Benchmarks continue to trade in red

Indian equity benchmarks continued to trade in red amid weak global cues and selling witnessed in front line blue chip stocks such as Tata Steel, HUL and Bajaj auto among others. Profit booking in metal, banking and auto stocks dragged the market lower and the major sectoral indices were trading in red. However, investors were seen piling up position in IT and Tech stock. Metal index was the top loser on BSE down by over 1.50% tracking weakness in metal prices on global markets. Mining stocks were also under pressure amid report that the Supreme Court may go for a Goa-like mining ban in Odisha for a period of three months to allow the state government to sort out illegalities in the mining sector. Railway stocks such as Titagarh Wagons, Kalindee Rail Nirman and Kernex Microsystems plunged by over 10% due to profit-booking. Railway stocks had witnessed a sharp run-up in the past few trading sessions on expectations that these companies would bag orders from the new government.

Wockhardt, extending its previous day’s 12% rally, surged another around 10% to nearly Rs 794, after the company said that drug regulator of Himachal Pradesh has revoked a suspension it imposed on the manufacturer and sale of a combination drug for pain treatment. On the other hand, Hindustan Unilever was down around 2.4% to Rs 567 after it reported weak numbers for Q4 FY14.

On global front, Asian equity indices were trading mixed with Straits Times down by 0.41% and Nikkei 225 down by 0.98% as investors turned cautious ahead of the US Fed meet and emerging crisis in Ukraine. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 6,750 and 22,600 levels respectively. The market breadth on BSE was negative, out of 2,292 stocks traded, 1,074 stocks advanced, while 1,112 stocks declined on the BSE.

The BSE Sensex is currently trading at 22,526.75 down by  104.86 points or 0.46% after trading in a range of 22,681.89 and 22,470.43. There were 7 stocks advancing against 23 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.15%, while Small cap index up by 0.22%.

The gaining sectoral indices on the BSE were IT up by 0.44%, Teck up by 0.28% and Consumer Durables up by 0.11%. While, Metal down by 1.54%, FMCG down by 0.83%, Bankex down by 0.80%, Power down by 0.70% and Auto down by 0.58% were the losing indices on BSE.   

The top gainers on the Sensex were Wipro up by 1.18%, Sun Pharma up by 0.48%, M&M up by 0.41%, ONGC up by 0.39% and Infosys up by 0.31%. On the flip side, Tata Steel down by 2.91%, Hindustan Unilever down by 1.42%, Bajaj Auto down by 2.01%, Hindalco Inds down by 1.42% and Cipla down by 1.18%.

Meanwhile, the Fitch group entity India Ratings has stated that the new government will need to push strong policy reforms to bring economy back to higher growth trajectory. In its latest report it has stated that though the worst appeared to be over, Indian economy is unlikely to migrate to a high growth phase of around 9% over the next two-to-three years. Indian rating has kept its growth forecast for FY15 at 5.6 %.

The rating agency also rejected the possibility of drop in farm productivity saying that the reservoir are a decadal high already and it is too early to assess the impact of possible El Nino. India Meteorological Department (IMD) predicted a sub-normal monsoon this year because of the El Nino effect. It has noted that till April 3, 2014 adequate water storage in major reservoirs was 25 per cent higher than last year and 37 per cent higher than the average of last 10 years which will help in alleviating some pressure which is likely to emanate from lower-than-average seasonal rainfall. The rating agency projects seasonal factors primarily rainfall to continue to exert pressure on inflation. However, it expect that both WPI and CPI-based inflation to fall and average out at 5.5 per cent and 8 per cent in FY15.

Further, India Ratings estimates current account deficit (CAD) to be $45.4 billion (2.1 percent of GDP) in FY15 as against around $32 billion (1.7% of GDP) last fiscal. Capital flows are expected to be buoyant and are estimated to touch $60 billion in FY15. Rise in foreign currency assets and a manageable CAD will support the rupee, which is expected to settle at around 57-58 by end of FY15. It added that a mild decline in inflation and the rupee appreciation will impact interest rate positively and expects 10-year G-sec rate to settle around 8.3-8.4% by end-March 2015. Regarding the industry growth, the report highlighted that the industrial sector will grow by 4.1 % in FY15 mainly due to better mining and electricity sector performance. Indian economic growth is estimated at around 4.9% during the FY14.

The CNX Nifty is currently trading at 6,735.45 down by 25.80 points or 0.38% after trading in a range of 6,779.70 and 6,711.10. There were 21 stocks advancing against 29 declining ones on the index.

The top gainers of the Nifty were Ambuja Cement up by 1.95%, Grasim up by 1.76%, Ultratech Cement up by 1.45%, Tech Mahindra up by 1.36% and ACC up by 1.35%. On the flip side, Jindal Steel down by 3.89%, Tata Steel down by 2.89%, HUL down by 2.50%, Bajaj Auto down by 2.02% and Hindalco Inds down by 1.38% were the major losers on the index.

Asian equity indices were trading mixed; Hang Seng up by 0.11% to 22,156.75, Shanghai Composite up by 0.05% to 2,004.47 and Taiwan Weighted up by 0.71% to 8,872.11. While,  Straits Times was down by 0.41% to 3,228.86, Nikkei 225 down by 0.98% to 14,288.23 and Jakarta Composite down by 0.19% to 4,809.81.