Bourses nose-dive to day’s low; sugar stocks hog limelight

On the back of accentuated selling pressure in frontline blue chip stocks, local equity markets were now languishing at day’s low point and nursing heavy losses of around half a percent, which dragged both Sensex and Nifty below the crucial 25,000 and 7,500 levels respectively. Much of the pressure were exerted by stocks from ITC, which slumped over 4% on worries that government may raise taxes on cigarettes aggressively in the upcoming budget in July. Additionally, plunge of IT major Infosys and FMCG major Hindustan Unilever also was disturbing.  Besides, negative start of European markets also pressurized sentiment.

On the global front, European shares got off to negative start; with France’s CAC plunging around half a percent after data showed French business activity has slowed more than expected. Data compiler Markit said its composite purchasing managers index (PMI) of activity in both the manufacturing and services sector fell to 48.0 from 49.3 in May, slipping further below the 50-point line denoting expansions in activity.

Closer home, gains in stocks from Metal, Auto and Public Sector Undertaking (PSU) counters were offset by steep losses in stocks from Fast Moving Consumer Goods, Information Technology and Power counters. Metal shares gained 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. In non-sectoral guage activity, sugar stocks were story of the session, with all stocks from Shree Renuka Sugars, Bajaj Hindustan, Balrampur Chini Mills, Triveni Engineering and Industries, Dhampur Sugar Mills and Oudh Sugar Mills trading higher by up to 10% in otherwise subdued market on report that the government will hike import duty on sugar to 40% from the current 15%. Additionally, cement stocks were buzzing in trade after the government on Friday pushed through a steep 6.5 percent hike in rail freight effective June 25. The overall market breadth on BSE is in the favour of declines which thumped advances in the ratio of 1335:1285; while 123 shares remained unchanged.

The BSE Sensex is currently trading at 24972.74, down by 132.77 points or 0.53% after trading in a range of 24945.30 and 25197.50. There were 17 stocks advancing against 13 stocks declining on the index.   

The broader indices were trading in green; the BSE Mid cap index was up by 0.31%, while Small cap index up by 0.28%.   

The gaining sectoral indices on the BSE were Metal up by 0.88%, Auto up by 0.53%, PSU up by 0.46%, Consumer Durables up by 0.32% and Bankex up by 0.18% . While, FMCG down by 2.93%, IT down by 1.37%, TECK down by 1.02%, Power down by 0.25% and Oil & Gas down by 0.05%, were the losing indices on BSE.   

The top gainers on the Sensex were Hero MotoCorp up by 1.69%, SSLT up by 1.58%, Mahindra & Mahindra up by 1.27%, ONGC up by 1.08% and Tata Steel up by 1.02%. On the flip side, ITC down by 4.41%, Infosys down by 2.48%, Hindustan Unilever down by 1.5%, Cipla down by 1.11% and Gail India down by 0.79% were the top losers.   

Meanwhile, assuring the global investors about Indian economy’s growth, Finance Secretary Arvind Mayaram has stated that policies of the new government will deepen the reform process to put Indian economy back on high growth path which is in line with the G20 objective of strong, sustainable and balanced growth. India's economic growth stayed below 5 percent for the second year in a row at 4.7 percent during FY14.

Arvind Mayaram has asserted that as per the priorities of the new elected government, India has started strengthening growth strategies. Mayaram further added that global scenario has become challenging and less supportive for emerging economies growth prospects. Emerging markets are going through a phase of tepid economic activity, with some of them witnessing significant negative output gaps mainly due to the external factors especially increased volatility with unwinding of unconventional policies. Referring to prevailing crisis in Iraq, Mayaram has stated that recent developments in Iraq have created huge uncertainties over the global economy and the volatility in petroleum prices has put pressure on countries like India.

Iraq is India's second largest crude oil supplier after Saudi Arabia. It met over 13% of India's oil need in 2013-14, supplying about 25.1 million tonnes (MT) of oil. The same level of imports was projected to be maintained in current fiscal. The price of the Indian crude basket has soared from $106.88 on June 2 to $111.94 on June 19. At the same time, Indian rupee has weakened against the dollar and is now hovering at Rs 60.20 as compared to Rs 58.50 per dollar early this month. Every dollar increase in the oil price raises the import bill by Rs 7,500-8,000 crore. High crude oil price can increase inflation as well as trade deficit in India.

The CNX Nifty is currently trading at 7,469.60, down by 41.85 points or 0.56% after trading in a range of 7,459.40 and 7534.80. There were 27 stocks advancing against 21 stocks declining on the index.   

The top gainers on Nifty were Hero Motocorp up by 2.1%, SSLT up by 1.88%, Jindal Steel up by 1.63%, Indusind Bank up by 1.44% and ICICI Bank up by 1.41%. On the flip side, ITC down by 4.68%, Kotak Bank down by 2.72%, Infyosys down by 1.99%, BPCL down by 1.53% and Ultratech Cement down by 1.43were the top losers.   

Asian equity indices were trading in green; Straits Times up by 0.07%, Nikkei 225 up by 0.13%, Jakarta Stock Index up by 0.09%, Shanghai Composite down by 0.12% and Hang Seng down by 1.20%, while Taiwan Weighted down by 0.49%.

European shares got off to a negative start; with France’s CAC 40 declining by 0.48%, Germany’s DAX sliding by 0.17%, and United Kingdom’s FTSE 100 was trading lower by 0.04%.