Markets trade at the lowest point of the day

Indian equity indices are trading at the lowest point of day and it has pared off the gains with lack of  buying by investors, as they fear sovereign crisis in the Eurozone and worsening inflation amid a potential rise in diesel prices this week. Market participants are only indulging in stock specific activities as F&O expiry nears and they too fear that inflationary pressure and hike in interest rates would lead to higher borrowing costs, thereby hurting corporate earnings. Majority of Asian bourses were trading in the green terrain while the European counterparts on the other hand too are trading firm. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 5,400 and 18,000 levels, respectively. The Sensex outperformed the Mid-cap and the Small-cap indices on the upside. The market breadth on the BSE was in favor of declines in the ratio of 1195:1468 while 117 scrips remained unchanged.

The BSE Sensex was flat 1.03 points up or 0.01% at 17,994.36. The index touched a high and a low of 18,110.39 and 17,957.73 respectively.

The BSE Mid-cap index was down 0.13%, while the Small-cap index was trading with loss of 0.32%.

On the BSE sectoral front, Capital Goods up 0.75%, Bankex up 0.55%, Consumer Durables up 0.54%, Health Care up 0.25% and Oil & Gas up 0.09% were the top gainers. While, Realty down 1.01%, FMCG down 0.90%, PSU down 0.73%, Power down 0.42% and Auto down 0.39% were the major laggards in the BSE sectoral space.

The top gainer on the Sensex were ICICI Bank up 1.44%, Cipla up 1.41%, Hero Honda up 1.34%, L&T up 1.31% and RIL up 0.69%. On the flip side Reliance Infra down 2.40%, DLF down 2.06%, HUL down 1.45%, TCS down 1.39% and SBI down 1.25% were the major losers on the BSE index.

Meanwhile, the recommendations made by Sonia Gandhi led National Advisory Council on the proposed Food Security Bill is likely to be accepted by the government, in spite of some concerns that the suggestions would add to subsidy burden, increase dependence on import and may imbalance the country's food economy. The move followed a meeting last week between Gandhi and Minister of State for Consumer Affairs, Food and Public Distribution, KV Thomas. The council had proposed legal subsidized food entitlement for at least 72% of the country's population in phase I by 2011-12. The National Advisory Council had also proposed legal subsidized food entitlements for 75% of the country's population, covering the priority (below the poverty line) and general (above the poverty line) households, in phase II by 2013-14.The food ministry has set out plans in line with the NAC's proposal to widen the scope of the legislation, which seeks to provide legal guarantee of subsidised grains to the poor, however many experts have warned that the NAC advices would force the government significantly to raise its grain procurement, which in turn would show the way to a larger subsidy load on its already strained finances.

In tandem with experts view, an expert panel headed by the C Rangarajan, PM's Economic Advisory Council chairman said, 'It will not be possible to implement the NAC recommended food entitlements for either of the phases'. The panel had alternative suggested covering just 46% of the rural and 28% of the urban population roughly corresponding with the poverty estimates.

The Rangarajan panel's views were strongly criticized by the NAC, which released a part of the draft food security bill for public debate a week after the panel submitted its report. The NAC is opposed to leaving out Above Poverty Line beneficiaries from the ambit of the food law. 

The PM formed an Empowered group of Ministers to settle varying views of the NAC and panel on the proposed legislation and even enlisted the planning commission's support. Now the government may offer a compromise by implementing largely the NAC recommendations law, but the prices would be higher than the suggested in order to reduce the burden of subsides.

Presently, the government gives 35 kg of grains a month to each of the 65.2 million families living below the poverty line through the Public Distribution System (PDS). The government charges only Rs. 4.16 a kg for wheat and Rs. 6.65 a kg for rice from these families, while the NAC has proposed wheat at Rs 2 kg and rice at Rs 3 kg in food security law.

The S&P CNX Nifty gained 1.85 points or 0.03% at 5,388.40. The index touched high and low of 5,422.60 and 5,376.40 respectively.

The top gainers on the Nifty were Ambuja Cement up 2.48%, ACC up 1.92%, PNB up 1.91%, Hero Honda up 1.74% and Sun Pharma up 1.49%.  While, Reliance Infra down 2.43%, SesaGoa down 2.25%, DLF down 2.04%, TCS down 1.78% and HCL Tech down 1.54% were the major losers on the index.

The Asian markets were trading majorly in green barring Shanghai Composite down 0.25%, Hang Seng gained 0.09%, Jakarta Composite up 0.20%, Seoul Composite up 0.29%, Nikkei 225 up 0.17%, Taiwan Weighted up 0.10%, Strait Times up 0.30% and KLSE Composite up 0.21%.

The European markets were trading in green. CAC 40 up 0.27%, DAX gained 0.59% and FTSE 100 up 0.36%.

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