Post Session: Quick Review

After logging record closing high levels for previous four consecutive sessions, Indian equity markets capitulated to selling pressure, settling with cut of over a quarter of a percent on Wednesday, ahead of the release of crucial macro-economic data, April IIP and May CPI a day later. Broadly, overlooking May trade deficit, which dipped by 42% year-on-year to $11.23 billion, market-participants scrambled to cash in their profits. Most of market-participants preferred reducing their exposure in local equities fearing any kind of nasty surprise from macro-economic data tomorrow. Additionally, lingering concerns over monsoon deficit probability also haunted traders. Thus, after making a good start and soaring to life-time highs in early deals, markets started coming off from second half of the session and nose-dived today’s low level by close of trade, which took both Sensex and Nifty below the psychologically crucial 25,500 and 7,650 levels respectively. Meanwhile, broader indices witnessing sharper laceration went home with loss in the range of 0.50%-0.80%.

On the global front, Asia pacific shares nudged lower on Wednesday, though the Nikkei edged up slightly as China's economic news was offset by the World Bank's trimmed global growth target of 2.8% for the year, compared with a 3.2% forecast in January. Highlighting government's efforts to energize the slowing economy, China's central bank said on Wednesday it will keep monetary policy steady in 2014, even as the finance ministry said fiscal spending had surged nearly 25 percent in May from a year earlier. Additionally, European shares too reacting to global growth forecast downward revision, were trading sharply lower in early deals. Meanwhile, sentiments also took a hit after profit warning from German airline Deutsche Lufthansa rocked the travel and leisure sector.

Closer home, sentiments at Dalal Street also took a hit after the World Bank scaled down its estimate for India's economic growth this financial year to 5.5%, as compared to 6.2% in its January Report and highlighted the key risk to near-term forecast was weak monsoon because of El Nino. Meanwhile, in the broad based selling pressure, most of the sectoral indices settled in red, with the only exceptions being the stocks from Information Technology, Technology and Healthcare counters which emerging as investors’ darling, were the only gaining indices of the session. While, defensive play aided healthcare pivotal’s gains, Rupee’s weakness lifted IT counter for yet another session. On the flip side, stocks from Realty, Consumer Durables and Metal counters witnessing sharp drubbing were the worst performers of trade today. The market breadth on the BSE ended positive; advances and declining stocks were in a ratio of 1618: 1517, while 68 scrips remained unchanged. (Provisional)

The BSE Sensex lost 109.80 points or 0.43% to settle at 25473.89. The index touched a high and a low of 25735.87 and 25365.65 respectively. Among the 30-share Sensex, 12 stocks gained, while 18 stocks declined. (Provisional)

The broader indices too struggled to get any traction and ended in the red; the BSE Mid cap index was down by 1.01% and Small cap index was down by 0.67%. (Provisional)

On the BSE Sectoral front, Realty up by 4.21%, Consumer Durables up by 2.99%, Metal up by 2.82%, Power up by 2.75% and Infrastructure up by 2.53% were the gainers while, IT down by 2.23%, TECk down by 1.25%, Healthcare down by 0.66% and  Bankex down by 0.06%, were the few losers in the space. (Provisional)

The top gainers on the Sensex were Infosys up 3.19%, TCS up by 2.08%, Hero MotoCorp up by 1.79%, Dr Reddys up by 1.38% and Bajaj Auto up by 1.17%. On the flip side, the key losers were Tata Power down by 5.51%, Hindalco down by 4.48%, Coal India down by 3.99%, BHEL down by 3.83% and NTPC down by 3.64%. (Provisional)

Meanwhile, in a move to enhance the investment in domestic equity benchmarks, the Securities & Exchange Board of India (SEBI) has urged the Finance Ministry to reduce securities transaction tax (STT) for investors.

At present, buyer and seller pay STT on any deal in the spot or cash market. The STT, which was introduced in the 2004-05 Union Budget constitutes 50% of the total transaction cost in the cash segment and also covers mutual fund units traded on exchanges. In exchange traded derivative contracts include futures and options, only the seller pays STT. Besides STT, there are other charges such as transaction charges, stump duty, service tax and brokerage fee which are discouraging investors particularly retail investors.

The market regulator is of the view that high STT tax is one of the reasons why India is losing out to overseas markets like Singapore where the transaction cost is much lower. Therefore, STT rates for different kinds of transactions on stock exchanges should be reduced.

Currently, the STT rate is 0.10% on the value of the transaction where a buyer takes delivery of shares in the spot market. Most of the stock market intermediaries are expecting a cut in STT in the coming union budget 2014-15. If the government removes one-way STT, it will reduce the transaction cost which in turn will enhance volume in domestic equity markets.

India VIX, a gauge for markets short term expectation rose 2.38% at 17.06 from its previous close of 16.66 on Tuesday. (Provisional)

The CNX Nifty declined 29.55 points or 0.39% to settle at 7,626.85. The index touched high and low of 7,700.05 and 7,589.05 respectively. Out of 50 stocks in Nifty, 16 stocks ended in the green and 34 in red. (Provisional)

The major gainers of the Nifty were Infosys up 3.31%, Kotak Mahindra Bank up by 2.57%, TCS up by 2.13%, Hero MotoCorp up by 1.47% and Dr Reddys up by 1.30%. On the flip side, the key losers were Tata Power down by 5.38%, DLF down by 5.38%, Hindalco down by 4.48%, Coal India down by 4.19% and NTPC down by 3.94%. (Provisional)

European markets were trading in red; UK’s FTSE 100 down by 0.54%, Germany’s DAX down by 0.79% and France’s CAC 40 was down by 0.72%.

The Asian markets concluded Wednesday’s trade mostly in green, with Hong Kong shares ending lower as profit-takers moved in after a healthy two-day rally. The traders in the region remained concerned with the World Bank cutting its global growth forecast amid weaker outlooks for the US, Russia and China, while calling on emerging markets to strengthen their economies before the Federal Reserve raises interest rates. The bank’s report showed that China’s expansion was lowered to 7.6% growth from 7.7%. Beijing’s own target for this year is 7.5%. China’s consumer prices hit a four-month high in May, but inflationary outlook remains mild, leaving room for more policy easing. The Consumer Price Index, the main gauge of inflation, expanded 2.5% from a year earlier last month, up from April’s 1.8% increase.

Japan’s Business Index Survey of large manufacturing conditions fell to a seasonally adjusted annual rate of -13.9, from 12.5 in the preceding quarter while Japan’s Corporate Goods Price Index rose to a seasonally adjusted annual rate of 4.4%, from 4.1% in the preceding month. Malaysian Industrial Production fell to a seasonally adjusted annual rate of 4.2%, from 4.3% in the preceding month.