Markets make soft start taking weak cues from the US markets

The Indian equity markets have made a soft start taking weak cues from the US markets. The US markets suffered sharp selloff on Tuesday influenced by the Libyan unrest and all the major indices were down by an average one and half a percent, though Asian markets were trading on a mixed note at this point of time. Back home, benchmarks are trading in the green after opening the day's trade on a soft note as some of the Asian markets turned positive. On the sectoral front, realty, oil and gas and metal were the top gainers in trade; on the other hand software, technology and banking were the major losers on the BSE sectoral space. The broader indices were outperforming benchmarks. Meanwhile, PSU oil companies like Bharat Petroleum Corporation (BPCL), Hindustan Petroleum Corporation (HPCL) and Indian Oil Corporation (IOC) were trading with a cut of about half a percent to one percent as the Indian crude basket, majorly contributed by Brent crude has already crossed $100 a barrel. The market breadth on the BSE was negative; there were 911 shares on the gaining side against 612 shares on the losing side while 74 shares remained unchanged. Trade may remain volatile this week as it being the expiry week for the February F&O series.

The BSE Sensex opened at 18,233.77; about 63 points lower compared to its previous closing of 18,296.16, and has touched a high and a low of 18,335.32 and 18,226.40, respectively.

The index is currently trading at 18,309.80, up by 13.64 points or 0.07%. There were 18 stocks advancing against 11 declines while one scrip remained unchanged on the index.

The overall market breadth started in the positive terrain, with 57.04% stocks advancing against 38.32% declines. The broader indices were outperforming benchmarks; the BSE Mid cap and Small cap indices were up by 0.29% and 0.42%, respectively.

The top gaining sectoral indices on the BSE were, Realty up by 1.04%, Oil and Gas up by 0.57%, Metal up by 0.47%, CG up by 0.45% and Power was up by 0.23%. While, IT down by 1.12%, TECk down by 0.77%, Bankex down by 0.51%, CD down by 0.23% and HC down by 0.02%, were the major losers on the index.

The top gainers on the Sensex were Sterlite Industries up by 2.41%, HDFC up by 1.99%, Reliance Infra up by 1.87%, Hindalco up by 1.04% and Hero Honda was up by 1.01%.

Infosys down by 1.63%, SBI down by 1.25%, ICICI Bank down by 0.62%, Wipro down by 0.56% and TCS down by 0.47% were the top losers on the index were.

Meanwhile, after years of negligence, the Indian government is likely to give a major boost to the semi conductor industry in the forthcoming Union Budget for FY12. Various experts have been urging the government to take steps in direction given the increasing dependence of the country on imported chips, even in basic equipments.

Analysts have been projecting that the demand for the electronics hardware will rise from $45 billion in 2009 to $400 billion by 2020. What it means is that by 2020, India would be spending more on electronic imports than on oil imports if the domestic production level is not drastically increased from the current levels, which even lag behind small countries like Taiwan. It has been clear for quite some time that the Indian semiconductor space will need some significant break to take it to a level where it can become global competitive.

The new incentive scheme that the government is expected to announce in Budget is an attempt to improve on the package that was introduced under its semiconductor policy - 2007, which has very much failed in its broader objectives of boosting semiconductor industry in India. In 2007, the government had offered 20-25% subsidies to large investments of Rs 1,000 crore to Rs 2,500 crore in semiconductor fab units and eco-system units. However, the policy mainly attracted investments by solar photovoltaic segment only.

Industry insiders have been saying that the government should minimize the threshold for manufacturing units to ensure that any benefits of such policy reach to the young technocrat entrepreneurs.  Since it is not practical for small companies to invest huge sums exceeding Rs 1,000 crore, the government will have to revisit the threshold to follow a bottom up approach, as has been the case with the software industry.

In fact the government had asked for recommendations of the industry and the new policy is being formulated accordingly. It is understood that the new incentive scheme would no longer be totally focused on large projects, rather, it would try to give some sops to the entire value chain of electronic systems, including chips, chip components, accessories, assembly, testing etc. If all these segments are brought under the incentive net, it will surely generate positive currents in the industry.

The S&P CNX Nifty opened at 5,452.45; about 17 points lower compared to its previous closing of 5,469.20, and has touched a touched a high and a low of 5,481.85 and 5,446.35, respectively.

The index is currently trading at 5,474.70, up by 5.50 points or 0.10%. There were 31 stocks advancing against 19 declines on the index.

The top gainers of the Nifty were Sterlite Industries up by 2.47%, HDFC up by 2.16%, Reliance Infra up by 1.98%, Ambuja Cement up by 1.25% and Hero Honda up by 1.25%.

The top losers of the index were Ranbaxy down by 3.22%, Infosys down by 1.68%, SBI down by 1.26%, IDFC down by 1.19% and BPCL was down by 1.18%.

Asian equity indices were trading on a mixed note; Hang Seng was down 70.63 points or 0.31% to 22,920.18, KLSE Composite was down 4.45 points or 0.29% to 1,509.18, Nikkei 225 was down 64.31 points or 0.60% to 10,600.39, Straits Times was down 10.52 points or 0.35% to 3,008.60 and Taiwan Weighted was down by 77.85 points or 0.90% to 8,595.82.

On the flip side, Shanghai Composite was up 7.02 points or 0.25% to 2,862.54, Jakarta Composite was up 31.74 points or 0.92% to 3,482.84 and Seoul Composite was up by 1.12 points or 0.06% to 1,971.04.

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