Benchmarks start new F&O series on a subdued note

After scaling fresh all-time highs in the previous session, Indian equity benchmarks kick started the new Futures & Options (F&O) series on subdued note with frontline gauges ending below their crucial 22,700 (Sensex) and 6,800 (Nifty) levels amid escalating tensions in Ukraine, while result disappointment too weighed down sentiments. Investors’ mood also remained dampened sentiments also remained dampened after India Meteorological Department (IMD) has predicted below normal June-September rains at 95% of the long period average due to El Nino. IMD said there was a 56% probability of below normal to deficient rains, as compared to a 44% chance of rains being normal or better. Domestic bourses after a cautious start traded flat till late morning trade, but succumbed to profit taking in the second half of the session amid growth concerns.

Selling got intensified after disappointment over earnings from market heavyweights -- ICICI Bank and Maruti Suzuki. Stock of ICICI Bank fell over two percent on reporting lower-than-expected bottom-line, though there was 15 percent rise in Q4 net , but it was helped by a one-time foreign exchange gain estimated at Rs 222 crore, while Maruti Suzuki reported a 35.5 percent fall in fourth-quarter net profit, missing estimates, as potential car buyers postponed their purchases and waited for a slowing economy to pick up.

Global cues too remained sluggish as Asian stocks ended mostly lower after fears of an escalating Ukraine crisis offset 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-stabilize the region. European counters too traded in negative territory in early deals on Friday, as escalating tensions in Ukraine dampened investor sentiment.

Back home, select pharma stocks witnessed selling on report that India’s pharmaceutical exports registered slowest growth in at least 15 years at 1.2 percent to $ 14.84 billion last fiscal. However, the oil and gas stocks may see some upmove, as it has been reported that India's natural gas demand is likely to jump by over 55 percent to 378 million standard cubic meters a day by 2016-17. Additionally, public sector oil marketing companies (OMCs) viz, BPCL, HPCL and IOC all edged lower as higher crude oil prices could increase under recoveries of PSU OMCs on domestic sale of diesel, LPG and kerosene at government controlled prices.

The NSE’s 50-share broadly followed index Nifty declined by around sixty points to end below the psychological 6,800 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex dropped by around one hundred and ninety points to end below the psychological 22,700 mark. Broader markets too struggled to get any traction and ended the session with a cut of around half a percent. The market breadth remained in favour of decliners, as there were 1,268 shares on the gaining side against 1,552 shares on the losing side while 106 shares remain unchanged.

Finally, the BSE Sensex plunged by 188.47 points or 0.82%, to 22688.07, while the CNX Nifty declined by 58.05 points or 0.85% to 6,782.75.

The BSE Sensex touched a high and a low of 22939.31and 22656.64, respectively. The BSE Mid cap index was down by 0.29%, while the Small cap index lost 0.64%.

The top gainers on the Sensex were Mahindra & Mahindra up by 3.23%, Dr Reddys Lab up by 2.36%, HDFC up by 1.62%, Axis Bank up by 1.10% and SBI up by 0.90%. While ITC down by 2.76%, NTPC down by 2.74%, Hindustan Unilever down by 2.58%, ICICI Bank down by 2.29% and Hero MotoCorp down by 2.05% were the top losers in the index.

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.

Meanwhile, the government has set a target of electricity generation of 1,023 billion units during the current financial year, which is about 5 percent higher than previous fiscal year target. Further, the Central Electricity Authority (CEA) planned to achieve electricity generation of 252 billion units in the April-June period, while the target for each of the subsequent quarters is 257 billion units.

As per the CEA, over 368 billion units may be generated from state utilities and over 393 billion units from central utilities, while the rest will generate from private entities.  Furthermore, it estimates that around 859 billion units of electricity will be generated by thermal power projects during 2014-15 out of which 784 billion units are expected to come from coal-based stations and the remaining 75 billion units from fuels such as diesel, lignite, naphtha and natural gas.

However, target for hydel generation has been lowered to 124 billion units in current fiscal from 135 billion units in 2013-14. India produced 967 billion units of power during FY14, lower than the target of 975 billion units.

Electricity in India is produced with the use of coal, crude oil, water and natural gas. Acute coal shortages in the country has become primary reason for power deficit in the country as coal-fired plants account for 68% of India's installed electricity capacity. India’s gas based installed capacity stands at nearly 8 percent at 20,000 MW of which around 6,000 MW is currently stranded because of unavailability of natural gas.

The CNX Nifty touched a high and low of 6,869.85 and 6,772.85 respectively.

The top gainers of the Nifty were Mahindra & Mahindra up by 2.57%, Tech Mahindra up by 2.49%, Dr. Reddy's Laboratories up by 2.38%, Axis Bank up by 1.57% and HDFC up by 1.56%. On the other hand, Cairn India down by 4.92%, Ambuja Cements down by 4.87%, BPCL down by 3.60%, UltraTech Cement down by 3.58% and Grasim Industries down by 3.05% were the top losers.

The European markets were trading in red, France's CAC 40 was down by 0.24%, Germany's DAX was down by 0.75% and United Kingdom's FTSE 100 was down by 0.18%.

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.