Markets re-slip into negative territory ahead of Economic Survey

After re-entering negative territory in late morning deals, benchmarks equity indices have magnified their losses on persistent profit-booking by funds and retail investors ahead of the crucial economic survey, which is to be tabled in the parliament later in the day, while cautiousness a day before the Union Budget 2014-15 also is weighing on the sentiment. Down in red with loss of over 0.15%, both Sensex and Nifty were trading below the psychological 25,600 and 7,650 levels respectively. Meanwhile, broader indices also succumbing to brutal selling pressure, were down and out with losses in the range of 0.45%-1%.

Meanwhile, somber global cues also are adding to the pessimistic environment. On the global front, Asian stocks extended losses to a one-week low on Wednesday after China's consumer inflation cooled slightly more than expected in June, pointing to lingering weakness in the economy.

Closer home, majority of the sectoral indices on BSE were trading into red, nevertheless prominent losers were stocks from Auto, Capital Goods and Information Technology counters. On the flip side, stocks from Oil & Gas, Fast Moving Consumer Goods and Consumer Durables were the top gainers of the session. 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 25537.21, down by 44.90 points or 0.18% after trading in a range of 25369.21 and 25683.97. There were 11 stocks advancing against 19 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.47%, while Small cap index down by 1.00%.

The gaining sectoral indices on the BSE were Oil & Gas up by 1.22%, FMCG up by 0.57%, Consumer Durables up by 0.51%, PSU up by 0.40%, Metal up by 0.15% while, Auto down by 1.87%, Capital Goods down by 0.73%, IT down by 0.66%, TECK down by 0.52%, Power down by 0.27% were the losing indices on BSE.

The top gainers on the Sensex were Hindalco up by 3.41%, ONGC up by 2.07%, Tata Steel up by 1.40%, GAIL India up by 1.30% and Reliance Industries up by 1.09%. On the flip side, Tata Motors down by 2.43%, Mahindra & Mahindra down by 2.30%, Sesa Sterlite down by 1.76%, Dr. Reddys Lab down by 1.75% and Bajaj Auto down by 1.73% were the top losers.

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 7609.80, down by 13.40 points or 0.18% after trading in a range of 7551.65 and 7650.10. There were 23 stocks advancing against 27 stocks declining on the index.

The top gainers on Nifty were Hindalco up by 3.11%, ONGC up by 2.34%, BPCL up by 2.07%, Asian Paints up by 1.35% and Tata Steel up by 1.35%. On the flip side, Tata Motors down by 2.77%, Mahindra & Mahindra down by 2.49%, Coal India down by 1.93%, Sesa Sterlite down by 1.89% and Hero MotoCorp down by 1.83% were the top losers.

Asian markets were trading mostly in the red; Hang Seng decreased 310.18 points or 1.32% to 23,231.20; Taiwan Weighted decreased 41 points or 0.43% to 9,489.98; Nikkei 225 decreased 24.67 points or 0.16% to 15,289.74; Straits Times decreased 13.41 points or 0.41% to 3,269.93; Shanghai Composite decreased 9.88 points or 0.48% to 2,054.15; KOSPI Index decreased 6.16 points or 0.31% to 2,000.50; FTSE Bursa Malaysia KLCI decreased 2.2 points or 0.12% to 1890.45. On the flip side, Jakarta Composite up by 35.68 points or 0.72% to 5,024.71 was the lone gainer amongst Asian pack.