Benchmarks magnify losses; languish at day’s low

Prolonging their southbound journey, local equity markets were sulking at day’s low level, despite positive start of European counterparts, below the crucial 25,200 (Sensex) and 7550 (Nifty) levels respectively, with a cut of over half a percent. While, Oil & Gas stocks were mainly responsible behind market’s fall, drubbing in Realty and PSU counters also weighed on the sentiment. Nevertheless, gains of auto and consumer durable stocks, which gathered momentum after government extended excise duty concessions for these sectors, were limiting further downside of the markets.

Cautiousness ahead of the monthly derivatives contracts expiry for June, on Thursday, mainly kept investors on the tenterhooks. 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.

The BSE Sensex is currently trading at 25174.60, down by 139.14 points or 0.55% after trading in a range of 25129.06 and 25309.33. There were 13 stocks advancing against 17 stocks declining on the index. The overall market breadth on BSE was in the favour of declines which were slightly outnumbering advances in the ratio of 1356:1338; while 101 shares remained unchanged.

The broader indices were trading in red; the BSE Mid cap index was down by 0.05%, while Small cap index down by 0.14%.

The gaining sectoral indices on the BSE were Capital Goods up by 1.02%, Consumer Durables up by 0.40%, Auto up by 0.24%, Teck Index up by 0.19% and Information Technology up by 0.14% while, Oil & Gas Index down by 3.25%, Realty Index down by 1.75%, Public Sector Undertaking down by 1.5%, Metal Index down by 0.59% and Power Index down by 0.28% were the losing indices on BSE.

The top gainers on the Sensex were Larsen & Toubro up by 1.49%, Dr. Reddys Lab up by 1.28%, BHEL up by 1.12%, Wipro up by 0.92% and Mahindra & Mahindra up by 0.67%. On the flip side, ONGC down by 5.23%, Reliance Industries down by 2.93%, NTPC down by 1.91%, GAIL India down by 1.48% and HDFC down by 1.39% were the top losers.

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.

The CNX Nifty is currently trading at 7531.65, down by 37.60 points or 0.5% after trading in a range of 7514.65 and 7570.20. There were 18 stocks advancing against 32 stocks declining on the index.

The top gainers on Nifty were Dr Reddy’s Lab and L&T up by 1.45%, HCL Technologies up by 1.31%, BHEL up by 1.12% and Wipro up by 0.82%. On the flip side, ONGC down by 5.24%, Reliance Industries down by 2.95%, BPCL down by 2.89%, NTPC down by 2.04% and DLF down by 2.03% were the top losers.

Asian equity indices were trading in green; Straits Times up by 0.42%, Hang Seng up by 0.90%, Nikkei225 up by 0.27%, Jakarta Stock Index up by 0.27%, Shanghai Composite up by 0.62% and Taiwan Weighted up by 0.85%.

European shares got off to a positive start; with Germany’s DAX adding by 0.26%, France’s CAC 40 gaining by 0.22% and United Kingdom’s FTSE 100 inching up 0.12%.