Key equity indices slip further; broader indices remain optimistic

The domestic markets which began the session on a higher note amid volatility tracking the rally across the globes have now slipped further, with financials leading the decline. The barometer indices are too lingering in red territory as investors have booked out their profit after the four sessions of rise. Some of the heavyweights which are contributing to the sluggishness of the markets include names such as HDFC Bank, State Bank of India and ICICI Bank. On the Global front, Asian markets are trading strong, with Japan's Nikkei gaining 1.68% and Shanghai Composite moving higher by 1.27%. The US future indices are showing uptick in  the screen trade.Back home, on the BSE Sectoral space, stocks that are garnering investors' attention are  from Fast Moving Consumer Goods, Oil & Gas, Information Technology, Consumer Durables counters, while,  stocks from Bankex, Auto, Capital Goods, Public Sector Undertaking and Realty space are off color and are languishing at the bottom. The broader indices are trying to keep up the spirit as they ruling up in green, 0.10% (Mid Cap Index) and 0.31% (Small Cap index) respectively. The breadth on the BSE was supporting  declines which have outperformed the advances  in the ratio of 1023:1267, while 96 shares remained unchanged.

The stocks that should not be given a miss include Top car maker ---Maruti Suzuki --as it reported its December vehicle sales figures. Mid-sized software services firm Patni Computer Systems as iGate's deal with Apax Partners to acquire a majority stake in Patni is expected to be announced.Maruti Suzuki, India's largest automaker, has sold a total of 99,225 vehicles in December 2010.

The BSE Sensex shed 48.72 points or 0.24 % at 20,512.33. The index touched a high and a low of 20,651.21 and 20,494.43 respectively. There were 13 stocks advancing versus 17 declines.

The BSE Mid-cap and Small-cap indices were up by 0.10% and 0.31%, respectively.

The main gainers in the BSE sectoral space were Fast Moving Consumer Goods up by 0.78%,Oil & Gas up by 0.66%,Information Technology up by 0.48%,Consumer Durables up by 0.46% and Power up by 0.21%.

On the other hand, Bankex down by 1.49%,Auto down by 0.37%,Capital Goods down by 0.29%,Public Sector Undertaking down by 0.26% and Realty was down by 0.25% were the losers in the BSE sectoral space.

SARIAH 50 opened at 1,254.96, was up by 0.41 points or 0.03% at 1,252.22 from its previous close.It touched a high of 1,256.73 and a low of 1,250.23.

The major gainers on the Sensex were Reliance Infra up 1.41%, Hindustan Unilever up by 1.25%,Jindal Steel up by 1.14%,RIL up by 0.74% and ITC up by 0.72%.

On the flip side, ICICI Bank down by 1.98%, State Bank of India down by 1.81%,Bajaj Auto down by 1.80%,HDFC Bank down by 1.53% and Reliance Communication down by 1.49% were the major losers in the BSE sectoral space.

Financial services conglomerate Goldman Sachs has flagged India's high current account deficit (CAD) as a potential risk to the country's growth story.  The CAD, which increased to historic high levels in the September quarter of this fiscal has been a major worry for economists in recent months.

'The high deficit number supports our view that rising current account deficit being financed by short term capital flows remains the biggest risk to India's growth story,' Goldman Sachs has said in a recent research note. The financial services giant said that while there was no immediate risk to growth, high CAD, if not managed well, can destabilize economy in medium term.

According to the Balance of Payments (BoP) data released by the reserve Bank of India (RBI), country's CAD surged 72% to $15.8 billion in the July-September quarter over the same period last year. CAD in the immediately preceding quarter stood at $12.1 billion. Goldman Sachs expects the CAD to widen to a record high of close to 4% in the current fiscal year ending March from 2.9% in the previous year.

However, India's policy makers including the Finance Ministry and the Planning Commission are more optimistic, with Deputy Chairman of the Planning Commission Montek Singh Ahluwalia saying recently that India can live with a current account gap of 3-3.5% of its GDP. This higher CAD according to Ahluwalia can be used to fund the infrastructure development which will need an investment of $1.2 trillion in next six years.

The current account shows the net amount a country is earning from outside. It is the sum of the balance of trade, balance of services, factor income from abroad and cash transfers. It is called the current account as it covers transactions in the 'here and now' sense in that such transactions do not give rise to future liabilities. Although there is a current account deficit, it is being funded by the receipts on the capital account. However, volatile and speculative capital account inflows, like those through the portfolio investment channel, can often reverse in times of financial volatility, aggravating a country's economic crisis. 

The S&P CNX Nifty declined 15.15 points or 0.25% to 6,142.45. The index touched a high and a low of 6,181.05 and 6,134.60, respectively.  There were 22 stocks advancing against 28 declining.

The top gainers on the Nifty were Suzlon up by 4.80%,Cairn Indian up by 1.85%,GAIL up by 1.46%,Hindustan Unilever up by 1.36% and Reliance Infra up by 1.28%.

The top losers on the index were Bajaj Auto down 2.09%, ICICI Bank down by 2.08%,State Bank of India down by 1.92%,Reliance Communication down by 1.75% and HDFC bank down by 1.53%.

All regional peers were trading firmly; Shanghai Composite gained 1.27%,Hang Seng rose 0.51%,Jakarta Composite inched up by 0.15%,KLSE Composite added 0.89%,Nikkei 225 clocked gain of 1.68%,Straits Times registered growth of 0.61%, while Seoul Composite too rose by 0.33%.

Taiwan Weighted down by 0.21% was the lone loser in the Asian pack.

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/?TJzsLEwstCyc7OysHMyctEa0HOwMnIzMzA==