Post Session: Quick Review

Profit-booking was witnessed a day after bourses consolidated at record high levels as market-participants increasingly booked profits worrying that markets rally was  a bit overdone. The sentiment soured to some extent after provisional data from bourses showed  that foreign investors sold Indian shares worth a net Rs 1.04 billion ($17.8 million) on Tuesday, their first sales since April 16. In the extremely dismal session of trade, markets after making flat, but positive start witnessed bouts of selling pressure from early deals which took bourses into negative territory, though some recovery soon followed, profit-booking yet again visited Dalal Street. Post this, markets did yet again make some attempts of recovery, but those remained lackadaisical. By close of trade, both Sensex and Nifty nursed loss of over quarter of a percent and settled just shy of the psychological 24,300 and 7,250 levels respectively. However, this for the third consecutive session that broader indices outperformed larger peers that too with massive gains of  close to percent and half.

On the global front, Asian shares followed Wall Street's gloom on Wednesday, with dismal data and prevailing tensions in Thailand also weighing on the sentiment. Japanese trade data for April released shortly before the market opening showed that the country posted a record 22nd month of trade deficits. While last month's rise in exports beat forecasts, shipments to the major US market slowed. On the flip side, markets failed to draw any sense of comfort from the much anticipated status quo stance of Bank of Japan (BoJ), which held policy steady as expected at the conclusion of a two-day meeting and maintained its overall upbeat economic assessment while raising its capex view. Meanwhile, European shares shrugging off a sluggish start were trading mostly positive even as investors awaited confidence data.

Closer home, the chief culprit behind the slide for the markets were stocks from Capital Goods, banking and Consumer Durables counters. On the flip side, massive demand was witnessed in stocks from Realty counters, followed by Information Technology (IT) and Fast Moving Consumer Goods counters.  IT stocks after previous few sessions’ drabbing was on investors’ radar for second consecutive session as they lapped up fundamentally strong blue chip IT stocks which were available at attractive valuation.  Additionally, defensive Fast Moving Consumer Goods stocks also made a smart comeback.  The market breadth on the BSE ended positive; advances and declining stocks were in a ratio of 2085:874, while 87 scrips remained unchanged. (Provisional)

The BSE Sensex lost 78.86 points or 0.32% to settle at 24298.02. The index touched a high and a low of 24419.54 and 24156.47 respectively. Among the 30-share Sensex, 9 stocks gained, while 21 stocks declined. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 1.34% and Small cap index was up by 1.84%. (Provisional)

On the BSE Sectoral front, Realty up by 1.90%, IT up by 0.79%, FMCG up by 0.64%, Auto up by 0.50% and Teck up by 0.44% were the gainers while, Capital Goods down by 1.63%,Bankex down by 1.07%, Consumer Durables down by 0.42%, Health Care down by 0.35% and Oil & Gas down by 0.26% were the losers in the space. (Provisional)

The top gainers on the Sensex were Bajaj Auto up by 4.79%, Hindalco Inds up by 3.12%, NTPC up by 2.52%, SSLT up by 1.79% and Coal India up by 1.53% while, BHEL down by 2.90%,Bharti Airtel down by 2.79%,Axis Bank down by 2.31%, SBI down by 2.30% and L&T down by 2.13% were the top losers in the index (Provisional).

Meanwhile, the World Gold Council (WGC), in its latest Gold Demand Trends report, highlighted that India’s gold demand declined by 26% to 190.3 tonnes during January-March quarter of 2014 as against 257.5 tonnes in the same period of previous year due to higher import duties and supply curbs imposed by the government. In value terms, domestic gold demand stood at Rs 48,853 crore in Q12014 versus Rs 73,184 crore Q1 of 2013, representing a 33% decline.    

The report further added that total jewellery demand during the period down 9% at 145.6 tonnes compared to 159.5 tonnes Q1 of 2013. Total investment demand for Q1 2014 was down by 54% at 44.7 tonnes from 98 tonnes in the same quarter last year. However, gold continued to enter India through unofficial channels, impacting domestic gold industry. The WCG expects Indian gold demand at around 900-1,000 tonnes for 2014.

Gold is the second largest import item for India after crude oil and is mainly utilised to meet the demand of jewellery industry. The government and the Reserve Bank of India (RBI) had imposed restriction on gold imports to reduce the widening current account deficit (CAD). The curbs included higher import duty at 10 percent and linking the imports to exports with 20:80 scheme under which 20% of all gold imports by importers has to be re-exported. Meanwhile, these restrictions on gold imports have yielded results as the CAD is likely to improve at around 2% of GDP level during FY14 as against the record high of 4.8% of GDP in FY13.

However, the move has been adversely impacting the domestic jewellery exports. Indian gems and jewellery industry exports declined by 8.82% to $39.52 billion in FY14 from a year earlier. Meanwhile, there are expectations that new government will remove these short terms curbs in order to create a favorable system that deals with gold and other precious metals category.  India VIX, a gauge for markets short term expectation lost 6.87% at 17.91 from its previous close of 19.23 on Tuesday. (Provisional)

The CNX Nifty lost 26.65 points or 0.37% to settle at 7,248.85. The index touched high and low of 7,287.15 and 7,206.70 respectively. Out of 50 stocks in Nifty, 15 stocks ended in the green and 35 in red.

The major gainers of the Nifty were DLF up 5.56%, Bajaj-Auto up by 5.12%, MC Dowell-N up by 4.99%, Asian Paint up by 3.78% and NTPC up by 2.85%.  On the flip side, the key losers were Ultra Cement down by 3.56%, BHEL down by 3.06%, Bharti Airtel down by 3.04%, Grasim down by 2.89% and SBI down by 2.50%. (Provisional)

 Most of European markets were trading in green; France’s CAC 40 was up by 0.04%, UK’s FTSE 100 was down by 0.67% and Germany’s DAX was up by 0.26%.

The Asian markets concluded Wednesday’s trade mostly in red, with Hong Kong shares ending flat in green. The Bank of Japan unanimously voted to keep the current monetary base target at the conclusion of a two-day board meeting. The Bank of Japan will conduct money market operations so that the monetary base will increase at an annual pace of about 60 to 70 trillion yen. The BoJ also maintained its outlook, repeating, Japan’s economy is expected to continue a moderate recovery as a trend, while it will be affected by the subsequent decline in demand following the front-loaded increase prior to the consumption tax hike. Japan’s trade balance rose to a seasonally adjusted -0.84T, from -1.63T in the preceding month whose figure was revised up from -1.71T. Indonesia’s government forecast a widening budget deficit next year on rising fuel subsidies, which could pose a problem for the new president amidst a global economic slowdown. The fiscal deficit in 2015 will remain expansive but measured which will translate into a budget deficit in range of 1.7% to 2.5% of GDP.

Singapore’s economy will experience modest expansion this year as a tight labor market constrains some industries amid improving global demand, the government stated after growth exceeded initial estimates last quarter. The city state maintained its 2014 growth and export forecasts even as manufacturing gains helped gross domestic product rise an annualized 2.3% in the three months through March from the previous quarter, more than an April estimate of a 0.1% expansion.