Post Session: Quick Review

Post staging a smart recovery in previous trading session, Indian equity markets witnessed a sharp setback of around 1.25% on Wednesday, which dragged Sensex and Nifty below its psychologically crucial 25,300 and 7,600 levels respectively. Absence of positive trigger and caution ahead of Fed policy decision kept investors on the sidelines for the session, with some-of market-participants also creaming away their profits tailing boiling prices of oil, which threaten to pose an upside risk to domestic inflation, besides aggravating Current Account Deficit (CAD). Sentiments also took a hit after report suggested of government expecting higher oil prices driving a hole of at least Rs 200 billion ($3.3 billion) in the budget. Meanwhile, in the sell-off, which was widely broad-based in nature, even broader indices got battered down cruelly, which led to crack of over half a percent in both Smallcap and Midcap index.

On the global front, while Asia-pacific stocks ended mixed, European stocks were trading higher for a second consecutive time as investors awaited a Federal Reserve monetary-policy decision. The Fed is widely expected to cut another $10 billion from its monthly bond purchases, while investors will be watching for any comments on when the Fed would begin to raise interest rates and its outlook for the economy. Meanwhile, Brent crude rose towards $114 a barrel on Wednesday as Sunni militants pushed forward in northern Iraq, striking a key refinery near Baghdad and stoking worries about oil exports from the key producer.

Closer home, none of the sectoral indices on BSE managed to stand against the ferocious selling pressure. Nevertheless, stocks from Realty, Oil & Gas and Consumer Durables were among the worst hit. On the flip side, Telecom stocks, viz Reliance Communication, Bharti Airtel and Idea Cellular rang loud after Minister of Communications & Information Technology Ravi Shankar Prasad unveiled that his ministry had given in-principle approval for a nation-wide Mobile Network Portability (MNP) and its implementation would begin after the Telecom Regulatory Authority of India (TRAI) submits its recommendations. Additionally, Rail stocks once again hogged limelight as buzz of railway fare and freight rate gathered steam, with Titagarh Wagons, Kalindee Rail Nirman, Kernex Microsystems and Texmaco Rail and Engineering all rallying in the range of 5-10% intraday on Wednesday. The overall market breadth on BSE ended in favour of declines, which thumped advances in the ratio of 1643:1384; while 98 shares ended unchanged. (Provisional)

The BSE Sensex settled at 25201.35, down by 319.84 points or 1.25% after trading in a range of 25114.30 and 25609.30. 6 stocks advanced against 23 stocks declining one’s on the index. (Provisional)

The broader indices too settled with hefty losses; the BSE Mid cap index was down by 0.98%, while Small cap index down by 0.45%. (Provisional)

While, all the sectoral indices on BSE ended in red, Realty down by 2.76%, Power down by 1.92%, Consumer Durables down by 1.84%, Oil & Gas down by 1.82% and PSU down by 1.48% were the top losing sectoral indices. (Provisional)

The top gainers on the Sensex were Cipla up by 2.62%, Hindalco Inds up by 2.18%, Gail India up by 1.73%, Maruti Suzuki up by 1.12% and Axis Bank up by 0.41%. On the flip side, BHEL down by 3.29%, RIL down by 2.51%, TCS down by 2.46%, Sun Pharma down by 2.37% and Tata Steel down by 2.32% were the top losers.   

Meanwhile, amid concerns over declining foreign investments in India's oil and gas sector, Petroleum Ministry has planned to bring in policies that would ease the way for large foreign investments in the oil and gas sector. Assuring an overhaul to make policies predictable, transparent and fair to investors, Petroleum Minister Dharmendra Pradhan has stated that there is an urgent need to facilitate an increase in domestic oil and gas production and Ministry is in the process of ushering in a new exploration and production policy after amending the existing New Exploration Licencing Policy (NELP).

Petroleum Ministry proposes to replace NELP with a uniform licensing policy to facilitate production of all forms of hydrocarbons from oil to shale gas under a single policy regime. The Ministry also cleared that the next round of oil and gas block auctions will be offered with all statutory clearances that will derisk exploration activities to some extent. Under the 10th round of NELP, more than 1,48,000 square kilometres of exploration acreage has been identified for auction.

Globally, India ranks fourth in energy consumption and consumes about 4.5 percent of the world's primary energy in a year. Presently, India imports around 25 percent of total India’s natural gas demand and 80 percent of crude oil demand. India’s oil and gas demand has been increasing at a rapid pace and it has become imperative for government to take steps to enhance domestic energy production to meet the growing demand. However, Indian domestic natural gas production fell by 16.3 percent to 33.7 billion cubic meters from 40.3 bcm in 2013. India's oil production was remained unchanged at 894,000 barrels per day (42 million tonnes) in the previous year.

 The CNX Nifty settled at 7,558.20, down by 73.50 points or 0.96% after trading in a range of 7515.50 and 7663.00. 10 stocks advanced against 40 stocks declining on the index.    (Provisional)

The top gainers on Nifty were Cipla up by 2.69%, Lupin up by 2.68%, Kotak Bank up by 2.37%, Hindalco Industries up by 2.37% and Gail India up by 1.81%. On the flip side, Jindal Steel down by 3.43%, BPCL down by 3.3%, IDFC down by 3.08%, BHEL down by 3.05% and NMDC down by 2.96% were the top losers. (Provisional)

European markets were trading positive; with Germany’s DAX rising by 0.23%, France’s CAC 40 gaining by 0.09% and FTSE 100 trading higher by 0.37%.

Asian markets ended the Wednesday’s trade mixed as investors remained concerned over Iraq turmoil. Sentiments remained dampened after Brent crude surged above $113 per barrel on Wednesday as heavy fighting in Iraq shut the country’s biggest refinery and led to the withdrawal of staff by foreign oil firms, stoking worries about exports from the key oil producer. Investors were also focused on the Federal Reserve's two-day monetary policy meeting that ends tonight, with economists expecting another $10 billion cut in the pace of monthly bond purchases to $35 billion.

Moreover, the Chinese market ended with a cut of over half a percent after country’s house prices fell in 35 cities in May. However, Japanese Nikkei edged higher by around a percent as the yen weakened on strong U.S. consumer prices data. On the economic front, Japanese merchandise trade deficit narrowed to 908.963 billion yen in May, down 8.3 percent from a year earlier and beating expectations for a shortfall of 1,189.3 billion yen as exports and imports both declined.