Markets trade in the red after a good start

The Indian equity markets are trading in the red after making a positive start on the back of supportive global cues. The US markets made a good closing overnight, though earnings report remained mixed but markets got supported from some easing of debt concerns in the Europe. The Asian counterparts were also trading mostly in the green at this point of time. Back Home, after a good start some selling pressure was witnessed in key heavyweights that dragged the BSE's -- Sensex -- below its crucial 19,100 level, which it attained in the early trade. On the sectoral front, metal, auto and oil and gas were the top gainers in trade; on the other hand software, technology and capital goods were the major losers on the BSE sectoral space. Meanwhile, Airlines stocks viz Kingfisher Airlines and Jet Air India were trading with a gain of over one percent, while Spicejet was also edged higher in the trade on the news that air traffic reported a robust growth this winter recording the highest number of passengers carried between October and December last year. Moreover, HCL Technology was also trading with a gain of over four percent after reporting a good set of numbers, the company has posted a net profit of Rs 285.97 crore for the quarter ended December 31, 2010 as compared to Rs 255.44 crore for the quarter ended December 31, 2009. The broader indices were outperforming benchmarks. The market breadth on the BSE was positive; there were 976 shares on the gaining side against 686 shares on the losing side while 68 shares remained unchanged.

The BSE Sensex opened at 19,153.31; about 61 points higher compared to its previous closing of 19,092.05, and has touched a high and a low of 19,167.06 and 19,047.96 respectively. The index is currently trading at 19,065.24, down by 26.81 points or 0.14%. There were 15 stocks advancing against 15 declines while on the index.

The overall market breadth is started in the positive terrain, with 56.42% stocks advancing against 39.65% declines. The broader indices were outperforming benchmarks; the BSE Mid cap and Small cap indices were up by 0.35% and 0.48%, respectively.

The top gaining sectoral indices on the BSE were, Metal up by 0.87%, Auto up by 0.28%, Oil and Gas up by 0.27%, Healthcare up by 0.16% and Bankex was up by 0.10%. While, IT down by 1.15%, TECk down by 0.86%, CG down by 0.80%, Realty down by 0.33%  and CD down by 0.07% were the major losers on the index.

The top gainers on the Sensex were Reliance Infra up by 3.37%, M&M up by 1.69%, ICICI Bank up by 1.44%, Sterlite Industries up by 1.44% and Jaiprakash Associates was up by 1.10%.

Infosys down by 1.78%, HDFC Bank down by 1.36%, BHEL down by 1.18%, L&T down by 1.16% and DLF down by 1.06% were the top losers on the index were.

Meanwhile, Industry body CII has urged the government top hike the foreign direct investment (FDI) cap in private companies to 49%, from the current level of 26%. The industry lobby contends the move will help raise the penetration level, particularly in the rural market and hence will improve the overall risk management in hinterlands.

"Rural and Social Sectors offer huge potential for improving Insurance penetration for the uninsured sections of the population and this calls for better risk management, innovations on product design and distribution, infusing technology and greater investments," said the CII in its comments on the Insurance Laws (Amendment) Bill, 2008..

The CII opines that insurance penetration in the rural and social sectors will be marked by high risk and hence more dynamic and efficient risk management systems would be crucial. It would necessitate innovative strategies not just in terms of insurance products but also in ways of distributing them. In addition, use of better technologies right from issuance to servicing of insurance services is also crucial for long term growth of Insurance sector in India that can also serve the interests of rural populations and businesses including agriculture and related activities.

"This clearly justifies greater engagement of foreign partners in bringing in better risk management practices, innovation in production and distribution, technology, specialized skills and hence there is a strong need to raise FDI cap in insurance sector from the current 26 % to 49%," the industry body concluded.

The Indian government has been contemplating liberalizing the insurance sector by hiking the FDI limit to 49% but the move has been held up due to political issues. Various industry bodies as well as foreign governments including those of the US and France have urged government to open up the insurance sector. While the government accepts that greater FDI into the insurance will help the cause of increasing penetration in rural areas, it also wants to ensure that Indian insurance sector remains protected from global economic problems, like the ones reflected in the financial crisis of late 2008.

The S&P CNX Nifty opened at 5,737.35; about 13 points higher compared to its previous closing of 5,724.05, and has touched a high and a low of 5,747.65 and 5,708.65 respectively. The index is currently trading at 5,715.70, down by 8.35 points or 0.15%. There were 23 stocks advancing against 27 declines on the index.

The top gainers of the Nifty were HCL Tech up by 3.73%, Reliance Infra up by 3.56%, SAIL up by 2.31%, M&M up by 1.80% and ICICI Bank up by 1.39%.

The top losers of the index were GAIL down by 2.34%, Infosys down by 1.96%, TCS down by 1.29%, L&T down by 1.28% and HDFC Bank was down by 1.25%.

Shanghai Composite was up 28.68 points or 1.06% to 2,737.66, Hang Seng was up 195.37 points or 0.81% to 24,349.35, Nikkei 225 was up 29.55 points or 0.28% to 10,548.53, Straits Times was up 3.46 points or 0.11% to 3,253.04, Seoul Composite was up 14.68 points or 0.70% to 2,111.16 and Taiwan Weighted was up by 28.97 points or 0.32% to 9,051.12.

On the flip side, Jakarta Composite was down 23.05 points or 0.65% to 3,525.60 and KLSE Composite was down by 4.03 points or 0.26% to 1,566.01.

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