Post Session: Quick Review

Local equity markets, snapping two consecutive sessions’ gaining streak, resumed their southbound journey on Wednesday on prevailing caution ahead of national election results next week, while worsening Ukraine crisis also kept market-participants on the sidelines ahead of crucial market-moving congressional testimony by Federal Reserve Chair Janet Yellen later in the day. In the extremely somber session of trade, benchmark equity indices after making a soft start, never looked confident and went on losing ground till the close of trade on account of accentuated selling pressure in both frontline and broader indices. Both, Sensex and Nifty surrendered over 3/ 4 of a percent and settled below the crucial 22,400 and 6650 psychological levels respectively-lowest closing level since March 27. Meanwhile, broader indices also squandering all their early gains, ended with loss in the range of 0.05%-0.15%.

On the global front, Asian shares stumbled to a one-month low on Wednesday as the heightened possibility of Ukraine slipping into civil war depressed risk appetite. The grim situation in Ukraine also weighed on European shares, which dropped for fourth consecutive session as companies from Fiat SpA to Societe Generale SA posted profit that missed estimates.

Closer home, majority of the sectoral indices ended lower in the sluggish session of trade, while those from Power, Consumer Durables and Banking counters turned out to be exceptions. On the flip side, stocks from Information Technology (IT), Technology and Realty counters were the chief culprits which dragged the markets lower. IT stocks such as TCS, Wipro, and Infosys, tumbled to multi months low in a range-bound market after UBS in its latest report downgraded Infosys to sell from buy and has also slashed its target price to Rs 2,750 from Rs 4,050. On the flip side, gains of Oil & Gas counter was led by BPCL, which gained over a percent and ONGC, which rallied a percent after Anadarko Petroleum Corp raised its reserve estimates for a Mozambique asset where the two Indian energy companies own stakes. The market breadth on the BSE ended negative; advances and declining stocks were in a ratio of 1238: 1490, while 136 scrips remained unchanged. (Provisional)

 The BSE Sensex lost 184.52 points or 0.82% to settle at 22323.90. The index touched a high and a low of 22532.82 and 22286.26 respectively. Among the 30-share Sensex, 4 stocks gained, while 26 stocks declined. (Provisional)

The BSE Mid cap and Small cap indices ended lower by 0.14% and 0.08% respectively. (Provisional)

On the BSE Sectoral front, Consumer Durables up by 0.77% and Power up by 0.20% were the gainers while, IT down by 2.59%, Teck down by 2.23%, Realty down by 1.11%, Metal down by 0.71% and Auto down by 0.70% were the top losers in the space. (Provisional)

The top gainers on the Sensex were NTPC up by 1.58%, SBI up by 1.22%, Sun Pharma up by 0.92% and  Hindustan Unilever up by 0.07% while, Infosys down by 3.23%, HDFC  down by 2.76%, Cipla down by 2.16%, Hindalco Inds down by 2.13% and Gail India down by 1.98% were the top losers in the index (Provisional).

Meanwhile, India’s steel consumption grew by 3.4 percent to 5.8 million tonnes in April 2014 over the same month a year ago. However, it witnessed a sharp 12.9 percent decline over the preceding month, indicating sluggish investment demand in the country. Domestic crude steel production grew by 2.7 percent to 6.8 million tonnes during the month from a year earlier. The major steel producer such as Tata Steel, SAIL, RINL, Essar Steel, JSW and JSPL together produced 3.7 million tonnes in April, while the remaining came from minor producers. Steel imports spurted by 14.1 percent to 0.494 million tonnes, whereas, exports increased by 13 percent to 0.461 million tonnes during the reported month.

As steel demand is derived from construction and automobile sectors, the performance of the steel industry is therefore largely dependent on overall economic growth of the country. Construction sector accounts for around 60 percent of the country's total steel demand, while the automobile industry consumes 15 percent of demand. Over the past two financial years, Indian steel industry is struggling with slowdown due to the weak steel demand. India’s finished steel consumption grew at a four-year low rate of 0.6 percent to 73.93 million tonnes in FY14 mainly impacted by a prevailing economic slowdown and high interest rates.

Domestic crude steel production increased marginally at 3.8 percent to 81.3 million tonnes in 2013-14. Along with weak demand, high input cost due to increased prices of raw material, such as iron ore has also become a main concern for domestic steel players, impacting their margins. The government has been taking various measures to enhance the domestic steel demand. Earlier in March 2014, it has relaxed the norms for import of steel and its products to boost domestic steel production and infrastructure development.

India VIX, a gauge for markets short term expectation gained 1.03% at 33.61 from its previous close of 33.27 on Tuesday. (Provisional)

The CNX Nifty lost 66.65 points or 0.99% to settle at 6,648.65. The index touched high and low of 6,718.75 and 6,642.90 respectively. Out of 50 stocks in Nifty, 9 stocks ended in the green and 40 in red while 1 stock remained unchanged.

The major gainers of the Nifty were NTPC up 1.57%, SBI up by 1.14%, Sun Pharma up by 0.69%, Kotak Bank up by 0.60% and BPCL up by 0.53%.  The key losers were HCL Tech down by 4.51%, Tech M down by 3.63%, Infosys down by 3.11%, HDFC down by 2.88% and Hindalco down by 2.56%. (Provisional)

European markets were trading in red; France’s CAC 40 was down by 0.01%, UK’s FTSE 100 was down by 0.36% and Germany’s DAX was down by 0.07%.

The Asian markets concluded Wednesday’s trade mostly in red, amid worries about Ukraine and mounting concern that China’s economy is slowing. The Bank of Japan board minutes noted that the current recovery is exerting more upward pressure on prices than it is boosting economic growth. The minutes showed that wage increases and price rises resulting from supply-side constrains might not be enough to bring 2% sustained inflation by 2015. A leading international organization is warning that the global economy will grow by less than expected this year after it cut forecasts for the United States and China. The OECD, a think tank for the world’s most developed countries, blamed slower growth in large developing economies like China for the downgrade. It cut China’s growth forecast this year to 7.4% from 8.2% in November. Malaysian Trade Balance fell to 9.60B, from 10.40B in the preceding month.