Post Session: Quick Review

Fears of an escalating Ukraine crisis, elections fatigue and IMD’s forecasts of below normal monsoon this year, spooked the sentiment of Indian equity market on the first trading session of the new series, leading to a loss of 3/4 of a percent on Friday. After scaling life-time high level in the previous session of trade, though some profit-booking was inevitable, flurry of disappointing numbers from industry big-wigs such as Maruti Suzuki, ICICI Bank, ACC and Ambuja cement, among others also acted as party poppers.  By close of trade, both Sensex and Nifty tanking over 3/4 of a percent, slipped below the psychological 22,700 and 6800 levels respectively. Meanwhile, broader indices also witnessing drubbing, ended lower with loss in the range of 0.35%-0.65% respectively. For the week, while Nifty ended higher with gains of over one tenth of a percent, Sensex lost over three tenths of a percent.

On the global front, Asian and European shares were beaten blue in trade after fears of an escalating Ukraine crisis eclipsed upbeat US economic data and robust US tech shares. Ukrainian forces killed up to five pro-Moscow rebels in what amounted to the first use of lethal force to recapture territory from the fighters, with the United States accusing Russia of trying to de-stabilise the region. Bucking the trend, however Nikkei ended higher after data showed that the March consumer-price index for the Tokyo metropolitan area rose by a preliminary 2.7% on-year-the largest gain since 1992.

Back on the home turf, in the downbeat session of trade, markets after getting flat but positive start managed to trade somewhat steady up-till the first half of trading session, but lost momentum in the second half, post the start of European market. Sentiment took a hit in early deals after India Meteorological Department (IMD) predicted the country to get below normal monsoon this year, which if proved correct could jeopardize a fragile economic recovery and trigger inflation. Nevertheless, caution ahead of the outcome of the currently underway national elections due on May 16 also played out on Dalal Street.

Amidst broad based selling pressure, stocks from Fast Moving Consumer Goods, Oil & Gas and Capital Goods counters were the weakest links of trade, while those from Consumer Durables, Realty, Technology counters were the counters that showed resilience.

On earnings front, While ICICI Bank slipped over 2% on missing its bottom line estimates, Maruti Suzuki skid over a percent on reporting posted a 35.46% decline in net profit at Rs 800.05 crore for the fourth quarter ended December 31, 2014. Additionally, cement stocks also edged lower despite both Ambuja Cement and ACC reporting better than expected earnings mainly as income and tax credit contributed significantly to these companies’ net profits. While, Ambuja Cement slumped  4% after the company reported on Friday a forecast-beating 6.6 percent rise in quarterly profit from a year earlier, ACC lost close to 3%  after reporting on Thursday March-quarter net profit of Rs 399 crore ($65.35 million), above consensus forecasts for Rs 337 crore. The market breadth on the BSE ended negative; advances and declining stocks were in a ratio of 1280: 1539, while 107 scrips remained unchanged. (Provisional)

The BSE Sensex lost 188.47 points or 0.82% to settle at 22688.07. The index touched a high and a low of 22939.31 and 22656.64 respectively. Among the 30-share Sensex, 9 stocks gained, while 21 stocks declined. (Provisional)

The BSE Mid cap and Small cap indices ended lower by 0.29% and 0.64% respectively. (Provisional)

On the BSE Sectoral front, Realty up by 0.61%, Healthcare up by 0.46%, Consumer Durables up by 0.44% and Teck up by 0.12%, were the only gainers, while Oil & Gas down by 2.11%, FMCG down by 2.02%, Capital Goods down by 1.34%, Power down by 1.06% and Bankex down by 0.68% were the top losers in the space. (Provisional)

The top gainers on the Sensex were Mahindra & Mahindra up by 2.74%, Dr Reddys Lab up by 2.38%, Axis Bank up by 1.80%, HDFC up by 1.58% and BHEL up by 0.85%, while, ITC down by 2.91%, Hindustan Unilever down by 2.78%, NTPC down by 2.74%,  ICICI Bank down by 2.42% and RIL down by 2.23% were the top losers in the index. (Provisional)

Meanwhile, Indian pharmaceutical industry’s exports grew at their slowest pace in 15 years which stood at around 1.2 percent to $14.84 billion in the FY14 mainly on account of rising tension with the US over Intellectual Property Rights (IPR) related issues. The previous slowest growth rate for domestic pharma exports was in FY10 at 5.9 percent.

The US accounts for about 25 percent of India's pharma exports. Presently, US pharma industry is contending that India's IPR laws particularly with regard to pharma sector discriminate American firms and put pressure on the US government to take actions against India. Furthermore, Obama administration has also been strongly criticising India's investment climate and IPR laws, particularly in the pharmaceutical sector. In addition, Vietnam too has raised concerns over quality defects in drugs imported from various countries, including India which is a major supplier to the country.

Furthermore, the prevailing political turmoil between Ukraine and Russia which has led to political and economic tensions in the Crimean region  also hit the businesses of leading Indian pharmaceutical companies as the sector is the top exporters to the CIS region countries. The government has set pharma exports target for current fiscal at $25 billion, which seems difficult amid concerns like IPR issues raised by the US and prevailing tension between Ukraine and Russia.   India VIX, a gauge for markets short term expectation marginally lost 1.45% at 30.68 from its previous close of 31.13 on Wednesday. (Provisional)

The CNX Nifty lost 60.60 points or 0.89% to settle at 6,780.20. The index touched high and low of 6,869.85 and 6,772.85 respectively. Out of the 50 stocks on the Nifty, 16 ended in the green, while 34 ended in the red.

The major gainers of the Nifty were M&M up 3.01%, Dr. Reddy's Laboratories up by 2.54%, Tech Mahindra up by 2.53%, HDFC up by 1.68% and Axis Bank up by 1.55%.

The key losers were Cairn down by 4.94%, Ambuja Cements down by 4.78%, UltraTech Cement down by 3.68%, BPCL down by 3.62% and Grasim down by 3.33%. (Provisional)

European markets were trading in red; France’s CAC 40 was down 0.34%, UK’s FTSE 100 was down 0.22% and Germany’s DAX was down by 0.85%.

The Asian markets concluded Friday’s trade mostly in red, due to concerns about China’s economy as well as tensions over the Ukraine crisis. Thailand’s sovereign bonds, Asia’s best performers over the past six months is seen faltering as a political stalemate slows growth and risks triggering a credit-rating downgrade. The economy could contract this year if the political standoff persists late into 2014. Support for Indonesia’s rupiah, this month’s worst-performing Asian currency, is building as the nation’s assets attract funds from abroad and trading patterns suggest its decline is overdone. Singaporean Industrial Production fell to an annual rate of 12.1%, from 13.1% in the preceding month whose figure was revised up from 12.8%. South Korean GDP rose to a seasonally adjusted 0.9%.

Japan’s National Core CPI remained unchanged at a seasonally adjusted 1.3%, from 1.3% in the preceding month. Tokyo’s inflation jumped to a 22-year high in April by a key measure, an early sign that companies are making progress in passing on a new tax increase to customers as policy makers seek to pull Japan out of years of deflation. Tokyo’s core CPI, which excludes fresh food costs rose to at an annualized rate of 2.7%, from 1.0% in the preceding month. This underscores the daunting challenge for Prime Minister Shinzo Abe and the Bank of Japan in generating a positive cycle of prices, wages and spending.