Benchmarks end volatile trade slightly in the red

Extending their southward journey for second day in a row, Indian equity benchmarks ended the volatile day of trade slightly in the red on Thursday. After a positive start, domestic bourses lost momentum in absence of any positive trigger and entered into the red terrain as sentiments turned cautious after Brent crude surged above $114.50 per barrel on Thursday 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.

However, losses remained capped as some amount of recovery witnessed in last leg of trade as investors opted to pile up positions in beaten down but fundamentally strong stocks. Report suggesting that foreign portfolio investors (FPIs) bought shares worth net Rs 366.18 crore on June 18, 2014 too aided the sentiments. Meanwhile, to encourage more promoters to tap the IPO market, SEBI has relaxed the minimum dilution criteria. Companies can now sell a minimum 25% stake or Rs 400 crore, whichever is more, in public offerings.

Positive opening in European markets too supported the sentiments with CAC, DAX and FTSE were trading in the green in early deals after the Federal Reserve repeated its pledge to leave interest rates near their record low and said the world’s largest economy should experience sustained growth. The Fed’s accommodative policy stance is seen as one of the positives, as rising consumption in the US is expected to help underpin some of Asia’s big export-driven economies. Though, Asian markets ended mixed on Thursday.

Back home, market’s fall was led by Oil explorers, which slumped on worries of high gas pricing, which might be allowed only for incremental output. The stocks were beaten blue after reports suggested of petroleum ministry, in a proposal, allowing higher gas price as per the Rangarajan formula only for incremental production over and above the current levels, as an alternative to applying the formula unconditionally from July 1. This was followed by stocks from Public Sector Undertaking and Infrastructure counters which remained among the worst hit of the session. In the ferocious selling pressure, broader indices too ended with cut of around half a percent.

On the flip side, defensive sectors stocks such as IT, teck and FMCG remained on buyers’ radar as weak rupee against the US dollar boosts the margins of the export-oriented sector. Additionally, railways related stocks edged higher, as the commerce and industry ministry has initiated the exercise to allow 100% FDI in several segments of railways, moving beyond its earlier plan to open select sectors.

The NSE’s 50-share broadly followed index Nifty declined by around twenty points to end below the psychological 7,550 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex declined by over fifty points to end below its crucial 25,250 mark. Broader markets too struggled to get any traction during the trade and ended the session with a cut of around half a percent. The market breadth remained in favor of decliners, as there were 1,406 shares on the gaining side against 1,586 shares on the losing side while 93 shares remain unchanged.

Finally, the BSE Sensex declined by 44.45 points or 0.18%, to 25201.80, while the CNX Nifty lost 17.50 points or 0.23%, to 7,540.70.

The BSE Sensex touched a high and a low of 25425.85 and 25069.66, respectively. The BSE Mid cap index was down by 0.42%, while Small cap index lost 0.31%.   

The top gainers on the Sensex were TCS up by 2.23%, Infosys up by 2.09%, Mahindra & Mahindra up by 1.41%, Wipro up by 1.25% and Sun Pharma up by 1.09%. On the flip side, the key losers were ONGC down by 5.13%, Maruti Suzuki down by 2.48%, RIL down by 2.38%, Coal India down by 1.94% and Gail India down by 1.88%.

On the BSE Sectoral front, IT up by 1.89%, Teck up by 1.36%, Consumer Durables up by 0.94%, Healthcare up by 0.59% and Auto up by 0.28% were the top gainers in the space, while Oil & Gas down by 3.11%, PSU down by 2.03%, India Infrastructure Index down by 1.10%, Bankex down by 0.91% and Metal down by 0.84% were the top losers in the space.

Meanwhile, Finance Ministry is mulling a strategy to divest stake in seven big state-run companies in seven big state-run companies, which include Coal India, Sail, MMTC, NMDC, NHPC, N Lignite and Nalco. The Government holds around 80 percent or more stakes in these companies.

The government would retain the disinvestment target through stake sale in PSUs at Rs 36,000 crore in FY15. It is likely to kick start the programme with bigger stake sale issues such as Coal India and Sail.

The move came after the Securities & Exchange Board of India (Sebi) proposed to bring public float in state-run firms at 75%, equal to that of private companies. However, earlier, Assocham had stated that the new government should divest stake in the top 10 cash-rich PSUs to raise around Rs 1 lakh crore, which can be used to provide much-needed push to economic growth and tide over revenue shortfall. Assocham added that the new government should take advantage of robust state of domestic stock markets helped by heavy inflow of funds from the foreign institutional investors (FIIs).

In the previous fiscal year, the government was able to disinvest only around Rs 16,000 crore as against the set target of Rs 40,000 crore mainly on account of subdued economic conditions.The CNX Nifty touched a high and low of 7,606.45 and 7,502.55 respectively.

The major gainers of the Nifty were IndusInd Bank up by 2.60%, TCS up by 2.38%, Infosys up by 2.05%, Asian Paints up by 1.83% and Sun Pharmaceuticals Industries up by 1.44%. On the flip side, the key losers were United Spirits down by 7.93%, BPCL down by 4.98%, ONGC down by 4.79%, Kotak Mahindra Bank down by 3.97% and Maruti Suzuki India down by 2.62%.

The European markets were trading in green, France's CAC 40 was up by 0.87%, Germany's DAX was up by 0.81% and United Kingdom's FTSE 100 was up by 0.82%.

The Asian markets concluded Thursday’s trade mixed, after the Federal Reserve stated that interest rates will remain low for some time as US growth rebounds, and Premier Li Keqiang pledged to meet China’s target for economic expansion. The minutes from the Bank of Japan’s May board meeting released showed that Japanese exports face headwinds with the political crisis in Thailand, a key supply chain hub, hurting business and acting as an economic drag. Japan’s All Industries Activity Index fell to a seasonally adjusted -4.3%, from 1.5% in the preceding month. The BoJ decided by a unanimous vote to leave the policy target unchanged as expected.

Japan’s exports in May suffered their first annual decline in 15 months as external demand remained soft despite a recovery in advance economies, suggesting a bumpy ride for the world’s third-largest economy. Exports fell 2.7% in the year to May, compared with a 1.2% drop seen by economists and a 5.1% rise in April. On a seasonally adjusted basis, exports fell 1.2% percent in May from the prior month.