Post Session: Quick Review

Local equity markets suffered heavy drubbing for yet another session on Wednesday after economic survey underscored that country’s fiscal situation was worse than it appeared and hence called for bold steps to contain fiscal deficit, including shoring up public finances and reducing inflation, sparking speculation that Finance Minister Arun Jaitley will announce a higher fiscal deficit target in his maiden budget on Thursday. Meanwhile, sentiment also was hurt after economic Survey, presented a day before the crucial Union Budget 14-15, forecasted GDP growth of between 5.4% and 5.9% in 2014/15, and warned that weak monsoon rains, which are essential for farming, could keep growth closer to lower projection of 5.4%

Benchmarks after dilly-dallying for most part of trading session, witnessed sharp selling pressure in the last hour of trade, which took benchmarks below the crucial 26,000 (Sensex) and 7,600 (Nifty) levels respectively, with loss of over half a percent.  Meanwhile, broader indices witnessing sharper losses, ended with cut of around 1.5%.

Somber global cues added to the negative sentiments in the local equities. On the global front, Asian pacific shares sulked in red, with major losses as soft inflation data from China and an overnight fall on Wall Street weighed on regional sentiment. On the macro-front, China released softer-than-expected June inflation data, with the consumer-price index up 2.3% from a year earlier, compared with an expected 2.4%, and slower than the 2.5% seen in May. Meanwhile, European shares too edged lower as market-participants were wary of taking large positions ahead of the publication of the U.S. Federal Reserve's latest policy meeting minutes later in the session. The minutes are expected to shed more light on when the central bank may opt to raise interest rates, especially after two Fed officials struck a dovish tone on Tuesday.

Closer home, in the broad-based selling pressure, most of the sectoral indices on BSE settled into negative territory, stocks from Auto, Realty and Capital Goods counters were the weakest links of trade. Hopes that there will be no more sops for auto sector after the recent extension of excise duty cut mainly led to heft profit-booking in Auto counter, however, stocks from Oil & Gas, Fast Moving Consumer Goods (FMCG) and Consumer Durable counters witnessing strong-buying interest, emerged as the top gainers. The market breadth on the BSE ended negative; advances and declining stocks were in a ratio of 907: 2,070, while 90 scrips remained unchanged. (Provisional)

The BSE Sensex lost 137.30 points or 0.54% to settle at 25444.81. The index touched a high and a low of 25683.97 and 25364.77 respectively. Among the 30-share Sensex, 10 stocks gained, while 20 stocks declined. (Provisional)

The BSE Mid cap and Small cap indices ended lower by 1.44% and 1.82% respectively. (Provisional) 

On the BSE sectoral front, Oil and Gas up by 0.84%, FMCG up by 0.81% and Consumer Durables up by 0.45% were the few gainers, while Auto down by 2.43%, Power down by 1.69%, Realty down by 1.60%, Capital Goods down by 1.47% and Healthcare down by 0.14% were the top losers in the space. (Provisional)

The top gainers on the Sensex were ONGC up 1.94%, ITC up by 1.40%, GAIL up by 1.13%, Hindalco up by 1.07% and Tata Steel up by 0.92%. On the flip side, the key losers were Bajaj Auto down by 3.25%, Tata Motors down by 2.75%, Coal India down by 2.72%, Maruti Suzuki down by 2.70% and M&M down by 2.45%. (Provisional)

Meanwhile, the Minister of State for Finance Nirmala Sitharaman has asserted that the government has taken various measures to contain inflation and is regularly monitoring the situation, as price stability remains high on its agenda.

Sitharaman has further said that to restrain rising food inflation in the country, the government has recently taken steps such as de-listing of fruits and vegetables from Agricultural Produce Marketing Committee Act, bringing onion and potato under the Essential Commodities Act, fixing minimum export price of $500 per tonne and $450 per tonne on export of onion and potato respectively. Further, an additional 50 lakh tonne of rice has been allocated for distribution towards Below Poverty Line (BPL). 

WPI inflation rose to five month high at 6.01% y-o-y in May as against 5.20% in April and 4.58% during the corresponding month of the previous year. The increase in inflation was mainly driven by high prices of food, fuel and manufactured product prices. The inflation in food articles increased by 9.50% y-o-y in May as compared to 8.64% in the previous month, mainly due to high prices of fruits and vegetables.

India has been battling a prolonged spell of high inflation and low growth. Rising inflation has been eroding the investors and business sentiments in the country. The Reserve Bank of India (RBI) has raised lending rate three times since September’13 in order to tame price rise through cooling demand. Meanwhile, food inflation is likely to remain elevated in the near term as weak monsoon rains would impact the performance of Indian agriculture sector.

India VIX, a gauge for markets short term expectation dipped 5.17% at 18.18 from its previous close of 19.31 on Tuesday. (Provisional)

The CNX Nifty declined 38.20 points or 0.50% to settle at 7,585.00. The index touched high and low of 7,650.10 and 7,551.65 respectively. Out of 50 stocks in Nifty, 18 stocks ended in the green and 32 in red. (Provisional)

The major gainers of the Nifty were ONGC up 2.09%, BPCL up by 1.93%, IDFC up by 1.90%, ITC up by 1.55% and Tata Steel up by 1.16%. On the flip side, the key losers were Jindal Steel down by 3.94%, Tata Motors down by 3.17%, Tata Power down by 2.88%, Coal India down by 2.76% and Bajaj Auto down by 2.56%. (Provisional)

European markets were trading in red; UK’s FTSE 100 down by 0.61%, Germany’s DAX down by 0.15% and France’s CAC 40 was down by 0.04%.

The Asian markets concluded Wednesday’s trade in red, with the benchmark indices on course for their largest decline in two months, after equity valuations touched the highest this year and China inflation data missed estimates. Indonesia Stock Exchange was closed today on account of Public Holiday (Election Day). Hong Kong stocks fell, with the benchmark index declining the most in two weeks, while China’s stocks fell the most in almost three weeks, as technology and health-care companies slumped amid concern earnings growth will disappoint investors. China’s trade data scheduled for tomorrow is forecast to show exports grew 10.4% in June from 7% in May. The economic growth data for the second quarter is set for July 16.

A prevailing wait-and-see sentiment again pulled new home sales down in China by nearly 36%, snapping a major rebound that lasted one week. The purchases of new homes, excluding government-subsidized affordable housing, fell 35.7% to 152,600 square meters during the seven-day period ending Sunday. The average cost of a new home rose nearly 5% week on week to 27,593 yuan ($4,450) per square meter. Chinese CPI fell to an annual rate of 2.3%, from 2.5% in the preceding month while Chinese PPI rose to an annual rate of -1.1%, from -1.4% in the preceding month.  Japan’s M2 Money Stock fell to a seasonally adjusted 3.0%, from 3.3% in the preceding month.