Benchmarks end lower for fourth straight session

Extending their southward journey for fourth day in a row, Indian equity benchmarks ended Monday’s trade in the red as sentiments remained dampened by report that foreign direct investment (FDI) in India declined by 26 percent to five-month low at $1.70 billion in the month of April as compared to $2.32 billion in the same month of previous year. After opening on a positive note, the frontline gauges failed to build momentum and entered into red terrain. The indices even went on to test important psychological 24,900 (Sensex) and 7,450 (Nifty) levels, but the key gauges got some support near those intraday low levels as they trimmed their losses from thereon as investors continued hunt for fundamentally strong stocks. Some support also came on report that the government is likely to defer implementation of the controversial GAAR provisions by one more year to April 2017 and exempt transactions made up to March 2013 in a bid to improve business sentiment.

Global cues too remained dampened as European markets made a sluggish opening with CAC, DAX and FTSE all were trading lower in early trade after some disappointing data from both Germany and France. Asian markets too ended the session mostly in the red terrain despite positive news from China’s factory sector.

Back home, decline in fast moving consumer goods counter mainly dampened the sentiments, led by ITC, which slumped over 6.50% on worries that government may raise taxes on cigarettes aggressively in the upcoming budget in July. Additionally, cement stocks declined after the government on Friday pushed through a steep 6.5 percent hike in rail freight effective June 25.

On the flip side, metal shares remained on buyers’ radar on hopes of better demand after a preliminary HSBC survey showed activity in China’s factory sector expanded in June for the first time in six months as new orders surged. Moreover, sugar stocks like Shree Renuka Sugars, Bajaj Hindustan, Balrampur Chini Mills, Triveni Engineering and Industries, Dhampur Sugar Mills and Oudh Sugar Mills all edged higher on report that the government will hike import duty on sugar to 40% from the current 15%. Additionally, Rail-related shares firmed up on hopes that the hike in passenger fares by 14% and freight fares by 6% would improve the financial position of the Indian Railways.

The NSE’s 50-share broadly followed index Nifty declined by around twenty points to end below the psychological 7,500 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex declined by above seventy points to end below its crucial 25,100 mark. Broader markets, however, outperformed benchmarks and ended the session with a gain of over half a percent. The market breadth remained in favor of decliners, as there were 1,564 shares on the gaining side against 1,386 shares on the losing side while 123 shares remain unchanged.

Finally, the BSE Sensex plunged by 74.19 points or 0.30%, to 25031.32, while the CNX Nifty declined by 18.10 points or 0.24%, to 7,493.35.

The BSE Sensex touched a high and a low of 25197.50 and 24878.66, respectively. The BSE Mid cap index was up by 0.63%, while Small cap index gained 0.56%.  

The top gainers on the Sensex were ONGC up by 4.63%, Hero MotoCorp up by 2.38%, BHEL up by 2.26%, SSLT up by 1.80% and Mahindra & Mahindra up by 1.45%. On the flip side, the key losers were ITC down by 6.50%, Infosys down by 2.55%, Hindustan Unilever down by 1.03%, TCS down by 0.95% and Wipro down by 0.93%.

On the BSE Sectoral front, PSU up by 1.57%, Oil & Gas up by 1.43%, Metal up by 1.13%, Auto up by 0.73% and Capital Goods down by 0.55% were the top gainers in the space, while FMCG down by 4.06%, IT down by 1.56%, Teck down by 1.12% and Consumer Durables down by 0.90% were the only losers in the space.

Meanwhile, with an aim to develop Indian capital markets, the Securities and Exchange Board of India (SEBI) has asked the government to provide clarity on tax benefits for new products like Real Estate Investment Trusts (REITs), Infrastructure Investment Trusts and debt securities. The capital market regulator is of the view that REITs and infrastructure bonds would allow investors to invest in specific products linked to real estate projects and infrastructure projects besides providing necessary safeguards. Further, these products would also help the corporates raise significant amounts of capital for their projects. Therefore, there is a need to remove certain anomalies in tax structure for these products.

Regarding the REITs, SEBI Chairman U K Sinha has asserted that REITs have been a significant vehicle for global investors and Indian capital markets will soon tap this opportunity as SEBI is ready with guidelines that would be announced immediately after tax clarity from the government. Sinha further added that to expand corporate bond markets, new draft for debt was already in place compromising simplified regulations. 

SEBI’s chairman also expressed the need to encourage Small and Medium Enterprises (SMEs) to get listed and get benefited from the capital markets. SEBI has also identified certain SME clusters to encourage listing. At present, the listed SME market capitalisation in India stands at over Rs 7,500 crore, while only 65 companies have got listed on SME Platform of exchanges. Furthermore, SEBI would soon put in place norms for crowd funding, which would allow start- ups to tap new platforms to raise funds.

The CNX Nifty touched a high and low of 7,534.80 and 7,441.60 respectively.

The major gainers of the Nifty were ONGC up by 5.27%, Jindal Steel & Power up by 2.95%, BHEL up by 2.76%, ACC up by 2.53% and Hero MotoCorp up by 2.34%. On the flip side, the key losers were ITC down by 5.42%, Kotak Mahindra Bank down by 3.96%, United Spirits down by 3.44%, Infosys down by 2.57% and HCL Technologies down by 2.07%.

The European markets were trading in red, France's CAC 40 was down by 0.32%, Germany's DAX was down by 0.38% and United Kingdom's FTSE 100 was down by 0.23%.

The Asian markets concluded Monday’s trade mostly in red, with Hong Kong’s index tumbling the most in three months amid concerns over slumping Chinese property prices, higher money-market rates and political tension between the city and the mainland. Indonesia’s bonds fell, pushing the 10-year yield to a three-month high, on speculation the prospect of increased government debt sales will prompt investors to seek higher returns on existing notes. Manufacturing activity in China expanded at the fastest pace in seven months in June, easing concerns over the outlook for growth in the world’s second largest economy. China’s HSBC Flash Purchasing Managers Index, the earliest indicator of the country's industrial activity, rose to 50.8 in June from a final reading of 49.4 in May. 

Japanese businesses left behind this year as global equities rallied to a record found a winning strategy in buying back shares the rest of the world preferred to avoid. Foreign investors, which account for about 60% of market turnover, reduced holdings of Japanese shares in all but one month this year just as buybacks surged. Taiwanese Industrial Production fell to a seasonally adjusted annual rate of 5.19%, from 5.29% in the preceding month whose figure was revised up from 4.80%.