Benchmarks surrender to selling pressure after flattish start

After making a flat but positive start, benchmark equity indices have now slipped into negative territory and trading with slender loss of over one tenth of a percent on the first trading session of new F&O series in absence of any positive triggers at home front and negative regional counterparts. However, the benchmarks have bounced back from day’s low witnessed in early deals on bit of bargain buying activities by market-participants at lower levels on hopes of stable government after elections. Off day’s low, while Sensex is trading above the crucial 22,850 level, Nifty was languishing below the crucial 6850 mark. Meanwhile, broader indices also mirroring similar kind of downbeat trend were trading lower with cut of close to two tenths of a percent.

On the global front, Asian stocks were down 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 destabilise the region.

Closer home, sentiment also took a hit after India Meteorological Department (IMD) predicted the country to get below normal monsoon this year, which if proves to be correct could jeopardize a fragile economic recovery, push up food prices and consequentially make life difficult for the next government. Sectorally, while Realty, Metal and Consumer Durables counters were restricting the losses of bourses, Oil & Gas FMCG and Information Technology were the endorsing the underlying weakness of bourses. The overall market breadth on BSE was in the favour of declines which thumped advances in the ratio of 957:840; while 28 shares remained unchanged.

The BSE Sensex is currently trading at 22876.54, down by 32.93 points or 0.14% after trading in a range of 22939.31 and 22806.54. There were 13 stocks advancing against 17 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.21%, while Small cap index up by 0.19%.

The gaining sectoral indices on the BSE were Realty up by 1.66%, Metal up by 0.74%, Consumer Durables up by 0.61%, Bankex up by 0.40%, and Auto up by 0.30%. While, Oil & Gas down by 1.24%, FMCG down by 0.94%, IT down by 0.42%, Capital Goods down by 0.39% and Teck down by 0.08% were the losing indices on BSE.   

The top gainers on the Sensex were Mahindra & Mahindra up by 2.15%, BHEL up by 2.01%, Dr Reddys Lab up by 1.58%, SBI Industries up by 1.43% and HDFC up by 1.40%. On the flip side, ITC down by 1.44%, RIL down by 1.12%, Hindustan Unilever down by 1.03%, NTPC down by 1.02% and Cipla down by 0.90% were the top losers of the index.

Meanwhile, the India Meteorological Department (IMD) has forecasted that the country may get below normal monsoon this year, which if proves to be correct could jeopardize a fragile economic recovery, push up food prices and consequentially make life difficult for the next government.

In its first long period forecast for this year, IMD forecasted there was a 56% probability of below normal to deficient rains, as compared to a 44% chance of rains being normal or better. Further, the department also acknowledging the shadow of El Nino on this year's monsoon said there was a 60% chance of for the phenomenon that is usually linked to droughts in India. However, the predictions have an error margin of 5%. The department will issue a second forecast on monsoon in June.

While predicting below-normal monsoon this year, IMD also released forecasts of two experimental models, one of which predicted deficient rains at 88% of normal. However, the weather department preferred going with the operational forecast which is showing 95%.

IMD director general L S Rathore unveiled that while several models were referred, the department issued forecasts by two such models. One, the monsoon mission model, predicting 96% of the long period average and second the ESSO IMD seasonal forecast showing 88% of the LPA.

IMD has been periodically updating its methodology for the complex task of predicting the monsoon. The department, however, continues to battle the impression that its accuracy drops markedly when rains fail.

The CNX Nifty is currently trading at 6,830.40, down by 10.40 points or 0.15% after trading in a range of 6,869.85 and 6,818.20. There were 23 stocks advancing against 27 declining on the index.

The top gainers of the Nifty were DLF up by 2.56%, M&M up by 2.17%, BHEL up by 1.98%, NMDC up by 1.88% and Dr. Reddy's Laboratories up by 1.72%. On the flip side, CAIRN down by 4.99%, ACC down by 3.30%, BPCL down by 2.20%, Asian Paint down by 1.85% and Ambuja Cements down by 1.76% were the major losers on the index.

Most of the Asian equity indices were trading in red; Shanghai Composite declined by 0.20%, Hang Seng slipped by 1.39%, KLSE Composite decreased by 0.15%, Straits Times contracted by 0.45%, KOSPI Composite dropped by 1.15%, Nikkei 225 was down by 0.24% and Taiwan Weighted was down by 1.90%. On the flip side, Jakarta Composite increased by 0.39%.