Indian markets got slaughtered on F&O expiry; deposes about 1.5%

Thursday turned out to be disappointing session for the Indian equity indices which got pounded by around one and half percentage points on the expiry of May series Futures and Options. Indian barometer gauges, witnessed blood bath and closed near their lowest level in almost two weeks, breaching major crucial support levels 24,300 (Sensex) and 7,250 (Nifty) on feeble global cues. After a negative opening, the domestic bourses never looked in recovery mood and continued sliding till end, closing near the lowest point of the day. Selling was both brutal and wide-based as, barring healthcare; none of sectoral indices on BSE could manage a green close. Counters, which featured in the list of worst performers included software, technology and oil and gas. Sentiments also remained somber on report that foreign institutional investors (FIIs) sold shares worth a net Rs 286.54 crore on May 28, 2014, as per provisional data from the stock exchanges.

Selling got intensified in last leg of trade as European markets made a sluggish start ahead of next week’s European Central Bank rates decision. Though, the central bank is widely anticipated to announce new stimulus measures on June 5. While, most of the Asian markets went home in red, with Japanese markets declining over a percentage point on report of a worse-than-estimated drop in nation’s retail sales. Japan’s retail sales fell 13.7 percent in April from March, the most in at least 14 years.

Back home, investors remained on sidelines ahead of Q4 GDP data, scheduled to be released on Friday and RBI policy review next week, wherein Raghuram Rajan is likely to keep monetary policy rates steady, given continued concerns about inflation. Sentiments remained down-beat with software and technology counters bearing most of the brunt led by fall of around eight percent in Infosys stock after the company announced the resignation of its President and Member of the Board B. G. Srinivas.

Sentiments also got dented after select stocks of non-banking finance companies (NBFC) viz. Reliance Capital, Manappuram Finance, Shriram Transport Finance Company, IDFC continued to trade lower on report that 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 like, Triveni Engineering & Industries, E.I.D- Parry (India), Shree Renuka Sugars etc declined on sluggish demand from bulk consumers ahead of the monsoon season.

The NSE’s 50-share broadly followed index Nifty declined by over ninety points to end below its psychological 7,250 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex dropped by over three hundred and twenty to end below its crucial 24,250 mark. Moreover, the broader markets too were struggled to get traction and ended the session with a cut of around half a percent. The market breadth remained in favour of decliners, as there were 1,407 shares on the gaining side against 1,551 shares on the losing side while 103 shares remain unchanged.

Finally, the BSE Sensex plunged by 321.94 points or 1.31%, to 24234.15, while the CNX Nifty declined by 94.00 points or 1.28%, to 7,235.65.

The BSE Sensex touched a high and a low of 24528.20 and 24206.50, respectively. The BSE Mid cap index was down by 0.34%, while the Small cap index lost 0.48%.

The top gainers on the Sensex were Hindalco Inds up by 1.43%, Mahindra & Mahindra up by 1.38%, Dr Reddys Lab up by 1.32%, Sun Pharma up by 0.63% and NTPC up by 0.53%. While Infosys down by 7.81%, ONGC down by 2.65%, Wipro down by 2.63%, BHEL down by 2.23% and Cipla down by 1.80% were the top losers in the index.

On the BSE Sectoral front, Healthcare up by 0.02% was the only gainer, while IT down by 3.44%, Teck down by 2.92%, India Infrastructure Index down by 1.67%, Oil & Gas down by 1.64% and Capital Goods down by 1.49% were the top losers in the space.

Meanwhile, Finance ministry is planning to introduce a foreign investment policy framework that will allow at least 49% investment in all sectors, in a move to stimulate overseas interest and help lift the economy from the doldrums, the finance ministry is planning to introduce a liberal foreign investment policy framework that will allow at least 49% investment in all sectors, barring a few strategic ones.

Moreover, the ministry is also contemplating on eliminating the time-consuming government approval, required for proposal wherein 49% investment is allowed via the automatic route, to free the Indian companies from undue scrutiny.

According to this proposal, sectoral 49% cap would be covering FDI, foreign portfolio investment as also non-resident Indian investment and any investment over 49%, except when 100% has been permitted through the automatic route, will have to be approved by the Foreign Investment Promotion Board (FIPB).

Notably, this proposal could also offer a way to settle the controversial issue over FDI in multi-brand retail as scaling back FDI in the sector to 49% could be a compromise solution.

Additionally, composite cap formulation could be acceptable for the insurance and pension sectors as well, where the change would have to be carried out through legislation.

The CNX Nifty touched a high and low of 7,325.40 and 7,224.40 respectively.

The top gainers of the Nifty were Hindalco Industries up by 1.66%, Dr. Reddy's Laboratories up by 1.42%, NTPC up by 0.99%, Mahindra & Mahindra up by 0.98% and Sun Pharmaceuticals Industries up by 0.76%. On the other hand, Infosys down by 3.43%, Jindal Steel & Power down by 3.37%, Ambuja Cements down by 3.05%, HCL Technologies down by 2.92% and IDFC down by 2.89% were the top losers.

Most of European markets were trading in red, France's CAC 40 was down by 0.17% and Germany's DAX was down by 0.09%, while United Kingdom's FTSE 100 was up 0.27%.

The Asian markets concluded Thursday’s trade mostly in red, while Jakarta Stock Exchange was closed on account of ‘Ascension Day’ holiday. China consumer sentiment rose for the second consecutive month in May amid growing confidence that authorities will take action to support growth. The Westpac MNI China Consumer Sentiment Indicator increased to 121.2 this month from 117.3 in April, showing an improvement after three straight months of declines. China’s industrial profits rose 10% in the first four months from a year earlier, easing from last year’s 11.4% - indications that the economic growth continued to slow. The profits totaled 1.76 trillion yuan ($282 billion) in the January-April period, with 30 industries of the 41 being tracked reporting higher earnings. Japanese retail sales fell to a seasonally adjusted annual rate of -4.4%, from 11.0% in the preceding month. South Korea’s current account surplus narrowed to $7.12 billion in April from a revised $7.29 billion in March. Philippines GDP fell to a seasonally adjusted annual rate of 5.7%, from 6.5% in the preceding month.