Benchmarks turn red after firm opening; financials drag

Indian equity benchmarks have slumped after a positive start on account of weakness in financial stocks. Markets made a positive opening with Infosys heralding the result season with a decent set of numbers. The company has posted a rise of 25.07% in its net profit at Rs 2883 crore for the quarter ended March 31, 2014 as compared to Rs 2305 crore for the same quarter in the previous year. However, the gains were short-lived as weakness on the financial counters negated the gains on the IT counters. Traders have also reacted negatively to different macro data, starting with the IIP numbers announced late Friday, which slipped to its 9-month low, showing de-growth of 1.9% in February as compared to marginal expansion of 0.1% in January. Traders will also be watching the WPI and CPI data to be announced later in the day.

On the global front, the US markets managed a positive close in last session despite some late hour volatility on the back of upbeat retail sales data, the largest jump since 2012. Traders also reacted positively to quarterly earnings news from Citigroup. The Asian markets too were trading mostly in the green at this point of time tailing US cues though some of the indices have given up their gains and the Chinese market were trading weak on expectation of lower economic momentum.

Back home, on the sectoral front software, technology and consumer durables witnessed the maximum gain in trade, while realty, banking and auto remained the top losers on the BSE sectoral space. The broader indices too were trading in the red, while the market breadth on the BSE was positive; there were 758 shares on the gaining side against 890 shares on the losing side while 91 shares remain unchanged.

The BSE Sensex opened at 22698.09; about 69 points higher compared to its previous closing of 22628.96, and touched a high and a low of 22737.31 and 22419.51 respectively. The index is currently trading at 22464.81, down by 164.15 points or 0.73%. There were 5 stocks advancing against 25 declines on the index.

The overall market breadth has made a weak start with 43.59% stocks advancing against 51.18% declines. The broader indices too were trading in red; the BSE Mid cap index up was by 0.31% and Small cap gained 0.17%. 

The top gaining sectoral indices on the BSE were, IT up by 2.13%, Teck up by 1.82% and Consumer Durables up by 0.16%, while Realty down by 1.46%, Bankex down by 1.45%, Auto down by 1.36%, PSU down by 1.25% and Metal down by 1.20% were the top losers on the sectoral index.

The top gainers on the Sensex were Infosys up by 3.28%, TCS up by 1.77%, Wipro up by 1.71%, Bharti Airtel up by 1.65% and Dr Reddys Lab up by 0.08%. On the flip side, HDFC was down by 3.27%, HDFC Bank was down by 2.29%,  Hindalco was down by 1.99%, Hero MotoCorp was down by 1.98% and Mahindra & Mahindra was down by 1.93% were the top losers on the Sensex.

Meanwhile, India has signed a memorandum of understanding (MoU) with Russia to source data on diamond trade between two countries. Russia is the world’s largest rough diamond producer, while, India is the largest diamond processor. Presently, most of the rough diamonds produced in Russia are cut and polished in India.

The agreement was signed between the Gem and Jewellery Export Promotion Council (GJEPC) and Russian Government-owned diamond mining firm Alrosa which accounts for around 25 per cent of the world total diamond output. The GJEPC Chairman Vipul Shah has asserted that India has sought long-term contracts between Russian firm Alrosa and Indian cutting and polishing industry. By adding further, he said that with this agreement, both trade bodies can look forward to exchange information and cooperation for the implementation of Kimberley Process Certification Scheme (KPCS) which prevents diamond industry finance to human rights abuses or war.

Diamonds have occupied a special place among the precious gemstones. India has emerged as the leading diamond cutting and polishing hub of the world with 11 out of 12 diamonds being cut and polished in India. Indian represents around 60 percent of global polished diamond output in value terms. During 2013, India exported 36.46 million carats of polished diamonds worth $20.23 billion and imported 163.11 million carats of rough diamonds worth $16.34 billion. While, a predominant portion of rough, uncut diamonds processed in India is exported either in the form of polished diamonds or in the form of finished diamond jewellery. Indian gems and jewellery industry is a significant contributor to India’s foreign exchange earnings and represents around 14 percent of the total country’s export. Cut and polished diamonds along with rough diamonds constitutes the 50 percent share of the total industry’s export. India exported gems and jewellery worth $36.04 billion in 2013. 

The CNX Nifty opened at 6,792.70; about 16 point higher as compared to its previous closing of 6,776.30, and has touched a high and a low of 6,813.40 and 6,711.75 respectively. The index is currently trading at 6,725.20, down by 51.10 points or 0.75%. There were 8 stocks advancing against 42 declines on the index.

The top gainers of the Nifty were United Spirits up by 10.94%, Infosys up by 3.29%, TCS up by 1.72 %, Wipro up by 1.71% and Bharti Airtel up by 1.63%. On the flip side, HDFC down by 3.42%, DLF down by 3.01%, HDFC Bank down by 2.40%, Kotak Bank down by 2.31% and Asian Paint down by 2.24% were the top losers on the index.

Asian equity indices were trading mixed; Nikkei 225 rose 118.66 points or 0.85% to 14,028.82, Taiwan Weighted increased by 46.73 points or 0.53% to 8,904.15, Jakarta Composite surged by 8.62 points or 0.18% to 4,873.50 and Straits Times was up by 31.21 points or 0.97% to 3,246.04.

On the flip side, Shanghai Composite declined 16.98 points or 0.80% to 2,114.56, Hang Seng dropped 250.12 points or 1.09% to 22,788.68, KOSPI Composite slipped by 2.92 points or 0.15% to 1,994.10 and KLSE Composite was down by 2.53 points or 0.14% to 1,849.00