Benchmarks trim losses; trade continues in red

Benchmarks trimmed losses but continued to trade in red in the late afternoon session on account of selling in frontline blue chip counters and taking cues from European counterparts. The barometer indices, the S&P BSE Sensex, and the 50-unit CNX Nifty, both, touched their lowest level in more than a week due to intense selling pressure. The volatility index witnessed 4-month high on fears of profit-taking during polls. Investors have started eyeing a major near term trigger for the market which is the outcome of the upcoming Lok Sabha elections. The 36 days long voting process begins today i.e. April 07, 2014, in 6 Lok Sabha constituencies of Assam and Tripura and will finally conclude on May 12, 2014. Traders were seen selling in Realty, Consumer Durables and Power sector stocks. In scrip specific development, Bharat Heavy Electricals (BHEL) was trading in red after the state-run top power equipment maker reported a 51% fall in provisional net profit for the fiscal year ended March 31 to Rs 3228 crore. GMR Infrastructure was trading in green after GMR-Megawide consortium received an airport project in Philippines.

On the global front, most of the Asian markets were trading in red, while the European markets were too trading on pessimistic note. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 6,700 and 22,300 levels respectively. The market breadth on BSE was negative in the ratio of 1073:1211 while 118 scrips remained unchanged.

The BSE Sensex is currently trading at 22247.08, down by 112.42 points or 0.50% after trading in a range of 22,481.62 and 22197.51. There were 9 stocks advancing against 21 stocks declining on the index.

The broader indices to added losses; the BSE Mid cap index was down by 0.65%, while Small cap index was down by 0.11%.

While there were no gainers on Sensex, the top losers were Realty down by 1.70%, Consumer Durables down by 1.45, Power down by 1.15%, HealthCare down by 0.68% and IT down by 0.64%.

The top gainers on the Sensex were Sun Pharma up by 1.20%, SSLT up by 0.82%, Wipro up by 0.68%, Tata Steel up 0.60% and M&M up by 0.60%.

On the flip side, BHEL down by 3.90%, Cipla down by 2.20%, Maruti Suzuki down by 2.10%, ICICI Bank down by 1.72% and Dr. Reddy’s Lab down by 1.59% were the top losers on the index.

Meanwhile, the growth in credit demand from industries slowed down to 12.2% to 19,970 crore in the month of February as compared to 18.9% growth in the same month of previous year. Prevailing economic slowdown coupled with political uncertainty associated with an election year have made corporates reluctant to launch any greenfield projects, resulting in declining credit demand from industrial sector. Slow credit flow to industrial sector has been adversely impacting domestic banks which are now pushing retail credit to boost credit growth.

High borrowing cost and delays in environmental clearances for industrial and infrastructure projects has forced the big infrastructure players to defer their investment decisions. Indian large infrastructure companies such as HCC, Lanco and Gammon India are struggling with high debt and have restructured them to avoid loan default.

The gross non-performing assets (NPAs) of banks would rise to 4.2-4.4% by March, from 4.1% reported in December 2013. Rising NPA levels have become an issue for growth of the banking industry, which is the most dominant segment of the financial sector and plays an important role in the economic development of the country. Banks help to channel savings into investments and encourage economic growth by allocating savings to investments that have potential to yield higher returns.

Meanwhile, risk appetite of industrial firms is likely to improve after the formation of new government, which could provide a boost to credit growth.

The CNX Nifty is currently trading at 6,666.30, down by 28.05 points or 0.42% after trading in a range of 6,725.15 and 6,650.40. There were 19 stocks advancing against 31 declining on the index.

The top gainers of the Nifty were Ultratech Cement up by 3.25%, Asian Paints up by 1.75%, Ambuja Cement up by 1.70%, NMDC up by 1.67% and Grasim up by 1.49%. On the flip side, Jindal Steel down by 5.96%, BHEL down by 3.68%, DLF down by 3.27%, Cipla down by 2.30% and Maruti Suzuki down by 2.22% were the major losers on the index.

Asian equity indices were trading mostly in red; Hang Seng down by 0.59%, Taiwan Weighted down by 0.14%, Nikkei 225 down by 1.69% and Straits Times was down by 0.60% while, Jakarta Composite up by 1.10% was the only gainer amongst Asian pack. Chinese markets remained shut for the trade today for Ching Ming Festival holiday.

The European markets were trading in red; France’s CAC 40 was down 0.75%, Germany’s DAX slipped 1.24% and UK’s FTSE 100 dropped 0.64%.