Benchmarks continue weak trade; IT, TECK drag

Indian equity benchmarks continued its weak trade in the late afternoon session on account of selling in frontline counters and taking cues from global counterparts. Investors didn’t pay any heed towards OECD’s latest report which stated 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% in 2014 and further gain momentum to grow at 5.9% in 2015. Traders were seen piling up positions in Consumer Durables, Power and FMCG stocks, while selling was witnessed in IT, TECK and Metal sector stocks. In scrip specific development, Infosys was trading in red after foreign brokerage firm downgraded the company to sell from buy and cut its target price. CESC was trading in green after another brokerage firm initiated coverage with a buy rating.

On the global front, the Asian markets were trading mostly in red, while the European markets too traded on pessimistic note. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 6,700 and 22,400 levels respectively. The market breadth on BSE was negative in the ratio of 1199:1298 while 166 scrips remained unchanged.

The BSE Sensex is currently trading at 22371.47, down by 136.95 points or 0.61% after trading in a range of 22,532.82 and 22359.82. There were 10 stocks advancing against 20 stocks declining on the index.

The broader indices pared some of its early gains; the BSE Mid cap index was up by 0.23%, while Small cap index up by 0.24%.

The gaining sectoral indices on the BSE were Consumer Durables up by 0.90%, Power up by 0.66%, FMCG up by 0.45%, HealthCare up by 0.27% and PSU up by 0.27% while, IT down by 2.72%, TECK down by 2.36%, Metal down by 0.32%, Realty down by 0.24% and Auto down by 0.11% were the top losing indices on BSE.   

The top gainers on the Sensex were NTPC up by 1.58%, Sun Pharma up by 1.57%, SBI up by 1.22%, Hindustan Unilever up by 0.84% and Axis Bank up by 0.58%.

On the flip side, Infosys down by 3.42%, Bharti Airtel down by 2.62%, Wipro down by 2.35%, TCS down by 2.00% and HDFC down by 1.90%.

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.

The CNX Nifty is currently trading at 6,673.55, down by 41.75 points or 0.62% after trading in a range of 6,718.75 and 6,670.75. There were 21 stocks advancing against 29 declining ones on the index.

The top gainers of the Nifty were BPCL up by 2.10%, Lupin up by 1.65%, Sun Pharma up by 1.53%, NTPC up by 1.44% and SBI up by 1.28%.

On the flip side, Infosys down by 3.48%, HCL Tech down by 3.17%, Ultratech Cement down by 3.10%, Tech Mahindra down by 2.86% and Bharti Airtel down by 2.75% were the major losers on the index.

Asian equity indices were trading mostly in red; Hang Seng plummeted 1.05%, Nikkei 225 plunged 2.93%, Straits Times lost 0.36%, Shanghai Composite slid 0.89% and Taiwan Weighted shed 0.22%. While, Jakarta Composite was up by 0.68% the only gainer among Asian pack.

The European markets were trading in red; France’s CAC 40 was down 0.29%, Germany’s DAX lost 0.22% and UK’s FTSE 100 dropped 0.34%.