Domestic equity market slides lacking any suuportive cue

Domestic equity markets after starting the day on a muted note in line with the cues from the global front have now edged lower due to some selling pressure amidst worries about the impact of the 2G spectrum scam on the Indian political scene. Concerns about a slowdown in economic growth and a decline in corporate earnings too appear to be weighing on sentiment of the domestic markets which have started showing signs of fatigue after three successive days of gains. Adding pressure to the markets are the shares of Anil Dhirubhai Ambani Group (ADAG) companies which are witnessing selling pressure following the report of central investigating agency  seeking details from  Anil Ambani about possible irregularities in Swan Telecom getting 2G spectrum allocation. However, keeping the momentum on the positive side are broader indices which seem to be in jaunty mood and are edging up over 0.50% each. On the global front, Wall Street rose marginally on Wednesday on stronger-than-expected Dell earnings and a spell of deal news, but concern about tensions between Israel and Iran gave investors reason to pause. While Asian shares were showcasing diverged trend as property developers dragged China and Hong Kong lower.

Back on the Dalal Street, from the sectoral indices, stocks from Metal, TECk, IT, Consumer Durables and Realty counters were leading the gainers pack, while stocks from FMCG, Oil & Gas, Auto, Power and Capital Goods were moving in southwards direction, in tandem with the flow of the market. The overall market breadth on BSE still remains in the favour of advances which have flogged declines in the ratio of 1300:842, while, 78 shares remained unchanged. 

The BSE Sensex is currently trading at 18,287.53, down by 13.37 points or 0.07%.The index touched a high of 18,345.42 and a low of 18,233.79 respectively. There were 10 stocks advancing against 20 declines on the index.

The broader indices were afloat in green; the BSE Mid cap and Small cap indices were up by 0.47% and 0.63% respectively.

In BSE sectoral indices, Metal up 0.44%, TECk up 0.33 %, IT up 0.21%, Consumer Durables up by 0.15% and Realty up by 0.10% were the main gainers in the BSE sectoral space.

On the other hand FMCG down 0.61%, OIL& Gas down 0.56%, Auto down 0.25%, Power down 0.24%, and Capital Goods (CG) 0.18% were the main losers on the BSE sectoral space.

The top gainers of the BSE Sensex were Bharti Airtel up 1.43%, HDFC up 1.33%, Bajaj Auto up 0.87%, HDFC Bank up 0.87% and DLF up 0.86%.

Wipro down 1.36%, ICICI Bank down 1.31%, JP Associates down1.05%, Mahindra &Mahindra down 0.97% and ONGC down 0.93% were top losers on the BSE Sensex.

Meanwhile, the Indian government is fast running out of feasible options in context of the surging fuel subsidy as the global crude prices continue to remain at elevated levels. Brent crude rose above $104 a barrel on Wednesday amidst some increasing tension between Israel and Iran and has shown little signs of easing even as Egypt problem recedes.

Earlier in January, the three week long unrest in Egypt helped push Brent over $100 a barrel. There have been fears that after Tunisia and Egypt, the unrest could spread to other countries in the Middle-East that could result in some significant disruption in world oil supplies. Although such a possibility is low at the time, it can nonetheless further drive up prices on speculations even if there is a little bit of negative news.

This however is not good for India which imports close to 80% of the crude oil consumed in the country. As the crude oil prices have been rising, the under-recoveries of the state-controlled fuel retailers have been rising. According to the estimates of oil ministry, the under-recovery of oil marketing companies (OMCs) have increased to over Rs 10 a litre from nearly Rs 6 a litre in December.

Union Oil and Gas Minister S Jaipal Reddy had on Tuesday reiterated that the government did not intend to hike the administered prices of diesel and cooking fuels despite the surge in under-recoveries of the OMCs, which are now likely to close to Rs 80,000 crore than Rs 70,0000 crore expected earlier. It will however increase its subsidy share from 33% to 50% to help protect financial health of fuel retailers.  

Even a 50% contribution from finance ministry will leave 16% of the losses to be absorbed by the OMCs. These companies are not in a position to bear even these kind of losses in longer term, and even if things are left like this in the current fiscal, there must be some better mechanism in the next fiscal. This may in form of some flexibility on taxes and retail prices or greater support from the government. However, one thing is sure, the OMCs cannot be left venerable, as these are very important pillar of Indian energy security.   

The S&P CNX Nifty is currently trading at 5,478.40, down by 3.30 points or 0.06%. The index touched high of 5,501.70 and a low of 5,463.40 respectively. There were 21 stocks advancing against 29 declines on the index.

The top gainers of the Nifty were SAIL up 2.33%, IDFC up 1.95%, HDFC up 1.66%, Suzlon up 1.55% and Ambuja Cement up 1.43%.

The top losers of the index were Cairn India down 1.98%, Wipro down 1.41%, Reliance Capital down 1.37%, BPCL down 1.32% and GAIL down 1.29%.

Majority of the Asian markets were trading mixed; Shanghai composite declined 0.35%, Straits Times down 0.30%, Seoul Composite down 1.33%, Taiwan Weighted   lowered 0.13% While Hang Seng was trading flat.

On the other hand, Nikkei 225 was up by 0.35%, KLSE Composite gained 0.42%, Jakarta Composite added 0.44%.

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/?TJzsLEwstCyc7OysHMyctEa0nIwMDAxsDA==