Benchmarks end lower on profit booking

Tuesday’s trading session was a disappointing session of trade for the Indian equity markets, as market participants booked profits in recent outperformers mainly power and PSU sector stocks. Investors’ remained cautious after India’s new Prime Minister Narendra Modi named his cabinet, which seems to have potential for policy conflict between ministers wanting faster economic growth and the Reserve Bank of India, which wants to tame inflation. Sentiments also remained dampened on report that foreign institutional investors (FIIs) sold shares worth a net Rs 84.13 crore on May 26, 2014, as per provisional data from the stock exchanges. Depreciation in Indian rupee too dampened the sentiments. The Indian rupee was trading lower against the US dollar at Rs 59.03 amid demand for US dollars from oil importers.

However, losses remained capped up to some extent after the Reserve Bank of India reported a sharp moderation in imports, especially of gold, helping India's current account deficit (CAD) to sharply narrow to 1.7 percent of GDP, in FY’14 from 4.7 percent in FY’13. Traders will also be eyeing the weakness in rupee and the movement in export-oriented stocks.

Global cues too remained sluggish with European markets making cautious start as the European Central Bank made sure that there was little doubt in investors’ mind that global liquidity will continue. Most of the Asian counters shut shop in the red with the exception of Japanese Nikkei which hit a new seven-week high on Tuesday, extending gains for the fourth straight session on the back of encouraging data from Chinese and the US.

Back home, stocks of non-banking finance companies (NBFC) viz. IFCI, Reliance Capital, Manappuram Finance, Muthoot Capital Services, Shriram Transport Finance Company, IDFC, L&T Finance Holdings all edged lower after the Reserve Bank of India (RBI) tightened merger rules for non-banking finance companies, requiring them to obtain the RBI’s written permission to acquire or merge with any similar entity, in order to ensure their fit and proper management. Additionally, most of the sugar stocks declined on sluggish demand from bulk consumers ahead of the monsoon season. On the flip side, stocks related to software and technology counters showed some relief on the back of rupee depreciation, which slipped below the psychological 59 per dollar mark.

The NSE’s 50-share broadly followed index Nifty declined by over forty points to end below its psychological 7,350 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex dropped by around one hundred and seventy points to end below its crucial 24,550 mark. Moreover, the broader markets too were struggled to get any traction and ended the session with a cut of around half a percent. The market breadth remained in favour of decliners, as there were 1,293 shares on the gaining side against 1,659 shares on the losing side while 103 shares remain unchanged.

Finally, the BSE Sensex plunged by 167.37 points or 0.68%, to 24549.51, while the CNX Nifty declined by 41.05 points or 0.56%, to 7,318.00.

The BSE Sensex touched a high and a low of 24777.31 and 24422.33, respectively. The BSE Mid cap index was down by 0.66%, while the Small cap index lost 0.45%.

The top gainers on the Sensex were Tata Steel up by 1.78%, Hindalco Inds up by 1.63%, L&T up by 1.37%, Infosys up by 1.29% and HDFC Bank up by 0.82%. While Gail India down by 7.56%, BHEL down by 5.30%, Mahindra & Mahindra down by 2.90%, Tata Power down by 2.71% and SBI down by 2.50% were the top losers in the index.

On the BSE Sectoral front, IT up by 0.29%, Healthcare up by 0.25%, Teck up by 0.21% and Metal up by 0.04% were the only gainers, while PSU down 2.41%, Power down by 2.14%, Oil & Gas down by 1.92%, Auto down by 1.31% and Realty down by 0.90% were the top losers in the space.

Meanwhile, newly-appointed Finance Minister Arun Jaitley, taking over the post at a time when India’s economic growth has a hit a decade low sub 5% levels, underscored his three priorities, including, fiscal consolidation, curbing inflation and balancing act on managing inflation without hurting growth. While expressing his gratitude to the Prime Minister, Jaitley highlighted that mandate of government had an inbuilt hope and change of the government would send out a strong signal to global community, who for some time now have preferred being on sidelines amidst political uncertainty.

Jaitley, a top corporate lawyer, who would be handling both the finance and defence ministry in the new administration of Prime Minister Narendra Modi, would be inheriting an economy that is growing at snail's pace, struggling with higher interest rates, high inflation, high fiscal deficit and is on the verge of a sovereign downgrade by ratings agencies.

Also, the newly appointed minister assured of expediting the decision making processes at a time when investment cycle has stalled and many key reforms have been shelved due to lack of political consensus. The country's finances continue to be precarious and Jaitley will have to walk a tightrope between growth and cutting deficit.

The CNX Nifty touched a high and low of 7,372.95 and 7,274.75 respectively.

The top gainers of the Nifty were Jindal Steel & Power up by 5.79%, Tech Mahindra up by 2.58%, Tata Steel up by 2.21%, Infosys up by 1.30% and Lupin up by 1.19%. On the other hand, GAIL (India) down by 7.59%, BHEL down by 5.27%, PNB down by 3.13%, Bank of Baroda down by 3.02% and IDFC down by 2.89% were the top losers.

Most of the European markets were trading in green, Germany's DAX was up by 0.34% and United Kingdom's FTSE 100 was up by 0.51%, while France's CAC 40 was down by 0.03%.

The Asian markets concluded Tuesday’s trade mostly in red, after the regional equity index yesterday climbed to the highest level this year. Jakarta Stock Exchange was closed today on account of ‘Isra Mi'raj of the prophet Muhammad SAW’ holiday. New home sales in Shanghai remained below the 200,000-square-meter threshold for the seventh consecutive week in a local market still beset by sluggish momentum. Purchases of new homes in the seven days ended, excluding government-funded affordable housing, shed 1% to 149,000 square meters. The average cost of new homes rose 13 percent from the prior week to 29,205 yuan ($4,677) per square meter. Hong Kong Trade Balance fell to a seasonally adjusted -55.3B, from -50.4B in the preceding month. Japan’s CSPI rose to a seasonally adjusted annual rate of 3.4%, from 0.7% in the preceding month. South Korean Consumer Confidence fell to 105, from 108 in the preceding month.