Benchmarks add losses; Capital Goods drag

Indian equity benchmarks added losses to continue weak trade in the late afternoon session on account of selling in front line counters. The sentiments were on negative note despite economic think-tank the National Council of Applied Economic Research (NCAER), in its latest report, noted that the business confidence in last quarter of 2013-14 improved further on expectations of a new electoral mandate that pepped up the overall sentiments. Traders were seen piling up positions in IT, TECK and Consumer Durables stocks, while selling was witnessed in Capital Goods, Bankex and Oil & Gas stocks. In scrip specific development, Sun Pharmaceutical Industries was trading weak after US Food and Drug Administration issued warning letter to its Karkhadi unit. Gati was trading firm after Macquarie Bank bought stock in the company in a transaction estimated at about Rs 9.95 crore.

On the global front, the Asian markets were trading on a mixed note, while the European markets traded mostly in red. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 7,250 and 24,300 levels respectively. The market breadth on BSE was positive in the ratio of 1856:948 while 90 scrips remained unchanged.

The BSE Sensex is currently trading at 24221.35, down by 155.53 points or 0.64% after trading in a range of 24,419.54 and 24156.47. There were 7 stocks advancing against 23 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.79%, while Small cap index up by 1.10%.

The gaining sectoral indices on the BSE were IT up by 0.50%, TECK up by 0.23%, Consumer Durables up by 0.02% and FMCG up by 0.01%. On the flip side, Capital Goods down by 1.75%, Bankex down by 1.26%, Oil & Gas down by 0.64%, Power down by 0.62% and Realty down by 0.49% were the top losing indices on BSE.   

The top gainers on the Sensex were Bajaj Auto up by 3.26%, Hindalco Industries up by 2.22%, NTPC up by 1.37%, Coal India up by 0.70% and Infosys up by 0.63%. On the flip side, BHEL down by 3.11%, SBI down by 2.30%, Gail India down by 2.08%, Axis Bank down by 2.07% and L&T down by 2.06%.

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.

The CNX Nifty is currently trading at 7,225.05, down by 50.45 points or 0.69% after trading in a range of 7,287.15 and 7,206.70. There were 10 stocks advancing against 40 declining ones on the index.

The top gainers of the Nifty were McDowell up by 4.08%, Bajaj Auto up by 3.83%, Hindalco Industries up by 1.92%, HCL Technologies up by 1.52% and NTPC up by 1.51%. On the flip side, Ultratech Cement down by 3.62%, BHEL down by 3.17%, ACC down by 2.97%, Grasim Industries down by 2.65% and Gail India down by 2.39% were the major losers on the index.

Asian equity indices were trading on a mixed note; Jakarta Index added 0.22%, Hang Seng up by 0.01% and Shanghai Composite advanced 0.84% while, Straits Times dropped 0.15%, Nikkei 225 shed 0.24%, and Taiwan Weighted down by 0.29%.

The European markets were trading mostly in red; France’s CAC 40 was down by 0.16%, Germany’s DAX added 0.02% while UK’s FTSE 100 lost 0.06%.