Markets pare early gains; capital goods, banking stocks major laggard

After opening on a firm note in morning tracking positive cues from Asian bourses, where the mood is quite upbeat following a strong earnings report from the US technology major Apple, Indian equity markets erased early gains owing to the choppy trade on the day of F&O settlement. On the sectoral front banks stock were retreating a bit on profit taking, after scoring impressive gains in the previous session following unexpected 50 basis points cut in cash reserve ratio. Metal stocks surged after LMEX, a measure of six metals traded on the London Metal Exchange gained yesterday. Capital goods stocks too have given up some gains after a firm start. On the global front Asian markets were trading in green. Back home, the market breadth favoring the positive trend; there were 1588 shares on the gaining side against 843 shares on the losing side while 94 shares remained unchanged.

The BSE Sensex is currently trading at 17,057.82, up by 62.05 points or 0.37%. The index has touched a high and a low of 17,110.02 and 17,016.69 respectively. There were 14 stocks advancing against 16 declining ones on the index.

The broader indices outperforming benchmarks captured additional gains; the BSE Mid cap and Small cap indices surged 1.12% and 1.27% respectively.

The top gaining sectoral indices on the BSE were, PSU up by 0.93%, CD up by 0.93%, TECk up by 0.92%, IT up by 0.90% and Metal up by 0.80%. While, Capital Goods down by 0.26% and Bankex down by 0.03% were the losers on the index.

The top gainers on the Sensex were Tata Motors up by 2.50%, Sterlite Industries up by 2.29%, Tata Steel up by 1.93%, Coal India up by 1.85% and Maruti Suzuki up by 1.80%.

On the flip side, Jindal Steel down by 2.17%, L&T down by 1.16%, ICICI Bank down by 1.13%, Tata Power down by 1.07% and Hero MotoCorp down by 0.85% were the losers on the Sensex.

Meanwhile, the Heavy Industries Ministry has come in support of the domestic power equipment producers and has advocated a 14 per cent import duty on power generation equipment for the projects above 1,000 MW. The Heavy Industries Minister, Praful Patel, said, “Such a duty will provide a level playing field to domestic companies such as BHEL and L&T, which have significant disadvantage.” The move is primarily aimed at imports from China.

At present, equipment for power projects with capacity over 1,000 MW attract marginal duty, making the import cheaper. To protect their interests and provide them level playing field, domestic players led by Bhel and L&T have been demanding imposition of 14 percent duty on import of electrical equipment as a cushion against local taxes.

If the import duty is imposed, it will provide level playing field to Indian power equipment manufacturers to take on increasing penetration of international suppliers here. “Companies such as Bhel and L&T are at a specific disadvantage. Imports should not be disallowed but there is a case for (the Indian) power industry to have a level-playing field,” Patel said. It was reported that the Power Ministry had already circulated a Cabinet note in this regard. Power generation equipment makers having a manufacturing base in India stand to benefit from such a move.

Further, the Heavy Industries Ministry is pushing hard to ensure that the award of equipment contracts by developers of large power projects is done mandatorily through a bidding process, rather than the current practice of developers placing orders directly on the vendors of their choice. The bids for equipment supply for power projects are being rejigged, which will allow domestic gear makers to participate in the procedure. The ministry has also called for procurement model for equipment for ultra mega power projects (UMPP) of 4,000 MW capacity to involve international competitive bidding (ICB).

The S&P CNX Nifty is currently trading at 5,143.10, higher by 15.75 points or 0.31%. The index has touched a high and a low of 5,160.30 and 5,130.25 respectively.  There were 28 stocks advancing against 22 declining ones on the index.

The top gainers of the Nifty were BPCL up by 2.55%, Tata Motors up by 2.50%, Sterlite Industries up by 2.20%, SAIL up by 2.00% and Maruti Suzuki up by 1.90%.

On the flip side, Jindal Steel down by 2.14%, Kotak Bank down by 2.02%, ICICI Bank down by 1.32%, L&T down by 1.28% and Siemens down by1.26% were the major losers on the index.

In Asia, majority of bourses remained closed for Lunar New Year holiday, however, Nikkei 225 was trading up by 1.12%, Straits Times gained 0.85% and Seoul Composite was up by 0.12%.

On the flip side, Jakarta Composite was trading lower by 0.63% was the lone loser.