CHOPPY TRADE

Equity markets are showing choppy trend in morning trade after surging high in the last session, though the start was on a positive note but the benchmark indices soon slipped into red. The global cues were not that good as the US markets closed modestly higher overnight while the Asian markets made a mixed start with enthusiasm of last session fizzling out, though there has been sign of some easing in the European debt worries after Greece and Spain were able to auction their short term debt at a lower rate than they have been paying earlier. Though the domestic markets took a cautious step and have recovered from the lows of the day and were presently trading in green with a quarter percent of gains. While, the IT sector has once again taken the back seat despite IT bellwether TCS reporting better than expected numbers, concerns of currency and market volatility seems to have weighed on the sentiments. The sector that has surged in the early trade is oil & gas, after the index heavyweight Reliance Industries zoomed on reports that the company will consider a share buyback on Friday during its December quarter result announcements.

The BSE Sensex opened at 16502.42; about 36 points higher compared to its previous closing of 16,466.05, and has touched a high and a low of 16509.98 and 16427.98 respectively. The index is currently trading at 16495.60, up by 29 points or 0.18%. There were 17 stocks advancing against just 13 declines on the index.

The broader were trading mixed; the BSE Mid cap index was down by 0.06% on the other hand Small cap index was up by 0.20%.

The top gaining BSE sectoral indices were, Oil & Gas up by 2.58%, Healthcare up by 0.57%, PSU up by 0.34%, Power up by 0.66%, FMCG up by 0.06%.

While IT down by 2.73%, TECk down by 1.81%, Bankex down by 0.65%, CG down by 0.44%, Realty down by 0.32% were the major losing indices.

The top gainers of the Sensex were Reliance up by 3.98%, Tata Power up by 2.89%, Hero Moto Corp up by 1.55%, Cipla up by 1.20%, and ONGC up by 1.13%.

On the flip side, TCS down by 4.37%, Infosys down by 2.76%, Wipro down by 2.25%, ICICI Bank down by 1.73%, and Tata Steel down by 1.31%.

Meanwhile, the government has raised import duty on gold and silver exorbitantly to curb import of precious metals. In a rare decision, the government raised the import tax on gold to 2% of its value from a flat rate of Rs 300 ($5.8)/10 grams earlier. The import tax on silver has also been changed to 6% of its value from the earlier flat Rs 1,500 a kilogram. The import duty on gold comes to around Rs 540 per 10 grams now considering the base price of Rs 27,000 per 10 grams. Similarly, in silver total duty works out to nearly Rs 3,120 a kg considering the base price of Rs 52,000.

Earlier, when presenting the Budget 2009-10, Finance Minister Pranab Mukherjee had increased import duty on gold bars from Rs 100 per 10 gram to Rs 200 per 10 gram, while duty on other forms of gold (excluding jewellery) was increased from Rs 250 per 10 gram to Rs 500 per 10 gram. The customs duty on silver was also increased from Rs 500 per kg to Rs 1,000 per kg. According to government notification, the ad-valorem rates of excise and customs on precious metals like gold, silver and platinum will come into effect from January 17, 2012. Diamonds, on the other hand will also attract an import duty of 2%.

India is the world's largest importer of gold jewellery, and the change in tax rates is likely to push up local prices. However, this move is not expected to bring down the demand for gold and silver since high prices have not deterred consumers from making a record purchase of 745.7 tonne jewellery last year. According to the estimates of World Gold Council (WGC), Indian government earned around Rs 2,836.6 crore in 2010 as an import duty on gold. In 2010, the import duty stood at Rs 30,900 per kg. In 2010, Indian consumers consumed approximately 963.1 tonne of gold priced at Rs 1.73 lakh crore, representing a y-o-y growth of around 66%.

This move is expected to help the government earn additional revenues and could also strengthen the rupee against the dollar. As per the changes, customs and excise duty will now be levied on the value of the precious metals instead of a fixed amount, meaning that the incidence of duty will move up with the rise in prices of the goods, thereby making them more expensive. Moreover, as per the finance ministry estimates, the increase in the duty is expected to fetch additional Rs 500-600 crore for the balance financial year.

The S&P CNX Nifty opened at 4,904.50; about 30.6 points higher compared to its previous closing of 4,873.90, and has touched a high and a low of 4,935.20 and 4,904.00 respectively.

The index is currently trading at 4,960.25, down by 7points or 0.14%. There were 29 stocks advancing against 21 declines on the index.

The top gainers of the Nifty were Reliance up by 4.36%, BPCL up by 2.12%, Tata Power up by 2.10%, Reliance Power up by 1.97%, and Cairn up by 1.61%.

On the flip side, TCS down by 4.08%, Infosys down by 2.55%, Wipro down by 1.99%, Axis Bank down by 1.78%, and Kotak Bank down by 1.75% were the losers on the index.

Most of the Asian equity indices were trading in the green; Hang Seng was up by 58.12 points or 0.30%, Jakarta Composite climbed 9.72 points or 0.25%, Nikkei 225 ascended 124.32 points or 1.47%, Straits Times increased by 6.25 points or 0.22%, Seoul Composite soared 2.18 points or 0.12%, Taiwan Weighted jumped 13.42 points or 0.19%.

On the other hand Shanghai Composite down by 7.57 points or 0.33% was the only loser.