Benchmarks trade in red after a flat start

The Indian equity markets are trading in the negative terrain after making a flat start taking weak cues from the Asian counterparts. Most of the Asian peers were trading in the negative terrain at this point of time slightly influenced by the rate hike in China. Though, the US markets continued their gaining streak on Friday and despite some profit booking the major indices were able to snap the week with gains of about a percent each. Back home, benchmarks turn negative after a positive start as selling pressure was witnessed in broader indices and rate sensitive sectors. On the sectoral front, capital goods, fast moving consumer goods and metal were the top gainers in the trade; on the other hand auto, realty and banking were the major losers on the BSE sectoral space. The broader indices too were bleeding badly. The market breadth on the BSE was negative; there were 617 shares on the gaining side against 1036 shares on the losing side while 61 shares remained unchanged. The investors remained on the safer side in early trade as crucial budget session of Parliament will begin today. Trade may remain volatile this week as it being the expiry week for the February F&O series.

The BSE Sensex opened at 18,238.54; about 27 points higher compared to its previous closing of 18,211.52, and has touched a high and a low of 18,306.75 and 18,147.07 respectively.

The index is currently trading at 18,181.48, down by 30.04 points or 0.16%. There were 10 stocks advancing against 19 declines while one scrip remained unchanged on the index.

The overall market breadth started in the negative terrain, with 36% stocks advancing against 60.44% declines. The broader indices too were trading in the red; the BSE Mid cap and Small cap indices were down by 0.82% and 0.41%, respectively.

The top gaining sectoral indices on the BSE were, CG up by 0.70%, FMCG up by 0.61%, Metal up by 0.42% and CD up by 0.01%. While, Auto down by 1.38%, Realty down by 0.80%, Bankex down by 0.66%, TECk down by 0.28% and IT down by 0.23% were the major losers on the index.

The top gainers on the Sensex were Bajaj Wipro up by 2.52%, Sterlite Industries up by 1.90%, Jindal Steel up by 1.63%, BHEL up by 1.29% and HUL was up by 1.02%.

Tata Motors down by 2.50%, TCS down by 1.87%, Hero Honda down by 1.72%, DLF down by 1.63% and M&M down by 1.46% were the top losers on the index were.

The Indian government cleared on Friday that it was not in favour of a global mechanism for regulating the flow of capital or for implementing capital controls, but would like to see a higher degree of transparency in framing of monetary policies and flow of volatile capital across borders. 

"Our position is that we do not want any arbitrary mechanism to discourage capital inflows. We have stated that this decision should be left to the discretion of individual countries," said the Union Finance Minister of the country Pranab Mukherjee on Friday at the sidelined of the gathering of the G20 to deliberate on the global economic imbalances.

India is facing a difficult situation wherein its economy needs greater foreign capital to bridge its widening current account deficit (CAD), expected to reach 3.5% of the gross domestic product (GDP), but the foreign direct investment (FDI) has gone down in 2010. While institutional fund flow has increased broadly, economists have raised concerns saying financing of higher CAD should come through greater direct investment which has longer term commitment rather than volatile portfolio flows.

On the issue of fiscal consolidation, the finance minister stated that Indian government would return to fiscal discipline in the forthcoming Budget, after having followed policies of stimulus and expansion in the last two years. Mukherjee said that expansionary policies were the need of the hour when growth was going down. Now, however, as the growth has started to improve, it was pragmatic to bring down deficit, particularly in wake of high inflation prevailing presently.

Years of hard work in fiscal consolidation was washed away in 2008-09 when fiscal deficit ballooned to 6.8% of the GDP on account of higher subsidy outgo in first half amidst a global commodity rally and decline in tax receipts in second half due to tax sops and slowdown in economic growth. However, riding on windfall non-tax revenue from the auction of third generation (3G) telecom spectrum, the government is likely to end the fiscal with lower than budgeted deficit. The challenge will be to cut the fiscal gap further next year when there will be no windfall income.

The S&P CNX Nifty opened at 5,456.60; flat compared to its previous closing of 5,458.95, and has touched a high and a low of 5,483.55 and 5,436.80, respectively.

The index is currently trading at 5,444.35, down by 14.60 points or 0.27%. There were 19 stocks advancing against 31 declines on the index.

The top gainers of the Nifty were Wipro up by 2.42%, Sterlite Industries up by 2.28%, Jindal Steel up by 1.66%, Reliance Infra up by 1.45% and Sun Pharma up by 1.35%.

The top losers of the index were Tata Motors down by 2.70%, Hero Honda down by 1.91%, HCL Tech down by 1.88%, TCS down by 1.68% and Suzlon was down by 1.57%.

Asian equity indices were trading mostly in the red; Hang Seng was down 75.94 points or 0.32% to 23,519.30, Jakarta Composite was down 7.51 points or 0.21% to 3,493.99, KLSE Composite was down 0.31 points or 0.02% to 1,517.25, Straits Times was down 15.01 points or 0.49% to 3,071.91, Seoul Composite was down 3.93 points or 0.20% to 2,009.21 and Taiwan Weighted was down by 7.33 points or 0.08% to 8,836.51.

On the flip side, Shanghai Composite was up 3.59 points or 0.12% to 2,903.38 and Nikkei 225 was up by 5.19 points or 0.05% to 10,847.99.

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