Benchmarks extend last session’s southward journey

Extending their last session’s southward journey, Indian equity benchmarks ended Wednesday’s trade in red with cut of half a percent as investors remained on sidelines ahead of the Union Budget to be presented by the Finance Minister in tomorrow. Moreover, the Economic Survey failed to bring any cheer for the market participants, as Finance Minister Arun Jaitley said 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.

Sentiments also got hurt after the government in the economic survey estimated the FY15 GDP growth at 5.4-5.9%, adding that it is likely to be on the lower side of the projection. The survey also indicated that inflation limits the scope for RBI to cut rates. Sentiments also remained down-beat after industry body FICCI lowered Indian GDP growth forecast to 5.3% for the current fiscal, as compared to 5.5% growth projected earlier.

Global cues too remained sluggish with European markets trading in the red in early deals, as investors’ demonstrated caution ahead of the start of the second quarter earnings season. Asian markets shut shop in the red after China’s consumer inflation cooled slightly more than expected in June, pointing to lingering weakness in the economy. China’s consumer price index (CPI) rose 2.3 per cent in June from a year earlier, shy of the consensus forecast of 2.4 per cent.

Back home, railway-related stocks continued to remain under pressure for the second straight day, falling by over 30% in two days on the BSE, following Railway Minister Sadananda Gowda maiden Budget. Additionally, selling in fertilizers stocks too dampened the sentiments with the government saying that there was no proposal to increase urea prices and subsidy to farmers will continue.

On the flip side, public sector oil marketing companies (OMCs) viz. BPCL, HPCL and IOC edged higher after Brent crude fell below $109 a barrel as Libya restarted an oilfield. Moreover, FMCG shares gained with the survey saying that social sector schemes such as MNREGA, NRHM, SSA, need a complete revamp.

The NSE’s 50-share broadly followed index Nifty tumbled by around forty points to end below the psychological 7,600 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex declined by over one hundred and thirty points to finish below its psychological 25,500 mark. Broader markets too witnessed selling pressure and ended the session with a cut of around one and half a percent. The market breadth remained in favor of decliners, as there were 891 shares on the gaining side against 2,088 shares on the losing side while 88 shares remain unchanged.

Finally, the BSE Sensex dropped 137.30 points or 0.54%, to 25444.81, while the CNX Nifty declined by 38.20 points or 0.50%, to 7,585.00.

The BSE Sensex touched a high and a low of 25683.97 and 25364.77, respectively. The BSE Mid cap index was down by 1.44%, while Small cap index lost 1.82%.

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%.

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.

Meanwhile, the Securities and Exchange Board of India has notified that overseas companies owned by NRIs or persons of Indian origin (PIOs) can act as investment manager for newly created class of overseas investors, namely foreign portfolio investors (FPIs).

However, the market regulator stated that the company should be well regulated in their jurisdiction to get registered as Category II FPI for acting as investment manager for other FPIs. At present, a company which is majority owned by one or more NRI/PIOs is not eligible to make investments as a foreign portfolio investor (FPI).

FPI includes all foreign institutional investors (FIIs), their sub-accounts and qualified foreign investors (QFI) under a new regime which has been effective from June 1. The FPIs are divided into three categories as per their risk profile and know your client (KYC) requirements.  Category-I FPIs is the lowest risk category and includes foreign governments and government-related foreign investors. Category-II FPIs include appropriately regulated entities, broad-based funds whose investment manager is appropriately regulated, university funds, university-related endowments and pension funds. Category-III FPIs compromise all others not eligible under the first two categories.

The CNX Nifty touched a high and low of 7,650.10 and 7,551.65 respectively.

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%.

European markets were trading in red; UK’s FTSE 100 down by 0.46%, Germany’s DAX down by 0.01% and France’s CAC 40 was down by 0.03%.

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.