Benchmarks end lower for third consecutive day

Extending their southward journey for third consecutive session, Indian equity benchmarks ended the Tuesday’s trade near day’s lows on geo-political tension over Ukraine. Selling was both brutal and wide-based as, barring consumer durables; none of sectoral indices on BSE could manage a green close. Counters, which featured in the list of worst performers, were metal, banking, auto and power. After getting a promising start, frontline gauges slipped into negative terrain, as markets participants turned cautious on report that foreign investors sold index futures worth Rs 1170 crore over the previous two sessions.

Selling got intensified in last leg of trade as investors remained pessimistic on India Meteorological Department’s (IMD) announcement that the country will likely get below-normal levels of monsoon rain this year. Moreover, the Reserve Bank of India has warned that El Nino can impact the yield, which could further trigger the inflation rate above 8.5 per cent and may result in hiking rates further, which could impact the India Inc investment cycle and put brakes on the growth rate. Further, uncertainty over 2014 Lok-Sabha election outcome despite opinion polls indicating victory for the BJP-led NDA government, weighed on market sentiment.

On the global front, European markets made a positive start and were trading mostly in the green in early deals. Asian markets shut shop mostly in the green with Hong Kong shares jumping on bargain-hunting following a rebound on Wall Street. Though, gains remained capped as investors remained cautious eyeing development in Ukraine. Investors also remained wary ahead of the announcement of Federal Reserve's monetary policy review on April 30, 2014.

Back home, mining stocks remained under pressure during the trade on 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 and grant fresh leases.  Additionally, 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.

On the flip side, telecom stocks grabbed some limelight after the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) cleared the 3G intra-circle roaming agreements signed between Bharti Airtel, Vodafone India and Idea Cellular, saying the pacts didn't violate any license conditions and also quashed the penalties levied on the three operators by the telecom department (DoT).

On the result front, FMCG major Dabur India, despite meeting street expectations with the fourth quarter numbers, edged lower by 1.36% during the session. The company has reported 17.32% rise in its consolidated net profit at Rs 235.29 crore for the quarter ended March 31, 2014 as compared to Rs 200.55 crore for the same quarter in the previous year. Meanwhile, Midcap IT company Hexaware Technologies missed street expectations on every parameter with the first quarter (January-March) net profit falling 32% sequentially to Rs 70.3 crore on lower revenues and operational performance.

The NSE’s 50-share broadly followed index Nifty lost over forty points to end way below the psychological 6,750 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex dropped by around one hundred and seventy points to end below the psychological 22,500 mark. Broader markets too were struggled to get any traction during the trade and ended the session in the red. The market breadth remained in favour of decliners, as there were 1,281 shares on the gaining side against 1,506 shares on the losing side while 123 shares remain unchanged.

Finally, the BSE Sensex plunged by 165.42 points or 0.73%, to 22466.19, while the CNX Nifty declined by 46.00 points or 0.68% to 6,715.25.

The BSE Sensex touched a high and a low of 22681.89 and 22443.56, respectively. The BSE Mid cap index was down by 0.44%, while the Small cap index lost 0.02%.

The top gainers on the Sensex were Sun Pharma up by 0.65%, Coal India up by 0.34%, HDFC up by 0.20%, TCS up by 0.10% and Infosys up by 0.01%. While Tata Steel down by 4.79%, Hindustan Unilever down by 3.01%, Hindalco Inds down by 2.87%, Tata Power down by 2.65% and Bajaj Auto down by 2.20% were the top losers in the index.

On the BSE Sectoral front, Consumer Durables up by 0.18% was the only gainer, while Metal down by 2.69%, Bankex down by 1.27%, Auto down by 1.19%, Power down by 1.11% and FMCG down by 0.83% were the top losers in the space.

Meanwhile, amid concerns over high selling prices of coal-bed methane (CBM), the government has informed that gas extracted from coal seams will be priced at equivalent to conventional gas, as the new Rangarajan formula will also apply to CBM. Presently, the actual CBM gas price that is being realised by industry players such as GEECL and EOL is much higher than the Government approved price.

Oil Ministry has notified that gas price advised through the new pricing guidelines 2014 based on the Rangarajan formula to treat as a floor price in case of CBM contracts. Therefore, the prices of CBM, shale gas and conventional gas will be equal and contractors cannot charge a higher price than this from their customers. The Ministry added that coal-bed methane contractors like GEECL and EOL will have to sell CBM gas at a uniform rate of $8.3 per mmBtu derived from the new Pricing Guidelines 2014.

The government had approved the formula under which all domestically produced gas will be priced at an average of the price prevailing at international gas trading hubs and the actual cost of importing liquid gas (LNG). Under the new approved pricing formula, the gas prices will get doubled at $8.30 per million British thermal unit from the current price at $ 4.20 per mbtu. New price will be uniformly applicable to all public and private sector producers such as Reliance Industries and ONGC. The increase in gas prices will directly benefit these local producers. Further, the move to raise gas prices is expected to benefit the government by around $2.2 billion incremental revenue by way of higher taxes. However, the implementation of new approved pricing formula has been deferred till completion of general elections.

The CNX Nifty touched a high and low of 6,779.70 and 6,708.65 respectively.

The top gainers of the Nifty were Ambuja Cements up by 1.45%, Grasim Industries up by 1.39%, BPCL up by 1.10%, ACC up by 0.95% and Tech Mahindra up by 0.75%. On the other hand, Jindal Steel & Power down by 9.01%, Tata Steel down by 4.88%, Hindustan Unilever down by 3.36%, Tata Power Company down by 3.01% and Hindalco Industries down by 2.73% were the top losers.

The European markets were trading in green, France's CAC 40 was up by 0.53%, Germany's DAX was up by 1.14% and United Kingdom's FTSE 100 was up by 0.69%.

The Asian markets concluded Tuesday’s trade mostly in green with Hong Kong shares jumping on bargain-hunting following a rebound on Wall Street, while investors await the release of key economic data later in the week. Japanese market has been closed for the day on account of ‘Showa Day’ holiday. The International Monetary Fund revised its forecast of China’s economic growth to 7.5% for this year and 7.3% in 2015 but it warned the slowdown in the country’s economy was sharper than envisaged despite the upward adjustment. But the revision in both growth figures marked a rise of 0.3% points from the previous forecast in October. Homebuyers and real estate developers in Shanghai retained their positive sentiment last week despite an overall weakness in the market. The purchases of new homes, excluding government-subsidized affordable housing, rose 7% week on week to 196,400 square meters, up for the second straight week.