Post Session: Quick Review

Final expiry session of June derivatives contracts turned out to be tormenting for markets, which nursing heavy losses of 3/4th of a percent, settled below the crucial 25,200 and 7,500 levels for Sensex and Nifty respectively. Local equity markets after making a weak start, witnessing bouts of selling pressure, kept losing ground, though some recovery came to the fore in afternoon deals that too was reciprocated by profit-booking by select market-participants in the last hour of trade. However, June series turned out to be yielding for markets, which led both Sensex and Nifty rally over 3%, while in broader space, CNX Midcap index puffed up gains of over 7% and BSE Small-cap index rallied over 11%. Cautiousness on account of monthly derivatives contracts expiry for June, on Thursday, mainly contributed to downbeat mood of the markets. Additionally, reports which suggested of drought-like conditions intensifying with the monsoon not moving an inch for 10 days now, leaving oilseeds, pulses and paddy fields parched and posing the threat of food inflation and weak rural demand in the first year of the Narendra Modi government, also acted as dampener for markets.

On the global front, Asian shares swung higher on Thursday as weak U.S. growth seemed to further delay the day when interest rates might rise. U.S. first-quarter GDP was initially reported to have increased by 0.1%, but was subsequently revised to show a contraction of 1.0%. The difference between the second and third estimate was the largest since records began in 1976. Additionally, European shares, receiving positive hand-over from Asian counterparts, inched higher in trade.

Closer home, market’s fall was led by stocks from Oil & Gas counters, which slumped after government on Wednesday deferred a decision to raise prices of locally produced gas for next three months, saying the matter requires more discussion. This was followed by stocks from Realty and Metal counters. However, losses to some extent were limited on account of gains of auto and consumer durable stocks, which gathered momentum after Finance Minister Arun Jaitley said India extended excise duty concessions for these sectors, were limiting further downside of the market. Besides, Capital Goods and Healthcare counters also generated strong buying interest. Additionally, Shares of fertiliser companies rose after the Cabinet Committee on Economic Affairs deferred the decision to hike gas price by three months. The market breadth on the BSE ended negative; advances and declining stocks were in a ratio of 1489: 1538, while 100 scrips remained unchanged. (Provisional)

The BSE Sensex lost 251.07 points or 0.99% to settle at 25062.67. The index touched a high and a low of 25309.33 and 25021.23 respectively. Among the 30-share Sensex, 13 stocks gained, while 17 stocks declined. (Provisional)

The BSE Mid cap and Small cap indices ended lower by 0.30% and 0.31% respectively. (Provisional) 

On the BSE sectoral front, Capital Goods up by 0.88%, Consumer Durables up by 0.69%, Healthcare up by 0.33%, TECK up by 0.15% and Auto up by 0.13% were the gainers while, Oil and Gas down by 3.88%, Realty down by 2.74%, PSU down by 2.48%, Metal down by 1.15% and Bankex down by 1.13% were the top losers in the space. (Provisional)

The top gainers on the Sensex were Wipro up 1.56%, L&T up by 1.21%, Sun Pharma up by 0.82%, Dr Reddys up by 0.79% and Axis Bank up by 0.58%. On the flip side, the key losers were ONGC down by 5.46%, RIL down by 3.22%, NTPC down by 2.49%, GAIL down by 2.23% and Coal India down by 2.07%. (Provisional)

Meanwhile, with an aim to enhance the capital inflow in domestic equity markets, Finance Ministry has proposed allowing retirement and gratuity funds to invest up to 30 percent of their money in the equity market.

As per the Finance Ministry proposal, non-government pension, provident and gratuity funds can invest up to 15 percent in shares of companies that have derivatives or in mutual funds. Further, these funds can also invested up to 15 percent of their amount in exchange traded funds, index funds that replicate the portfolios of the Sensex or Nifty, or derivatives including credit default swaps. The draft proposal notified that index funds replicating Sensex or Nifty portfolios should be constructed in such a manner that investment in securities may be in the same weightage comprising an index. It added that the fund managers will have to choose which index they intend to track in advance on a yearly basis. The Retirement and gratuity funds will be permitted to invest up to 40 percent debt securities with a maturity period of three years. Finance Ministry proposes to make these investment guidelines effective from April 1, 2015.

According to the current norms, funds are not permitted to take any direct equity exposure. However, such funds can invest up to 55 percent of the total money in debt instruments such as government bonds. Retirement fund body EPFO is allowed to invest up to 5 percent in money market instruments, including equity linked schemes of mutual funds regulated by the Securities and Exchange Board of India.

However, trade unions have decided to oppose any move to invest part of over Rs 5 lakh crore corpus of retirement fund body Employees' Provident Fund Organisation (EPFO) in equity market. The unions are of the view that poor worker money should not be exposed to equity markets. Most of the trade unions in the country are in favour of setting up a workers' bank using EPFO funds to meet the credit requirements of the working class and earn better returns on investments.

India VIX, a gauge for markets short term expectation declined 3.33% at 17.70 from its previous close of 18.31 on Wednesday. (Provisional)

The CNX Nifty declined 76.05 points or 1.00% to settle at 7,493.20. The index touched high and low of 7,570.20 and 7,481.30 respectively. Out of 50 stocks in Nifty, 15 stocks ended in the green and 35 in red. (Provisional)

The major gainers of the Nifty were Wipro up 1.69%, Tech Mahindra up by 1.53%, L&T up by 1.21%, HCL Tech up by 1.13% and Dr Reddys up by 1.12%. On the flip side, the key losers were ONGC down by 5.38%, DLF down by 3.31%, Reliance down by 3.16%, NTPC down by 2.65% and MCDOWELL-N down by 2.51%. (Provisional)

European markets were trading in green; UK’s FTSE 100 up by 0.09%, Germany’s DAX up by 0.12% and France’s CAC 40 was up by 0.11%.

The Asian markets concluded Thursday’s trade in green, amid optimism that US economy is emerging from a worse-than-estimated contraction last quarter. Confidence among Chinese consumers fell to the lowest level in nearly a year this month despite signs that measures taken by Chinese authorities have bolstered the economy. The Westpac MNI China Consumer Sentiment Index fell 7 percent to 112.6 in June. While sentiment remained above the break even 100 mark, meaning optimists still outnumbered pessimists, confidence has not been this low since July 2013. China has seen slowing growth in local government debts since the middle of last year. The balance of debts for the nine provincial governments and nine city governments audited by the National Audit Office grew by an average of 3.79 percent from the end of June last year to the end of March. Hong Kong Trade Balance rose to a seasonally adjusted -42.4B, from -55.3B in the preceding month. Singaporean Industrial Production fell to an annual rate of -2.5%, from 5.3% in the preceding month whose figure was revised up from 4.6%.