ago period.

The decline in FDI comes despite the fact that Indian government has been working towards making the FDI regime more liberal. The commerce and trade ministry had recently also released a compilation of all FDI related rules to increase the awareness and make it easy for foreign investors to understand rules governing investment in the second fastest growing country in world.

Further, this is perhaps the worst time to loose on FDI as India needs greater capital inflows in wake of the surge in current account deficit to record highs in September quarter. Economists expected that CAD can surge to over 3.5% in the current financial year compared with 2.7% in the last year. Although the foreign portfolio inflows are likely to remain robust going forward, FDI is much less volatile than portfolio flows and therefore is preferred over the latter route by the receiving country. 

The S&P CNX Nifty trimmed 45.30 points or 0.74% to 6101.05. The index touched a high and a low of 6,141.35 and 6,093.85, respectively.

The top gainers on the Nifty were  HCL up by 1.96% Tata Power 1.48% GAIL up 1.16%, Sunpharma up 1.03% and Hindalco up 0.78%

The top losers on the index were ICICI Bank down 2.57% Sterlite Industries down 2.55% Bajaj Auto down 2.38%, Axis Bank down 2.36% and HDFC down by 2.29%.

Majority of the regional peers are trading red; Shanghai Composite shed 0.26%,Jakarta Composite declined 0.33%, Taiwan Weighted trimmed 1.68% ,Nikkei decreased  1.65%, and Seoul Composite declined 0.18%  whereas Hang Seng increased  by 0.08% KLSE Composite trimmed  by 0.78% and Straits Times inched 0.08%.

 

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