Benchmarks trade weak; Nifty below 5,550 mark

Indian equity indices continued their weak trade paring off the gains and hovering around the lowest point of the day as investors booked profits in some heavy weights like Tata Motors, Hindalco, HDFC, Sterlite and JP Associates etc. amid the growing uncertainty in the local markets. The downside risks were capped by the rally in shares of Reliance ADA group companies after a Central Bureau of Investigation court turned down a plea seeking a probe against group chairman Anil Ambani in the case of alleged rigging of sale of telecommunication licenses and bandwidth in 2008. Reliance Communications, the country's second-largest mobile-phone operator, surged 5.34% while Reliance Infra soared by 2.77% in the afternoon trades. However, leads from the Asian markets were not encouraging while European counterparts were trading in green zone giving mixed sentiments among the investors. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 5,550 and 18,500 levels, respectively. The market breadth on the BSE was in favor of declines in the ratio of 1263:1416 while 141 scrips remained unchanged.

Moreover, Reliance Industries' Chairman Mukesh Ambani addressed the shareholders at the company's 37th AGM where it aimed the company to be free of net debt by the end of fiscal 2012 stating that the company is the first private sector company in India to have a turnover of Rs 2.5 lakh crore. The company has cash and cash-equivalents of Rs 42,393 crore ($9.5 billion) as on March 31 this year, which was nearly double the level seen a year ago and are mainly in fixed deposits, certificate of deposits with banks, mutual funds and government securities/ bonds. The enterprise value of the company stood at about $75 billion. Since its IPO, RIL's revenue has grown by 28 percent on year-on-year basis over the past 33 years, while profit and market capitalization have grown by 33 per cent on an average every year during this period. The company will double petrochemical business on rising demand and will be setting up a 1.5 mn tonne cracker unit at Jamnagar.  However, the company shelved plans to foray into power sector.

The BSE Sensex slipped by 93.39 points or 0.50% at 18,400.79. The index touched a high and a low of 18,672.65 and 18,358.94 respectively.

The BSE Mid-cap index was down 0.24% and Small-cap index slipped 0.04%.

On the BSE sectoral front, Capital Goods up 0.66%, Realty up 0.50%, Consumer Durables up 0.19%, Teck up 0.07% and IT flat 0.00% remained the only gainers. While, Oil & Gas down 1.23%, PSU down 0.98%, Metal down 0.90%, Healthcare down 0.88% and FMCG down 0.84% were the major laggards in the BSE sectoral space. 

The top gainers on the Sensex were R Com up 5.34%, R Infra up 2.77%, L&T up 2.12%, DLF up 1.16% and Maruti up 0.95%. On the flip side Tata Motors down 2.58%, Hindalco down 2.14%, HDFC down 2.03%, Sterlite down 1.41% and JP Associates down 1.38% were the major losers on the index.

Meanwhile, the competition watchdog CCI (Competition Commission of India) is going to study key sectors like agriculture, steel and paper after conducting similar study in aviation and cement industry. The CCI will conduct market specific study to understand the dynamics of market and how to improve the efficiency in the sectors and also to identify the reason why some of the products prices are volatile in the commodity market.

The CCI has decided to undertake detailed studies on these sectors to ensure that there are no distortions in pricing and the end consumer is not impacted in any way. Prices of the agricultural commodities are more volatile than those of the non-farm commodities due to their low price elasticity and income elasticity and inherently unstable agricultural production due to risk and exogenous shocks,' said the CCI chairman Dhanendra Kumar.

The study on "market structures for agricultural commodities in India" (with particular focus on onion markets) will be conducted by Institute of Social and Economic Change. The study is likely to complete in 45 days. The study aims to understand the supply side dynamics for selected agriculture commodities, the structure, degree and nature of market competition at each stage of supply chain, functions of mandies, process of price discovery and identification of competition and efficiency bottlenecks. The spurt in food inflation in recent months had brought into focus the critical issues of price volatility in agricultural commodities, agricultural market structures and market efficiency, CCI said.

In recent time, the surge in agriculture commodities prices had attracted the attention of competition watchdog as the prices movements were not affected by the market fundamentals of demand and supply. And there was urgent need to understand the market mechanism of agriculture sector in order to keep an eye on food inflation, which was in two digits till March 2011. Food inflation accounts for 15% in the wholesale price index (WPI).

The S&P CNX Nifty eased 28.20 points or 0.51% at 5,522.15. The index touched high and low of 5,604.95 and 5,509.90 respectively.

The top gainers on the Nifty were R Com up 5.11%, R Capital up 3.94%, R Infra up 2.62%, L&T up 2.30% and PowerGrid up 2.27%. On the other hand, Tata Motors down 2.70%, Axis Bank down 2.43%, IDFC down 2.38%, Sun Pharma down 2.35% and SAIL down 2.18% were the major losers on the index.

On the Asian front, Hang Seng plunged 1.31%, Jakarta Composite down 0.16%, Nikkei 225 drifted 0.66%, Straits Times fell 0.49% and Seoul Composite inched down 0.03%.

On the flipside, Shanghai Composite climbed by 0.85%, KLSE Composite up 0.12% and Taiwan Weighted advanced 0.61%.

The European markets were trading in green with France's CAC 40 up 0.24%, Germany's DAX gained 0.58% and London's FTSE rose 0.25%.

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