Post Session: Quick Review

Local equity markets retreating from life-time high levels, marked biggest percentage fall since September 2013, which took both Sensex and Nifty tumbling below the psychologically crucial 26,000 and 7,650 levels respectively on Tuesday. Market-participants booked profit in almost each and every stock they held after Railways minister Sadananda Gowda’s maiden Rail budget lacked clarity in terms of providing a road-map. The Ministry in the budget sought cabinet approval for allowing foreign direct investment in the state-owned network, an announcement which despite being on much expected lines, failed to excite markets. In the budget, budgetary plan outlay was proposed to be hiked to the extent of Rs 47,650 crore, compared to Rs 30,200 crore outlined in the interim budget. Meanwhile for FY15, Railways pegged receipts of Rs 1.64 lakh crore (versus Rs 1.39 lakh crore in FY14) and expenditure of Rs 1.49 lakh crore.

Meanwhile, reports which suggested of Finance Minister Arun Jaitley likely pegging the fiscal deficit target for FY15 at 4.3%, up from the 4.1% stated by his predecessor P Chidambaram, but lower than previous estimate of 4.8%, also dampened sentiment.

In the extremely dismal session of trade, markets squandering a positive start, witnessed flurry of selling pressure that dragged the frontline indices to-day’s low point by close of trade. Meanwhile, broader indices imitating the similar somber mood were down and out with cut of around four percent, with CNX Midcap index even marking its biggest percentage fall since July, 2009.

On the global front, Asian shares ended mostly positive, waiting for a flurry of Chinese economic data scheduled for release during the week. On Thursday, the region's largest economy will release its trade data, while early next week it will put out its second-quarter growth figures. However, European shares dipped on Tuesday amid reports of new US fines on banks and dimming prospects for an asset purchase programme from the European Central Bank.

Closer home, in the broad- based selling pressure, none of the sectoral indices on BSE settled into positive territory, nevertheless stocks from Realty, Power and Capital Goods witnessing brutal thrashing, featured in the list of top losers. Besides, Railway stocks like Titagarh Wagons , Kernex Micro, Texmaco and Kalindee Rail  were down around 5-13% intraday on Tuesday as the Budget lacked clarity on various proposals and projects. Interestingly, most of these stocks touched 52-week highs before falling prey to profit booking today. The market breadth on the BSE ended negative; advances and declining stocks were in a ratio of 769: 2230, while 97 scrips remained unchanged. (Provisional)

The BSE Sensex tumbled 517.97 points or 1.98% to settle at 25582.11. The index touched a high and a low of 26190.44 and 25495.04 respectively. Among the 30-share Sensex, 2 stocks gained, while 28 stocks declined. (Provisional)

The BSE Mid cap and Small cap indices ended lower by 3.63% and 4.19% respectively. (Provisional) 

On the BSE sectoral front, Realty down by 7.16%, Power down by 6.37%, PSU down by 4.92%, Capital Goods down by 4.80% and Consumer Durables down by 4.55% were the top losers in the space, while there were no losers on the space. (Provisional)

The only gainers on the Sensex were Sun Pharma up 0.76% and HDFC up by 0.25%. On the flip side, the key losers were BHEL down by 7.84%, NTPC down by 5.33%, Tata Power down by 5.27%, Coal India down by 5.23% and L&T down by 4.34%. (Provisional)

Meanwhile, according to the Engineering Export Promotion Council (EEPC), India’s engineering exports from the country can surpass the $70 billion target in FY15 if 3 percent interest subvention scheme is extended for the entire financial year. Earlier, the government has approved interest subvention of 3 percent to 235 engineering tariff lines and the MSME sector valid till last fiscal ended March 31.

In the view of prevailing wide gap in cost of finance between India and overseas countries, the EEPC has stated that it has become imperative to extend the benefit of interest subvention scheme to this fiscal. Currently in India, interest rate vary between 10.5 percent and 11 percent per annum and with 3 percent interest subvention, interest rates comes in the range of 7.5-8 percent per annum, lowering the cost of credit considerably for sector. The scheme should be extended to the entire engineering sector. Current budgetary allocation on this account is Rs 1,200 crore and an additional amount of Rs 500 crore will cover the entire sector, it added.

Further, EEPC stated that it is the right time for the government to announce such measure as order book position from the US has considerably improved. The US alone accounted for about 15 percent of country’s total engineering exports. Engineering exports, which account for about 20 percent of India’s outward shipments, registered growth of 8.49% respectively to $61.61 billion in FY14. 

India VIX, a gauge for markets short term expectation dipped 0.48% at 19.31 from its previous close of 19.40 on Monday. (Provisional)

The CNX Nifty dropped 163.95 points or 2.11% to settle at 7,623.20. The index touched high and low of 7,808.85 and 7,595.90 respectively. Out of 50 stocks in Nifty, 2 stocks ended in the green and 48 in red. (Provisional)

The only gainers of the Nifty were Sun Pharma up by 0.62% and ITC up by 0.06%. On the flip side, the key losers were DLF down by 8.53%, BHEL down by 8.21%, Jindal Steel down by 6.07%, NMDC down by 5.97% and Power Grid down by 5.92%. (Provisional)

European markets were trading in red; UK’s FTSE 100 down by 0.56%, Germany’s DAX down by 0.52% and France’s CAC 40 was down by 0.53%.

The Asian markets concluded Tuesday’s trade mostly in green, while Japanese stocks dropped as yen held gains and insurers and consumer lenders retreated. China’s stocks rose, sending the benchmark index to a three-week high, before the release of inflation data scheduled tomorrow. Indonesia’s benchmark stocks gauge rose to a one-year high on speculation market favorite Joko Widodo will win tomorrow’s presidential election. Indonesia’s foreign exchange reserves increased 0.7% in June, thanks in part to the rise in the government’s oil and gas revenue and higher foreign-exchange term deposits at local banks. Reserves climbed to $107.7 billion at the end of June, from $107 billion a month earlier. Taiwanese CPI rose to a seasonally adjusted annual rate of 1.64%, from 1.61% in the preceding quarter.

Japan’s Economy Watchers Current Index rose to a seasonally adjusted 47.7, from 45.1 in the preceding month. Japan’s current account logged a higher-than-expected surplus in May, as the trade deficit narrowed due to a decline in imports. The surplus was 522.8 billion yen ($5.14 billion), more than the median forecast for a 403.6 billion yen surplus. It was the fourth consecutive month of surpluses. In April, the surplus was 187.4 billion yen. Exports rose 2% in May from a year ago, slower than a 6.2% annual gain in April. Imports fell an annual 0.4%, following a 6.6% annual increase in April. As a result, the trade deficit in May narrowed to 675.9 billion yen. Japan’s Current Account rose to a seasonally adjusted 0.38T, from 0.13T in the preceding month while Japan’s Bank Lending remained unchanged at a seasonally adjusted annual rate of 2.3% compared to the preceding quarter.