Indian equities trade weak as short covering rally halts

The short covering rally, which emerged after the knee-jerk reaction to reports that India will push for removal of tax concessions in the tax treaty with Mauritius dragged the Indian benchmarks to four month low levels, seems to have halted in the afternoon session of trade. Just when it looked like the frontline indices are set to pare most part of their losses, they witnessed severe resistances around the psychological 5,350 and 17,900 levels as marketmen continued to book profits from the blue chip stocks. Meanwhile, the European markets too got off to a pessimistic opening on reports that European finance ministers delayed a final decision on extending an emergency loan to Greece, stating that it would first have to introduce harsh austerity measures. Asian markets are also exhibiting subdued trends thereby giving no support to the local sentiments. Back home stocks like GTL and GTL Infrastructure plunged by around 50% after multiple factors like company's higher debt, scrapping of fund raising plan and the Mauritius government's tax treaty plan with India, prompted investors to take profits off the table. ADA group stocks too took nasty beating on the back of stocks like R Com and R Infra being removed from the benchmark Sensex index. On the sectoral front, only consumer durables counter managed to hold in green zone while the high beta realty pocket languished at the bottom with over two percent laceration.

Back home, the broader markets too failed to recuperate the hefty losses incurred in the morning session and traded with large cuts of around two and half a percent points. The markets got butchered on large volumes of over Rs 1.20 lakh crore in the noon session while the turnover for the F&O segment was at over Rs 1 lakh crore. The market breadth on the BSE was in favor of declines in the ratio of 469:2103 while 70 scrips remained unchanged.

The BSE Sensex is currently trading with huge losses at 17,636.07 down by 234.46 points or 1.31% after trading as high as 17,925.17 and as low as 17,314.38. There were 3 stocks advancing against 27 declines on the index.

The broader indices were trading on a somber note; the BSE Mid cap and Small cap indices plummeted by 2.23% and 2.35% respectively. 

On the BSE sectoral space, Consumer Durables up 0.13%was the only gainer, while Realty down 2.26%, IT down 2.13%, Power down 1.91%, Auto down 1.84% and Teck down by 1.82%, were the major losers on the index.

The top gainers on the Sensex were Bharti Airtel up by 1.64%, Herop Honda up by 0.39%, ICICI Bank up by 0.26%.

On the flip side, Reliance Communication down by 6.20%, Reliance Infra down by 5.62%, Cipla down by 3.15%, JP Associates down by 2.64% and TCS down by 2.48% were the top losers on the index.

The government has put a break to speculation of more sugar export from the country and has stated that it will not allow more sugar exports till Diwali as it does not want retail prices of the sweetener to rise during the festive season.

Food and Consumer Affairs Minister K V Thomas has said that 'We will take a view on export after meeting the festival demand and looking at domestic price situation.' The demand of sugar generally increases during the festive season during October-November. Thomas also pointed out that the retail prices of sugar are still fluctuating and in some places, rates are as high as Rs 40 per kg.

It was speculated that government might allow for more export of the sweetener after the Industry representatives met Thomas earlier last week to demand for additional exports of 1.5 million tonnes of sugar. In April, the government had allowed export of five lakh tonnes of sugar under Open General Licence, out of which 51,500 tonnes has been kept aside for the neighbouring countries.

The minister further stated that 'The decision on exports will depend on price situation in the retail market and estimates of next year's production.'  He, however, said that the government would consider the industry's demand to lift the stock-holding limit on sugar to boost domestic sales.

Meanwhile, according to the Agriculture Outlook prepared jointly by Paris-based OECD and UN body FAO, sugar production in India, the world's second biggest producer and largest consumer, is expected to be on an average 32 million tonnes (MT) per year for the next 10 years. India requires 22.5 million tonnes of sweetener annually for its domestic consumption.

The S&P CNX Nifty is currently trading at 5,293.75, lower by 72.65 points or 1.35% after trading as high as 5,377.40 and as low as 5,195.90. There were 6 stocks advancing against 44 declines on the index.

The top gainers of the Nifty were Bharti Airtel up by 1.46%, Sun Pharma up by 1.38%, Axis Bank up by 0.85%, PNB up by 0.50% and Hero Honda up by 0.48%.

R Com down by 6.30%, R Infra down by 5.72%, Grasim down by 3.73%, HCL Tech down by 3.53% and R Power down 3.51% were the major losers on the index.

Majority of Asian markets got butchered in the session as Shanghai Composite plunged 1.02%, Hang Seng shed 0.71%, KLSE Composite declined 0.31%, Seoul Composite eased 0.60% and Taiwan Weighted slithered 1.22%.

On the flipside only, Jakarta Composite added 0.29%, Nikkei 225 advanced 0.03% and Straits Times rose 0.38%.

The European markets have opened on a bleak note as Germany's DAX eased 0.96% and London's FTSE shed 1.10%.

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