Benchmarks end lower amid forecast of below normal rains

Extending their last session’s southward journey, Indian equity benchmarks ended the choppy day of trade with cut of over quarter a percent, as funds and retail investors opted to book profit at higher levels amid forecast of below normal rains and on renewed worries over Ukraine crisis. Domestic bourses made a cautious start and traded mostly in the red throughout the session, though barometer gauges for couple of times managed to bounce-back into positive terrain, but every attempt of recovery was reciprocated by profit-booking, triggered by the India Meteorological Department (IMD), announcement that the country will likely get below-normal levels of monsoon rain this year.

Further, uncertainty over 2014 Lok-Sabha election outcome despite opinion polls indicating victory for the BJP-led NDA government, weighed on market sentiment. Investors also remained pessimistic on report that foreign direct investment (FDI) in India dipped modestly 0.6 percent to $20.76 billion from $20.89 billion recorded in the corresponding period of FY13. Though, FDI grew by 12.29 percent to $2.01 billion in the month of February, as compared to $1.79 billion in the same month of previous year. However, some support to the markets came from Finance Minister P Chidambaram’s statement that Indian economy will strengthen in future on the back of recent measures taken by the government. The CAD will be brought down significantly to around $32 billion as compared to record high of $88.2 billion or 4.8% of GDP in FY13. Finance Minister added that CAD has not only been fully and safely financed but $ 28.5 billion has also been added to the reserves during the previous fiscal year.

On the global front, Asian shares ended mostly in the red due to rising tensions in Ukraine and as investors await the outcome of the US Federal Reserve’s policy meeting later this week. Fed is expected to further cut its stimulus programme following a string of figures showing the economy is improving. However, European counters traded higher in early deals as companies from AstraZeneca Plc to Bayer AG rallied amid an increase in mergers and acquisitions activity.

Back home, investors remained cautious after Indian rupee fell to 60.68/69 per dollar mark at the time of equity markets closing as compared to its Friday’s close of 60.60/61 on the back of month-end dollar demand from oil importers. Meanwhile, capital goods segment witnessed sharp sell-off led by selling in capital goods majors BHEL and Larsen & Toubro, which ended down 1.5-2% each as investors booked profit after recent gains. Additionally, shares of Holcim group companies ACC and Ambuja Cements remained under selling pressure, declining by over 5% each in the past two trading sessions after both companies declared their results for the quarter ended March 31. On the flip side, the shares of pharmaceutical companies edged higher in an otherwise subdued market led by rally in pharma majors viz. Fulford India, Wockhardt and Strides Arcolab.

The NSE’s 50-share broadly followed index Nifty lost over twenty points to end way below the psychological 6,800 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex dropped by around sixty points to end below the psychological 22,650 mark. Broader markets, however, outperformed benchmarks and ended the session with a gain of around half a percent. The market breadth remained in favour of gainers, as there were 1,451 shares on the gaining side against 1,335 shares on the losing side while 146 shares remain unchanged.

Finally, the BSE Sensex ended lower by 56.46 points or 0.25%, to 22631.61, while the CNX Nifty declined by 21.50 points or 0.32% to 6,761.25.

The BSE Sensex touched a high and a low of 22721.36 and 22597.19, respectively. The BSE Mid cap index was up by 0.88%, while the Small cap index gained 0.26%.

The top gainers on the Sensex were Cipla up by 3.15%, Sun Pharma up by 1.99%, Wipro up by 1.79%, Dr Reddys Lab up by 1.77% and SBI up by 1.06%. While Gail India down by 2.13%, BHEL down by 2.10%, Hero MotoCorp down by 1.81%, Tata Motors down by 1.72% and L&T down by 1.60% were the top losers in the index.

On the BSE Sectoral front, Healthcare up by 1.65%, Realty up by 0.57%, Bankex up by 0.36%, Consumer Durables up by 0.08% and Power up by 0.03%, were the top gainers, while Capital Goods down by 1.01%, Auto down by 0.97%, Metal down by 0.53%, FMCG down by 0.42% and Oil & Gas down by 0.25% were the top losers in the space.

Meanwhile, Planning Commission is unlikely to suggest any cut in 8 percent annual average growth target for the 12th Plan despite the fact that Indian economy performed below average in the first two years of this period. Meanwhile, in order to achieve annual average growth of 8 percent in the 12th Plan period, domestic economy will have to grow at over 12 percent in 2015-16 and 2016-17 which is difficult.

Planning Commission's internal meeting to be headed by Prime Minister Manmohan Singh on April 29 would deliberate on the draft mid-term appraisal document for the 12th Plan and may refrain from suggesting any cut in growth target set for 12th Five Year plan. The mid-term review of 12th Plan will be conducted in the end of this year and the new government formed after general elections will bear the onus of revising the growth target. The term of Commission will also expire with the present government, and new government will constitute the new Planning Commission.

Presently, Indian economy is struggling with slowdown and its growth slowed down to a decade low at 4.5 percent in FY13 and 4.6 percent during the first three quarter of FY14. The factors like high interest rate, low investments and slow execution of infrastructure projects have been impacting economy’s growth.  The Central Statistics Office (CSO) expects the Indian economy to grow at 4.9 percent in FY14. Reserve Bank projected Indian economy growth at 5-6 percent during FY15. 

The CNX Nifty touched a high and low of 6,786.25 and 6,750.30 respectively.

The top gainers of the Nifty were Cipla up by 3.40%, Sun Pharmaceuticals Industries up by 2.39%, Wipro up by 2.17%, Dr. Reddy's Laboratories up by 1.93% and Kotak Mahindra Bank up by 1.84%. On the other hand, Ambuja Cements down by 4.26%, Asian Paints down by 2.90%, BHEL down by 2.46%, GAIL down by 2.12% and HCL Technologies down by 2.00% were the top losers.

The European markets were trading in green, France's CAC 40 was up by 0.43%, Germany's DAX was up by 0.75% and United Kingdom's FTSE 100 was up by 0.32%.

The Asian markets concluded Monday’s trade mostly in red, following losses on Wall Street, while traders keep a wary eye on the Ukraine crisis. Indonesia’s bonds gained, pushing the 10-year yield to a two-week low, after foreign funds boosted holdings this month, adding to last quarter’s record inflows. The global funds raised ownership of local-currency sovereign securities by 12.2 trillion rupiah ($1.1 billion) this month to a record 372.9 trillion rupiah. Shanghai’s economy in the first quarter grew 7% year on year to 531.3 billion yuan ($85 billion), slowing from 7.6% in the previous three months. While the figure was in line with the national trend - China’s GDP growth slowed to 7.4% for the period, from 7.7% in the final quarter of 2013. Japan’s retail sales rose to a seasonally adjusted annual rate of 11.0%, from 3.6% in the preceding month. Hong Kong Trade Balance rose to a seasonally adjusted -50.4B, from -53.7B in the preceding month. Thai Industrial Production fell to a seasonally adjusted -10.4%, from -4.4% in the preceding month.