Benchmarks pare some early losses; still continue to trade in red

Recovering from day’s low, benchmark equity indices have gained momentum however were still trading below the neutral line on persistent profit-booking by funds and retail investors, ahead of the Economic Survey to be presented by Finance Minister. Sentiment on the street weakened further as Industry body FICCI lowered Indian GDP growth forecast to 5.3 percent for the current fiscal, as compared to 5.5 percent growth projected earlier. Besides, a weakening trend on Asian bourses following overnight losses on the US market too influenced the sentiment.   However, gains in Oil & Gas, FMCG and Metal stocks have restrained the market losses. Some support also came in from reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 422.72 crore on July 08, 2014. Meanwhile, Railway stocks were trading lower for the second consecutive session. In scrip specific development, shares of Claris Lifesciences gained on receiving USFDA approval for finished dosage and API plants, while shares of ONGC surged as its overseas arm raises $2.2 billion from international markets.

On the global front, Asian stocks traded lower amid decline in global equities triggered by concerns that equity valuations are too high. Moreover, US stocks fell in a broad selloff on Tuesday, dropping for a second straight session and driving the Dow below 17,000 as investors turned cautious before the start of earnings season. Back home, stocks from Oil & Gas, FMCG and Metal counters were supporting the markets’ uptrend, while those from Auto, Healthcare and Realty counters were adding to the underlying cautious undertone. The market breadth on BSE was negative, out of 2340 stocks traded, 696 stocks advanced, while 1570 stocks declined on the BSE.

The BSE Sensex is currently trading at 25567.52 down by 14.59 points or 0.06% after trading in a range of 25683.97 and 25369.21. There were 12 stocks advancing against 18 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.58%, while Small cap index down by 1.13%.The gaining sectoral indices on the BSE were Oil & Gas up by 0.78%, FMCG up by 0.53%, Metal up by 0.52%, Consumer Durables up by 0.36% and Bankex up by 0.11%. While, Auto down by 1.54%, Healthcare down by 1.05%, Realty down by 0.64%, Power down by 0.59 and IT down by 0.53% were the losing indices on BSE.   

The top gainers on the Sensex were Hindalco up by 3.82%, Tata Steel up by 2.09%, Gail India up by 2.02%, BHEL up by 1.05% and ITC up by 0.94%. On the flip side, Tata Power  was down by 2.13%, Mahindra & Mahindra was down by 2.04%, Tata Motors was down by 1.88%, Coal India was down by 1.80% and Bajaj Auto was down by 1.61% were the top losers on the Sensex.

Meanwhile, Industry body FICCI has lowered Indian GDP growth forecast to 5.3 percent for the current fiscal, as compared to 5.5 percent growth projected earlier. FICCI, in its latest Economic Outlook Survey, has noted that sub-par monsoon forecast would impact performance of the agriculture sector which in turn will affect Indian economic growth prospects. Agricultural sector comprises around 15 percent share in Indian GDP.

FICCI expects Indian economic growth at 5.3% in FY15 with a minimum and a maximum range of 4.9 percent and 5.8 percent. Sector wise, the survey pegs agriculture growth at 2.1 percent and industrial growth at 3.1 percent for FY15. Further, services sector growth is expected at 7 percent, marginally higher than 6.8 percent recorded in the previous fiscal year. The FICCI’s survey forecasts fiscal deficit to GDP ratio at 4.5 percent in FY15 which is higher than the target of 4.1 percent set in the interim budget. On inflation front, the survey participants expects that El Nino effect to fuel inflationary pressure going ahead and prices to remain beyond the comfort zone. Participating economists suggested that the government should strengthen supply side infrastructure to check the rising inflation in the country. India's economic growth stayed below 5 percent for the second year in a row at 4.7 percent during FY14

Recommending measures to boost Indian economic growth, the survey respondents have asserted that the government should clear roadmap for roll out of Goods and Services Tax and review of the Direct Tax Code in order to widen the tax base and rationalizing exemptions. The government should chart out a path to contain subsidies and switch the focus from non-plan to plan expenditure, while putting across a roadmap for disinvestment. Besides, greater clarity on issues like General Anti Avoidance Rules (GAAR) and retrospective taxation must be provided in the upcoming budget. The respondents also recommended firming up the growth in the manufacturing sector to aid employment generation and to boost infrastructure spending, along with faster execution of stuck projects.

The CNX Nifty is currently trading at 7,620.95 down by 2.25 points or 0.03% after trading in a range of 7,646.25 and 7,551.65. There were 23 stocks advancing against 17 declining on the index.

The top gainers of the Nifty were Hindalco up by 3.91%, Tata Steel up by 2.16%, GAIL up by 1.60%, BPCL up by 1.41% and IDFC up by 1.28%. On the flip side, Tata Motors down by 2.22%, Tata Power down by 2.12%, Coal India down by 2.08%, Tech Mahindra down by 2.03% and M&M down by 1.95% were the major losers on the index.

Asian markets were trading mostly in the red; Nikkei 225 dropped by 0.28%, Hang Seng slipped 1.18%, KOSPI Index contracted by 0.37%, Straits Times declined by 0.42%, Shanghai Composite dipped 0.33%, FTSE Bursa Malaysia KLCI decreased by 0.12% and Taiwan Weighted was down by 0.41%. On the flip side, Jakarta Composite was up by 0.72%.