Markets retreat from life time high levels; slip into negative territory

Witnessing aggressive selling pressure, local equity markets pulling off from their all time high levels were languishing into negative territory, with loss of over quarter of a percent as market-participants rushed in to cash in their profits at higher levels, overlooking  May trade deficit, which though increased 11.2% month-on-month, but was down by 42% year-on-year to $11.23 billion. Additionally, caution ahead of the release of April IIP and May CPI data also underpinned market -participants to take profits off the table. On the macro front, street widely expects factory output to rise for the first time in April since January, to reflect healthy growth in core industries and consumer price index to ease in May. Additionally, nervy start of European shares also weighed on the sentiment. Although at day’s low, both Sensex and Nifty were trading below the crucial 25,500 and 7,600 levels respectively. Meanwhile, broader indices mirroring similar somber mood, were trading lower in the range of 0.10%-0.45%.

On the global front, European stocks got off to shaky start on Wednesday, consolidating after a three-week rally that led several indexes back to multi-year highs. However, a relatively busy corporate earnings calendar could help to provide direction, after Swedish budget fashion retailer Hennes & Mauritz and Spanish rival Inditex both posted results that beat forecasts.

Closer home, stocks from Information Technology, Healthcare and banking counters emerging as investors’ darlings, were the top gainers of the session. While, IT stocks were witnessing buying on rupee’s weakness, healthcare counter was up on defensive buying. Besides, banking counter which was beaten blue in previous few session of trade also saw return of buyers’ interest. On the flip side, stocks from Realty, Power and Consumer Durables counters were endorsing the underlying weakness of the markets.  The overall market breadth on BSE was in the favour of advances which thumped declines in the ratio of 1633:1286; while 62 shares remained unchanged.

The BSE Sensex is currently trading at 25522.70, down by 61.00 points or 0.24% after trading in a range of 25453.6 and 25735.87. There were 13 stocks advancing against 17 stocks declining on the index.   

The broader indices were trading in red; the BSE Mid cap index was down by 0.44%, while Small cap index declined by 0.11%.   

The gaining sectoral indices on the BSE were IT up by 2.41%, TECK up by 1.52%, Healthcare up by 0.71%, Bankex up by 0.55% while, Realty down by 2.35%, Power down by 2.08%, Consumer Durables down by 1.83%, Metal down by 1.82% and India Infrastructure Index down by 1.77% were the losing indices on BSE.   

The top gainers on the Sensex were Infosys up by 4.56%, SBI up by 1.51%, TCS up by 1.47%, Cipla up by 1.30% and Dr Reddys Lab up by 1.05%. On the flip side, NTPC down by 3.33%, Tata Power down by 2.84%, SSLT down by 2.83%, BHEL down by 2.72% and Hindustan Unilever down by 2.36% were the top losers.   

Meanwhile, in its flagship publication Global Economic Prospects, the World Bank has 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.

For 2015-16 and 2016-17, the World Bank forecasted India's economic growth to be at 6.3% and 6.6%, respectively, as it urged developing countries to double down on domestic reforms. The World Bank, however, cautioned that forecast have assumed that reforms were undertaken to ease supply-side constraints, particularly in energy and infrastructure and to improve labour productivity, while continuing with fiscal consolidation, and maintaining credible monetary policy stance.

It also pointed that subdued manufacturing activity and a sharp slowing of investment growth in India dragged GDP growth in South Asia as a whole to an estimated 4.7% in market price terms in calendar year 2013 and underscored that economic growth in ongoing fiscal year would be better provided these issues, subdued manufacturing activity and tepid pace of investment growth, were addressed.

The report highlighted that a large number of projects, particularly in the infrastructure, steel and energy sectors, being stalled in recent years in India, contributing to a rise in stressed loans of banks. However, it added that with these stalled investment projects coming on stream during the forecast period (2014-16), overall investment activity would pick up.

The forecast in coming two years were also marked down by nearly half a percentage point for FY15 at to 6.3% compared to 6.6% estimated initially and at 6.6% for FY16 from 7.1% earlier, reflecting the effects of slowing investment in recent years on potential growth, structural capacity constraints and sustained inflationary pressures.

The CNX Nifty is currently trading at 7634.50, down by 21.9 points or 0.29% after trading in a range of 7615.2 and 7700.05. There were 20 stocks advancing against 30 stocks declining on the index.   

The top gainers on Nifty were Infosys up by 4.32%, Kotak Bank up by 2.84%, TCS up by 1.61%, SBI up by 1.52% and CIPLA up by 1.47%. On the flip side, DLF down by 3.79%, NTPC down by 3.27%, BHEL down by 2.97%, SSLT down by 2.90% and Tata Power down by 2.84% were the top losers.   

Asian equity indices were trading in red; Shanghai Composite up by 0.09%, Jakarta Stock Index up by 0.01%, Nikkei up by 0.55% and Taiwan Weighted up by 0.08%. On the flip side, Hang Seng down by 0.28% and Straits Times down by 0.22%

European shares were trading in red; with Germany’s DAX sliding by 0.09%, France’s CAC 40 losing 0.23% and United Kingdom’s FTSE 100 shedding 0.15%