Markets extend losses; trade near intra-day low level

Indian equities extended losses to continue their weak trade in the late afternoon session, hovering near the lowest point of the day due to profit-booking by funds and retail investors at prevailing levels amid weak global cues triggered by geopolitical worries over Ukraine. Though, most of the sectoral indices were trying to remain in green, the sharp selling witnessed in the IT and Teck stocks dragged the markets lower. Selling was also seen in the metal stock amid concerns over growth prospect, as India’s steel consumption witnessed a sharp 12.9 percent decline to 5.8 million tonnes in April 2014 over the previous month. However, consumer durables and healthcare stocks were on buyers’ radar. Consumer durables was top gainer index on BSE up by over 1.16% followed by healthcare and capital goods indices both up by over 0.50%. Broader indices once again outperformed the major indices and both mid and small indices were trading up by over 0.35%.

Infosys’ stock was down by around 3% after top global brokerage downgraded the stock to 'sell' citing the longer-than-expected turnaround time at the IT outsourcer. On the other hand, Titan, extending its previous day's gain, was trading higher by around 2% after reporting 11.6% yoy jump in net profit at Rs 206 crore for Q4 FY14. Further, Gujarat Pipavav Port has soared around 12% after reporting a robust 73% yoy rise in net profit at Rs 61 crore for Q4 FY14 on the back of strong operational performance.

On global front, Asian equity indices were trading in red with Hang Seng down by 1.12% and Nikkei 225 down by 2.65% as sustained worries over the instability in Ukraine pushed investors to book profits. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 6,700 and 22,500 levels respectively. The market breadth on BSE was positive, out of 2,308 stocks traded, 1,196 stocks advanced, while 994 stocks declined on the BSE.

The BSE Sensex is currently trading at 22,416.25 down by 92.17 points or 0.41% after trading in a range of 22,532.82 and 22,409.98. 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 0.51%, while Small cap index up by 0.39%.

The gaining sectoral indices on the BSE were Consumer Durables up by 1.16%, Healthcare up by 0.64%, Capital Goods up by 0.55%, Power up by 0.39% and Oil and Gas up by 0.34%. While, IT down by 1.86%, Teck down by 1.61%, Metal down by 0.31%, Auto down by 0.21% and FMCG down by 0.04% were the losing indices on BSE.   

The top gainers on the Sensex were Sun Pharma up by 1.54%, Cipla up by 0.82%, NTPC up by 0.75%, BHEL up by 0.73% and ONGC up by 0.58%. On the flip side, Infosys down by 2.62%, Wipro down by 2.25%, Bharti Airtel down by 1.92%, TCS down by 1.50% and Maruti Suzuki down by 1.29%.

Meanwhile, the Organisation for Economic Cooperation and Development (OECD) in its latest report has said that Indian economic growth will gain momentum with a decline in political uncertainty after the general elections and increasing investments. The OECD’s report added that India's economic growth is likely to inch up 4.9 percent in 2014 and further gain momentum to grow at 5.9 percent in 2015. However, rising bad loans and fiscal consolidation would weigh on economic recovery.

The Paris based think tank further highlighted that rise in rural incomes and the contracting inflation would boost domestic consumption, while, rupee's depreciation and firming external demand would augment Indian exports’ growth. The OECD’s report further stated that implementing the proposed inflation targeting framework will check price rise and improve business sentiment and consumer confidence in the country. However, it added that fiscal consolidation and supply bottlenecks coupled with still high non-performing loans and corporate leverage may adversely impact the recovery. NPAs of state-owned banks rose 28.5 percent to Rs 2.36 lakh crore in September 2013 from Rs 1.83 lakh crore in March last year. Owing to their impaired portfolios, the banks are now cautious to extend credit which is impacting the growth of corporate sector.

On fiscal deficit front, the OECD highlighted that though the fiscal deficit has narrowed, there is a need to take more measures like implementing pending tax reforms and changing the spending mix away from energy subsidies towards better targeted social and infrastructure investment. Fiscal deficit is expected to be contained at 4.6 percent of GDP in FY 14, as compared to 4.89 percent in the FY13. The report further added that reforming labour regulations and improving the education and training systems would also promote growth and help create better quality jobs.

The CNX Nifty is currently trading at 6,687.35 up by 27.95 points or 0.42% after trading in a range of 6,718.75 and 6,686.90. There were 27 stocks advancing against 23 declining on the index.

The top gainers of the Nifty were BPCL up by 2.21%, Sun Pharma up by 1.44%, Lupin up by 1.07%, BHEL up by 0.78% and Cipla up by 0.70%. On the flip side, Infosys down by 2.71%, Wipro down by 2.30%, Tech Mahindra down by 2.03%, Bharti Airtel down by 1.87% and TCS down by 1.61% were the major losers on the index.

Asian equity indices were trading in red; Hang Seng down by 1.12% to 21,729.39, Nikkei 225 down by 2.65% to 14,074.72, Straits Times was down by 0.44% to 3,231.73, Shanghai Composite down by 0.42% to 2,019.49 and 65 and Taiwan Weighted down by 0.22% to 8,839.32. While, Jakarta Composite up by 0.24% to 4,846.