Markets drift lower;Bankex bleeds for second consecutive day

The domestic indices after starting the session on the subdued note have now drifted further low on unsupportive Asian markets, which are casting their shadow on the local market sentiment. Some pressure is also being exerted by the Banking sector for the second consecutive day which is dragging the markets lower, along with is the continuous offloading of positions at higher level by funds and retail investors in the metal sectors stocks. On the global front, the regional peers were mostly trading weak, barring Hang Seng, KLSE Composite and Strait Times. The US futures indices too are trading on mixed note, lacking any direction in screen trade. Back home, on the BSE Sectoral front, stocks from Oil & Gas , Healthcare, Consumer Durables and Information Technology sectors are to some extent capping the losses of the equity markets, while, stocks from Banking, Realty, Fast Moving Consumer Goods, Public Sector Undertaking and Metal Sectors are dragging the markets lower. In the broader indices, Midcap index is performing in tandem with the larger peers, while, Smallcap index  is ruling marginally up by  0.08%.The barometer indices are dipped in red and are struggling near their physcological level of 6100 nifty and 20500 mark Sensex.

The stock that buzzing today include; Larsen and Toubro and Navin Fluorine. L&T has kick started a restructuring plan to divide the Rs 37,000 crore groups into nine independent entities. The L&T board has approved this restructuring and implementation of the plan is underway. Another stock that has made it to the list includes Navin Fluorine International's as the SEBI has okeyd a buyback which is likely to be around Rs 400. Further the Ultratech Cement's shipments in December were at 3.27 million tonnes, unchanged from a year earlier.

The BSE Sensex is currently trading at 20,404.17, down by 94.55 points or 0.46%. There were 10 stocks advancing against 20 declines while on the index.

The overall market breadth is negative in the favour of declines against advances in the ratio of 1277:1268, while,90 shares remained unchanged.

In the broader indices,Midcap index is down by 0.22% while the small cap index is ruling up by 0.05%.

The top gaining sectoral indices on the BSE were, Oil and Gas up by 0.22 %, Consumer Durables up by 0.19%,Healthacre up by 0.18% and Information Technology up by 0.05%. While, Bankex down by 1.62%, Realty down by 0.48%, Metal down by 0.38 %, Public Sector Undertaking down by 0.33% and Fast Moving Consumer Goods down by 0.27%, were the major losers on the index.

The top gainers on the Sensex were Tata Powers up by 1.35%, Jaiprakash Associated up by 1.30%, Jindal Steel up by 1.02%, Mahindra & Mahindra up by 0.83% and Hindalco Industries up by 0.74%

ICICI Bank down by 2.32%, Sterlite Industries down by 1.99%, Bajaj Auto down by 1.79% HDFC down by 1.53% and Tata Steel down by 1.37% were the top losers on the index

SARIAH 50 which opened at 1,254.11, is currently trading up at 1,253.05, up by 0.16 points or 0.01% from its previous close of 1,252.89.

Meanwhile,  the Group of Ministers (GoM) on fertiliser policy, headed by Union Finance Minister Pranab Mukherjee, is expected to meet later today to consider the proposal of hiking the price of urea or deregulating the commodity fully or partially.

The government has been looking to deregulate the fertiliser sector completely to cut its subsidy burden and to help bring the fertiliser use, which is currently skewed in favour of urea, in the country into a balance. The Centre had earlier drawn a plan to free up urea prices and bring it under the purview of the Nutrient Based Subsidy (NBS) regime from the fiscal 2011-12.

In this wake the expectation earlier was that there will be a decontrol on the commodity. However, given the high inflation currently prevailing in the Indian economy, and particularly the rigid food commodities' prices, the fertiliser ministry seems to be against the decontrol move right now. Therefore, the GoM that consist of agriculture, finance and the fertiliser minister, is likely to consider either a prices hike or a partial deregulation within limits whose upper end could be around 10% higher from current price.

The government is also expected to add the fixed cost subsidy reimbursement. The fixed cost was last determined in the year 2003 and has not been revised since then, cost of production has gone up substantially since then, like the imputed cost of premises, employee costs etc, there is a reasonable case for increment in fixed cost subsidy. The industry is expecting around Rs 350 per tonne hike in the same. This will be a positive move for the industry, but ultimately the market participants would like to see a complete deregulation of urea and bringing it under the NBS they way other fertilizers have been brought.

Earlier, the government had deregulated phosphatic and potassic fertilisers, allowing the sellers to fix the maximum retail price (MRP) under the NBS regime. At that time the government did hike the urea MRP by 10% but did not allowed any freedom to sellers in deciding the prices. The finance ministry however has been wary of surging subsidy burden and wants to bring it down and therefore has been pushing for introducing greater market dynamics in the fertiliser space.

The S&P CNX Nifty is currently trading at 6,112.45, down by 33.90 points or 0.55%. There were 16 stocks advancing against 34 declines on the index.

The top gainers of the Nifty were HCL Technologies up by 1.62%, Tata Power up by 1.21%,GAIL up by 1.15%, Jaiprakash Associates up by 1.02%, and Mahindra & Mahindra up by 0.85%.

The top losers of the index were Axis Bank down by 2.38%,ICICI Bank down by 2.36 %,Sterlite Indusries down by 2.14%,Punjab National Bank down by 2.04% and Bajaj Auto down by 2.01%.

All the Asian markets barring Straits Times and KLSE Composite  and Hang Seng were trading in the red; Shanghai Composite was down 0.35%, Jakarta Composite was down by 0.33%, Nikkei 225 down by 0.24%, Seoul Composite was down 0.19% and Taiwan Weighted was down by 1.61%.

On the flip side, Straits Times was up 0.10, Hang Seng up by 0.08% and KLSE Composite was up by 0.78%

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