Benchmarks end lacklustre trade on a flat note

Thursday turned out to be a lackluster session for the Indian benchmark indices as frontline gauges traded in an extremely tight range hardly budging from the psychological 6,300 (Nifty) and 21,250 (Sensex) levels. Markets witnessed consolidation during the day’s trade as investors booked some profit garnered in previous session. Nevertheless, benchmarks made positive start as sentiments remained up-beat after the World Bank in its latest report highlighted that India’s economy is expected to grow by 6.2% in 2014 and 7.1 percent by 2016-17 as global demand recovers and domestic investment increases. Some support came in from Finance minister P Chidambaram expressing confidence of India getting on the high growth path in the next three years and attributing the decline in growth rate to global factors. However, investors remained on sidelines ahead of TCS third quarter earnings scheduled to be announced later today.

Global cues too remained choppy with European equities edging lower in early deals after climbing to a 5-1/2-year high in the previous session, with poor sales number from Dutch grocer Ahold and a cautious outlook from Dixons hurting retailers. Moreover, Asian equity counter retreated from their high level and ended mixed, despite better than expected core machine orders from Japan which jumped a seasonally adjusted 9.3 percent on month in November to 882.6 billion yen.

Back home, sentiments also remained dampened after telecom stocks tumbled, as the surprise decision of Reliance Industries (RIL) to join the bidding for upcoming telecom spectrum auction slated for February 3, 2014 raised concerns of aggressive bidding in the auction which in turn could have an adverse impact on balance sheet of telecom firms. Moreover, stocks related to sugar space too remained under selling pressure despite an informal group of ministers (GoM), headed by Agriculture Minister Sharad Pawar, approving incentives to the industry for exports of up to 40 lakh tonnes of raw sugar for two years.

However, the down-side remained capped on reports that government officials have indicated that the fiscal deficit will be below 4.8 per cent of GDP and it may come down to 4.65%. Some support also came in after rating agency Moody’s said that India's sovereign downgrade is not on the cards.

The NSE’s 50-share broadly followed index Nifty ended lower by two points and managed to hold psychological 6,300 level, while Bombay Stock Exchange’s sensitive Index -- Sensex dropped over twenty points and ended below the psychological 21,250 mark.

Moreover, the broader markets too struggled to get any traction and ended the session in the red. The market breadth remained in favour of decliners, as there were 1,169 shares on the gaining side against 1,510 shares on the losing side, while 166 shares remained unchanged.

Finally, the BSE Sensex declined by 24.31 points or 0.11%, to settle at 21265.18, while the CNX Nifty lost 2.00 points or 0.03% to settle at 6,318.90.

The BSE Sensex touched a high and a low of 21379.29 and 21199.65, respectively. The BSE Mid cap index was down by 0.12%, while the Small cap index lost 0.26%.

The top gainers on the Sensex were Coal India up 2.56%, Hindalco Inds up 1.85%, Wipro up 1.84%, HDFC up 1.80% and BHEL up by 1.74%, on the flip side Bharti Airtel  down 4.84%, Tata Motors down 1.86%, Sun Pharma  down 1.72%, ONGC  down 1.48 % and Cipla  down by 1.29 %, were the top losers on the index.

On the BSE Sectoral front Metal up by 1.75%, IT up by 0.56%, Capital Goods up by 0.25%, PSU up by 0.25%, and Realty up by 0.23%, were the top gainers, while Auto down by 0.84%, FMCG down by 0.80%, Healthcare down by 0.57%, Oil & Gas down by 0.31% and Bankex down by 0.21%, were the top losers on the sectoral front.

Meanwhile, in order to secure Indian banks from the impact of unhedged foreign currency exposure of corporate, the Reserve Bank of India (RBI) has asked the domestic lenders to calculate the incremental provisioning for them to entities with unhedged exposure at least once in a quarter. Meanwhile, the calculation should be done on monthly basis during periods of high US Dollar-INR volatility.

Highlighting that unhedged foreign currency exposures of the entities has become an area of concern not only for an individual entity but also for the entire financial system, the central bank has noted that extent of corporates’ unhedged foreign currency exposures continues to be significant and is increasing the probability of default in times of high currency volatility. Conversely, Reserve Bank also suggested the entities to hedge foreign currency exposure as unhedged exposure can lead to significant losses for them due to exchange rate movements. Corporates’ losses reduce their capacity to service the loans taken from the banking system and thereby affect the health of the banking system.

However, the RBI had earlier also issued norms suggesting banks to closely monitor the unhedged foreign currency exposures of their borrowing clients and also factor this risk into the pricing.

The CNX Nifty touched a high and low of 6,346.50 and 6,299.85 respectively.

The top gainers on the Nifty were HCL Technologies up by 4.63%, Coal India up by 2.52%, UltraTech Cement up by 2.45%, Hindalco Industries up by 2.03%, and Wipro up by 1.75%, On the other hand, Bharti Airtel down by 4.96%, Tata Motors down by 2.05%, ONGC down by 1.49%, Sun Pharmaceuticals Industries down by 1.49%, and Ranbaxy Laboratories down by 1.48%, were the top losers.

The European markets were trading in red, France's CAC 40 was down by 0.19%, Germany's DAX was down by 0.20%, and United Kingdom's FTSE 100 was down by 0.09%.

The Asian markets concluded Thursday’s trade on a mixed note following a record-breaking close on Wall Street as investors welcomed fresh positive US data and an upbeat Federal Reserve report on the economy. Indonesia’s bonds gained for a sixth day, the longest winning streak since October, on speculation local debt sales by the government will slow after it raised a record amount in a global offer. Japan’s Corporate Goods Price Index fell to a seasonally adjusted annual rate of 2.5%, from 2.7% in the preceding month while Japanese tertiary industry activity index rose to a seasonally adjusted 0.6%, from -0.9% in the preceding month whose figure was revised down from -0.7%.

Japanese core machinery orders jumped an unexpected 9.3% in November from the previous month, as demand picked up ahead of an upcoming sales tax hike. The rise in the volatile economic indicator, after adjustment for seasonal factors, was much larger than the 1.2% increase forecast. It comes after a 0.6% gain in October. Machinery orders are closely watched as a leading indicator of corporate capital investment.