Markets end another session in red but close June series higher by 3%

Indian equity markets truly depicted the choppiness of F&O expiry session on Thursday and after a cautious start markets extended their southward journey to close with a cut of around a percentage point. Final hour of trade proved to be the curse for the markets and bourses settled below their crucial 25,100 (Sensex) and 7,500 (Nifty) bastions. However June series proved a strong one for the markets with benchmark indices gaining over 3% each for the series. There was across the board strength in the markets during the series with broader indices gaining in the range of 7-11%.

After trading in tight band for most part of the day’s trade, domestic gauges crashed like house of card in the last leg of trade as investors offloaded their positions an hour before the end of F&O contract expiry day. Sentiments remained dampened as investors reacted negatively to the Cabinet Committee on Economic Affairs (CCEA) decision of deferring the gas price hike by three months, though some volatility and cover up can be seen in latter part of the trade. Meanwhile, commenting on the deferment of gas price issue, Law Minister Ravi Shankar Prasad has said that ‘the structure and mechanism of the price is needed to be reviewed’.

Moreover, reports which indicated 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 dampened the sentiments.

Meanwhile, investors shrugged off positive global cues with European markets were trading in the green terrain in early deals on Thursday, halting the previous session’s sell-off. CAC, DAX and FTSE were trading higher after data showed French consumer confidence ticked up slightly in June. Asian markets too rallied amid optimism that US economy is emerging from a worse-than-estimated contraction last quarter.

Back home, sentiments remained down-beat on the back of depreciation in Indian rupee against dollar. The rupee was trading at 60.15/16 at the time of equity markets closing versus its previous close of 60.12/13. Meanwhile, slump in Oil & Gas counter too played spoil sport for the Indian equity markets after government on Wednesday deferred a decision to raise prices of locally produced gas for next three months, saying the matter requires more discussion. On the flip side, auto and consumer durable stocks gathered some traction after government extended excise duty concessions for these sectors, were limiting further downside of the market.

NSE’s 50-share broadly followed index, Nifty declined by over seventy points to end below the psychological 7,500 support level, while Bombay Stock Exchange’s Sensitive Index - Sensex slipped by over two hundred and fifty points to end below its psychological 25,100 mark. Broader markets too witnessed selling during the trade and ended the session with a cut of around one third of a percent. The market breadth remained in favour of decliners, as there were 1,490 shares on the gaining side against 1,539 shares on the losing side while 98 shares remain unchanged. 

Finally, the BSE Sensex plunged by 251.07 points or 0.99%, to 25062.67, while the CNX Nifty declined by 76.05 points or 1.00%, to 7,493.20.

The BSE Sensex touched a high and a low of 25309.33 and 25021.23, respectively. The BSE Mid cap index was down by 0.30%, while Small cap index lost 0.31%.

The top gainers on the Sensex were Wipro up by 1.37%, L&T up by 1.33%, Dr Reddys Lab up by 1.03%, Bharti Airtel up by 0.68% and Axis Bank up by 0.66%. On the flip side, the key losers were ONGC down by 5.89%, RIL down by 3.70%, NTPC down by 2.77%, Coal India down by 2.29% and HDFC down by 1.82%.

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 down by 0.13% were the top gainers in the space, while Oil & 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.

Meanwhile, the government has given an in-principle approval to a memorandum of understanding (MoU) allowing China to set up industrial parks in the country. The industrial parks are expected to include special economic zones (SEZs) and manufacturing zones. Uttar Pradesh, Haryana and Andhra Pradesh are possible states where the parks could come up. The move came ahead of the five-day visit of Vice-President Hamid Ansari to China from June 26.

China had already established five industrial parks in ASEAN countries like Vietnam, Cambodia and Indonesia and is keen to set up similar industrial parks in India. The move is likely to enhance the Chinese investment in the country. The government wants to make India a manufacturing hub like China. Since 1991 when India opened up its economy, the investment from China remained sluggish at mere $469 million till now as compared to $16-17 billion from Japan.

The bilateral trade between China and India declined from around $75 billion in 2011 to $65.45 billion in 2013. Furthermore, India has huge trade deficit with China at average around $35 billion. During FY 14, India imported goods worth $51 billion from China, and exported goods worth $14.86 billion back to China. Both the countries have set $100 billion target by 2015. However, India had already asked the Chinese government to provide more access to the market so that the target of $100 billion can be achieved in a more balanced manner. Better access of Chinese markets to domestic IT-enabled services, cotton textiles, home furnishings and pharmaceuticals could help India to reduce the imbalance in trade.

The CNX Nifty touched a high and low of 7,570.20 and 7,481.30 respectively.

The major gainers of the Nifty were Wipro up by 1.69%, Tech Mahindra up by 1.53%, Larsen & Toubro up by 1.21%, HCL Technologies up by 1.13% and Dr. Reddy's Laboratories up by 1.12%. On the flip side, the key losers were ONGC down by 5.28%, DLF down by 3.31%, Reliance Industries down by 3.16%, NTPC down by 2.65% and United Spirits down by 2.51%.

The European markets were trading in green France's CAC 40 was up by 0.07%, Germany's DAX was up by 0.07% and United Kingdom's FTSE 100 was up by 0.14%.

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%.