Benchmarks snap four days gaining streak; Sensex ends below 25,500 mark

Snapping their four days gaining streak, Indian equity benchmarks ended the Wednesday’s session in the red, breaching their crucial 7,650 (Nifty) and 25,500 (Sensex) levels, as investors opted to book profit after the domestic bourses hit fresh all-time highs in intra-day trade. After a flat-to-positive start domestic gauges started building up momentum and scaled past their crucial 25,700 (Sensex) and 7,700 (Nifty) bastions in early deals. Sentiments remained up-beat on report that foreign portfolio investors (FPIs) bought shares worth Rs 682.26 crore net on June 10, 2014, as per provisional data from the stock exchanges.

But, markets took U-turn from intraday high levels to enter into red terrain as investors turned cautious with monsoon concern looming large and the country expected to receive a below-normal monsoon rainfall of 93 percent this year, which could drag down GDP growth. 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. Investors also remained on sidelines ahead of release of the consumer price index (CPI) inflation data for May and the Index of Industrial Production (IIP) data for April due on June 12.

Selling got intensified with European counters making a sluggish start with CAC, DAX and FTSE all trading with a cut of over half a percent in early deals. Investors mainly resorted to profit booking following the decline in European markets. Though, Asian markets ended the session mostly in the green terrain, though traders 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.

Back home, losses remained capped on the back of 42.02% Y-o-Y fall in May trade deficit data. Encouragingly, exports clocked a 12.4% jump year-on-year to $27.99 billion in May as compared to $24.91 exports in the corresponding month previous year, its first double digit growth since September 2011. Imports in May stood at $ 39.23 billion as compared to $44.28 billion in the same month previous year.

Meanwhile, FMCG shares lost ground on concerns that lower monsoon rains would hit agricultural output leading to lower rural incomes hurting volume growth. Oil shares which had surged recently on hopes of gas price hike continued to witness profit taking. On the flip side, software and technology stocks edged higher on the back of depreciation in rupee.

The NSE’s 50-share broadly followed index Nifty lost around thirty points to end below the psychological 7,650 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex dropped by around one hundred and ten points to end below the psychological 25,500 mark. Broader markets too were struggled to get any traction during the trade and ended the session in the red with a cut of around a percentage point. However, the market breadth remained in favour of advances, as there were 1647 shares on the gaining side against 1,487 shares on the losing side while 70 shares remain unchanged.

Finally, the BSE Sensex was down by 109.80 points or 0.43% at 25473.89, while CNX Nifty settled at 7,626.85, down by 29.55 points or 0.39%.

The BSE Sensex touched a high and a low of 25735.87 and 25365.65, respectively. The BSE Mid cap index was down by 1.01%, while Small cap index down by 0.67%.   

The top gainers on the Sensex were Infosys up 3.64%, TCS up by 2.23%, Dr Reddys up by 1.67%, Hero MotoCorp up by 1.61% and Bajaj Auto up by 1.14%. On the flip side, the key losers were Tata Power down by 4.98%, Hindalco down by 4.18%, Coal India down by 3.84%, BHEL down by 3.33% and NTPC down by 3.18%.

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.

Meanwhile, easing pressure on the current account balance, India’s trade deficit widened to $11.23 billion in May as compared to $10.01 billion in April, but was lower by 42.02% on Y-o-Y basis. The trade deficit stood at $19.37 billion in the corresponding month of the previous year.

Encouragingly, exports clocked a 12.4% jump year-on-year to $27.99 billion in May as compared to $24.91 exports in the corresponding month previous year, its first double digit growth since September 2011. Out of the total exports, while engineering exports grew 23% to 6.11 billion, petroleum exports rose 28.7% to $5.9 billion and gems and jewellery exports spiked up by 1.36% to $ 3.43 billion in May over same period last year.

Meanwhile, Imports in May stood at $ 39.23 billion, higher than $ 35.7 billion seen in April and $44.28 billion in the same month previous year. Of the total, gold imports fell 72% to $2.19 billion since May 2013, but jumped from $1.76 billion in April.

In cumulative terms, exports rising by 8.87% at $53.63 billion in the first two month of the 2014-15 fiscal, as compared to $49.26 billion in April-May, 2013 and imports falling by 13.16% in period under review at $ 74.95 billion as compared to $83.61 billion in corresponding months of the previous year, left trade deficit of $21.32 billion during first two months of new fiscal.

Thus, with gold imports falling, the commerce secretary underscored the ministry was looking to rationalize gold import duty and that the gold import regime should see a change as early as next month.

This is for the third successive month that trade deficit stayed in double digits as imports, especially oil, increased, nevertheless the trend is not worrying and the country remains comfortably within 2014/15 trade deficit forecast at $155 billion.  As a matter of fact, double-digit growth in exports is heartening. With better economic activity especially in the US and Europe, Indian exports are likely to stay on a reasonably better footing this time.

The CNX Nifty touched a high and low of 7,700.05 and 7,589.05 respectively.

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%.

European markets were trading in red; UK’s FTSE 100 down by 0.55%, Germany’s DAX down by 0.86% and France’s CAC 40 was down by 0.78%.

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.