Markets clobber out of shape; Sensex ends below 22,300 mark

Extending the southward journey for third straight session, distressed markets clobbered out of shape in Wednesday’s trade with benchmarks ending the session with a cut of around a percentage point and frontline gauges tumbled below their crucial 6,700 (Nifty) and 22,300 (Sensex) levels. Selling was both brutal and wide based as none of the sectoral indices, barring metal and FMCG on BSE were spared. Those counter which featured in the list of worst performers, included software, technology and capital goods. Earlier, markets made a flat but positive start but reversal of trend, which took place in second half of trade due to caution surrounding foreign institutional investors (FIIs) outflows, mainly weighed down sentiments. Traders remained cautious after data showed overseas investors sold Indian shares worth of Rs 21.6 crore ($3.59 million) on Tuesday -- the second straight session of outflows. Further, muted Q4 growth expectations from TCS which will announce its earnings after market hours further dampened sentiments.

Investors also remained cautious on rise in CPI numbers dashed hopes of any rate cut for India Inc. The inflation concern is likely to linger further with a private forecast that India should prepare for below normal rainfall in the crucial monsoon season this year, particularly in the agriculturally significant north-western and western central regions.

The markets cracked further in noon trades, ignoring the positive cues from the global bourses. European stocks made a firm start and were trading with decent gains in early trade after better-than-expected growth data from China. Asian markets too ended mostly in the green after China reported economic growth a touch above forecast, a relief for investors who had feared a much weaker outcome. China's economy grew 7.4 percent in the first quarter, from a year earlier, beating forecasts of 7.3 percent.

Back home, domestic bourses continued to trade in the red after Indian rupee depreciated against dollar. The rupee was trading at 60.36 per dollar at the time of equity markets closing versus its previous close of 60.24 per dollar. Meanwhile, the information technology pack witnessed immense selling pressure, ahead of the Q4 results from Wipro and TCS. Infosys tumbled over three percent on investor concerns about the company’s ability to bag lucrative contracts due to high attrition rate in the January-March quarter even as it posted a higher-than-expected net profit for the period. Banking counter too edged lower despite good Q4 earnings of IndusInd Bank. The bank beat street’s expectation by reporting net profit at Rs 396 crore in the quarter ended March 2014, up 29 percent compared to a year-ago period supported by other income. Additionally, Shares of public sector oil marketing companies viz. BPCL, HPCL and IOC edged lower, as the price of petrol was on April 15, cut by Rs 0.70 a litre, excluding local levies.

The NSE’s 50-share broadly followed index Nifty declined by around sixty points to end below the psychological 6,700 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex declined by over two hundred points to end below its crucial 22,300 mark. Broader markets too struggled to get any traction during the trade and ended the session with a cut of over a percent. The market breadth remained in favor of decliners, as there were 1,088 shares on the gaining side against 1,654 shares on the losing side while 130 shares remain unchanged.

Finally, the BSE Sensex plunged by 207.70 points or 0.92%, to settle at 22277.23, while the CNX Nifty declined by 57.80 points or 0.86% to settle at 6,675.30.

The BSE Sensex touched a high and a low of 22533.61 and 22247.39, respectively. The BSE Mid cap index was down by 1.08%, while the Small cap index lost 1.11%.

The top gainers on the Sensex were ITC up by 1.44%, Tata Steel up by 1.31%, Hindalco Inds up by 0.86%, Maruti Suzuki up by 0.61% and ICICI Bank up by 0.35%, while Tata Power down by 3.61%, Infosys down by 3.19%, BHEL down by 3.17%, Wipro down by 2.90% and L&T down by 2.87% were the top losers in the index.

On the BSE Sectoral front, FMCG up by 0.63% and Metal up by 0.19% were the only gainers, while Realty down by 3.87%, IT down by 2.49%, Capital Goods down by 2.47%, Teck down by 2.14% and Power down by 1.86% were the top losers in the space.

Meanwhile, taking into account the rising concerns of India’s subdued exports performance, the new foreign trade policy (FTP) to be introduced this year, is expected to focus on issues such as services sector shipments, standards and branding of products. The five-year FTP (2009-14) ended on March 31 and the new government formed after the general election will introduce new FTP for the period 2014-19. FTP governs all exports and imports related activities and mainly aims at enhancing the country's exports and use trade expansion as an effective instrument of economic growth and employment generation. 

It has become imperative to boost country’s exports which have been hovering near $300 billion over the last three fiscal years. The new FTP is likely to promote exports of specific products in specific geographies and would also abolish conventional method of exports through focusing more on areas like high-tech items, branding of products in the global market and new strategy for marketing. The policy may also review the current schemes which are not in compliance with the World Trade Organization (WTO) norms. According to global exports norms, India cannot provide export subsidies to a sector if outbound shipments from those particular segment crosses 3.5 percent share in the global market. Therefore, India would not be able to provide export subsidies to textile sector as the sector is reported to have crossed the 3.5 percent share in the global market. India's share in global trade stands at about 2 percent.

In FY14, India's exports grew marginally by 3.96 percent to $312.35 billion, which was below the set export target at $325 billion. During April-February period, services exports, which contribute about 60 per cent to the country's GDP were worth $152.69 billion.

The CNX Nifty touched a high and low of 6,748.65 and 6,665.15 respectively.

The top gainers of the Nifty were ITC up by 1.57%, Hindalco Industries up by 1.38%, Lupin up by 1.26%, Bank of Baroda up by 1.12% and Jindal Steel & Power up by 0.97%. On the other hand, DLF down by 4.85%, BHEL down by 3.60%, Tata Power Company down by 3.54%, Infosys down by 3.00% and Larsen & Toubro down by 2.92% were the top losers.

The European markets were trading in green, France's CAC 40 was up by 0.93%, Germany's DAX was up by 0.89% and United Kingdom's FTSE 100 was up by 0.36%.

The Asian markets concluded Wednesday’s trade mostly in green with Japan’s Nikkei jumping as bargain buying and a weaker yen lifted the market, following a rise on Wall Street bolstered by strong US corporate earnings. Bank Indonesia deputy governor Halim Alamsyah stated that Indonesia will have a chance to ease monetary policy next year as inflation slows, after maintaining a tight stance in 2014. Inflationary pressures are easing after interest rates were raised last year. He added that consumer-price gains will probably slow to about 5% by the end of this year and less than 4.5% in 2015. Japan’s industrial production fell to a seasonally adjusted -2.3%.

China’s economy grew at its slowest pace in six quarters in the first quarter of 2014 with signs of waning momentum already prompting limited government action to steady the world’s second-largest economy. China’s annual economic growth slowed between January and March 2014 to 7.4% from 7.7% in the previous three months while Chinese Industrial Production rose to 8.8%, from 8.6% in the preceding month. Chinese Retail Sales rose to an annual rate of 12.2%, from 11.8% in the preceding month while Chinese Fixed Asset Investment fell to a seasonally adjusted 17.6%, from 17.9% in the preceding month.