Benchmarks extends losses in afternoon session

Indian equity benchmarks extended losses in afternoon session after Economic Survey FY14 highlighted inflation and growth concerns. Selling witnessed in auto, IT and healthcare stocks dragged the markets lower. Most of sectoral indices were trading in red with auto as the top losing index, down by around 1.68%. Sentiments also got a hit after the 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. Also, there was some cautiousness among investors ahead of Union Budget 2014-15. Investors are expecting a major policy changes during the budget which can take Indian economy on a high growth path. Railway stocks were trading lower for the second consecutive session.  Further, sell-off continued in the broader markets with both the mid and small cap indices trading down by over 0.50%. However, the gain in oil and gas, FMCG and consumer durables stocks provided some support to the domestic equity benchmarks. Oil and gas stocks on buyer radar after Brent crude fell below $109 a barrel as Libya restarted an oilfield.

On global front, Asian equity indices were trading in red with Hang Seng down by 1.53% and  Nikkei 225 down by 0.08% as global sentiment was dampened as China's consumer price index (CPI) rose 2.3 per cent in June from a year earlier. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 7,650 and 26,000 levels respectively. The market breadth on BSE was negative, out of 2,692 stocks traded, 805 stocks advanced, while 1,800 stocks declined on the BSE.

The BSE Sensex is currently trading at 25,522.01 down by 60.10 points or 0.23% after trading in a range of 25,683.97 and 25,369.21. There were 13 stocks advancing against 17 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.59%, while Small cap index down by 1.21%.

The gaining sectoral indices on the BSE were Oil and Gas up by 1.26%, FMCG up by 0.52%, consumer durables up by 0.42% and Metal down by 0.05%. On the flip side, Auto down by 1.68%, IT down by 0.99%, Healthcare down by 0.91%, Teck down by 0.78% and Capital Goods down by 0.73% were the losing indices on BSE.    

The top gainers on the Sensex were Hindalco Inds down by 2.90%, ONGC up by 2.11%, Gail India up by 1.35%, BHEL up by 1.17% and Tata Steel up by 1.17%. On the flip side, M&M down by 2.60%, SSLT down by 2.01%, Coal India down by 1.83%, TCS down by 1.81% and  Bajaj Auto down by 1.73% were the top losers on the BSE.

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.

The CNX Nifty is currently trading at 7,604 down by 19.20 points or 0.25% after trading in a range of 7,650.10 and 7,551.65. There were 22 stocks advancing against 28 declining on the index.

The top gainers of the Nifty were Hindalco up by 2.90%, ONGC up by 2.28%, IDFC up by 2.08%, BPCL up by 1.97% and Grasim up by 1.59%. On the flip side, M&M down by 2.99%, Tata Motors down by 2.14%, SSLT down by 2.06%, Coal India down by 1.99% and TCS down by 1.97% were the major losers on the index.

Most of the Asian equity indices were trading in red; Hang Seng down by 1.53% to 23,180.35, Nikkei 225 down by 0.08% to 15,302.65 and Straits Times down by 0.49% to 3,267.21, Shanghai Composite down by 1.03% to 2,043.35 and Taiwan Weighted down by 0.43% to 9,489.98. While, Jakarta Stock Index up by 0.72% to 5,024.71