Benchmarks oscillate in narrow range; broader indices add some strength

Trade at Dalal Street is quite range-stuck as investors in absence of any major positive cues are preferring to stay on the sidelines tailing the Asian peers. Subdued global setup mainly led to the cautious start in the Indian equity market post to which the benchmark's failed to show any conviction in its movements. On the global front, US markets closed with marginal gains on Friday after results from the European banks' stress tests came out slightly better than expected and on good earnings announcement by Google and Citigroup, though the concerns of the US debt ceiling issue kept looming large. Meanwhile, Asian stocks indices were trading mixed and choppy, as investors in the region continue to be nervous about the credit crisis in euro area and the US budget impasse. Japanese markets are closed for a public holiday. The US future indices are showing a downtick in the screen trade. Back home, stocks from Realty, Consumer Durables and Metal are keeping the benchmark indices afloat in green, while stocks from Information Technology, TECk and Oil & Gas are languishing at the bottom. Meanwhile, Airline stocks rose after PSU OMCs on Friday, 15 July 2011, hiked jet fuel or aviation turbine fuel (ATF) price by a marginal Rs 78 per kilolitre. Leading among them were Jet Airways, Kingfisher Airlines and SpiceJet. The 30 scrip sensitive index-Sensex- after slipping close to the 18550, is currently trading up over 15 points. Similarly, the widely followed index-Nifty-is currently trading little above its neutral line with gains of 2.25 points. However, the broader indices added some brownie points to its kitty. The overall market breadth is in the favour of advances which have thrashed declines in the ratio of 1548:745, while 100 shares remained unchanged.

The BSE Sensex is currently trading at 18,578.37, up by 16.45 points or 0.09%. The index has touched a high and low of 18,622.56 and 18,516.54 respectively. There were 19 stocks advancing against just 11 declines on the index.

The broader indices were outperforming benchmarks; the BSE Mid cap and Small cap indices rose 0.59% and 0.71% respectively.

The top gaining sectoral indices on the BSE were, Realty up by 1.36%, CD up by 0.76%, Metal up by 0.73%, Power up by 0.68% and FMCG was up by 0.52%. While, IT down by 0.47%, TECk down by 0.20% and Oil and Gas down by 0.19% were the only losers on the index.

The top gainers on the Sensex were Hindalco up by 2.69%, BHEL up by 1.91%, DLF up by 1.54%, Jaiprakash Associates up by 1.31% and HDFC Bank was up by 1.26%.

On the flip side, Cipla was down by 2.04%, TCS was down by 1.54%, M&M was down by 0.88%, NTPC down by 0.58% and ICICI Bank was down by 0.50% were the top losers on the Sensex.

Meanwhile, the Free Trade Agreement (FTA) between India and 27 members European Union is held up over the issue of lowering import duty on automobiles and wines and spirits with government insisting that it is unable to reduce tariffs for both products that have a strong domestic lobby.

A senior government official said, 'we have told them (EU) that we are unable to offer any concessions since we have not included these two sectors in our FTAs.' There is also fear that if Indian government opens these sectors to EU then automobile producer countries like Japan and South Korea will ask for similar tariff reduction for these sectors. India has entered into FTA with these nations without reducing customs duty on these products, is holding back any concessions from government.

Another senior government official involved with the EU FTA negotiations said, 'Japan has already written to the government saying that it would want duty concessions for automobiles if the same is offered to EU.'

From last four years India and EU have been negotiating a comprehensive trade and investment agreement comprising goods and services and it was expected that the agreement will be done by the May-June, however both the sides have not been able to reach to the agreement. Whereas government official rejects any move to offer any concessions in sectors like intellectual property rights, environment and labour, which is something EU has been demanding, however, on the issue of automobiles EU is not giving any clear response. 

It is reported that the government may not be agreeing to offer any concession in tariffs for automobile sector. Regardless, through the Automotive Mission Plan, Indian government has promised to protect import of 77 items belonging to auto sector. In the Automotive Mission Plan 2006-16, government said, there is a need to keep these 77 items in the negative list for FTAs with Thailand, Bimstec (the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation), Asean, China, EU, Korea, Japan etc for which no duty concession should be extended.'

The second best solution for this situation can be government offer concessions in tariffs after the 2016; however, this solution also would require push from the top government functionaries. On the other hand, wines and spirits, which is considered as sin goods, Indian government has always opposed steep duty reduction and with EU, government may find politically difficult to do so. The S&P CNX Nifty is currently trading at 5,583.35, higher by 2.25 points or 0.04%. The index has touched a high and low of 5,583.35 and 5,563.70 respectively. There were 32 stocks advancing against 18 declines on the index.

The top gainers of the Nifty were Hindalco up by 2.72%, IDFC up by 2.09%, DLF up by 1.72%, BHEL up by 1.59% and HCL Tech up by 1.38%.

On the flip side, Cipla down by 1.94%, TCS down by 1.44%, M&M down by 1.27%, NTPC down by 0.92% and L&T down by 0.80%, were the major losers on the index.

Asian equity indices were trading mixed; Shanghai Composite declined 0.09%, KLSE Composite dropped 0.69%, Seoul Composite slid 0.57%and Taiwan Weighted was down by 0.26%.

On the flip side, Hang Seng gained 0.20%, Jakarta Composite added 0.38% and Straits Times inched up by 0.02% 

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