Post Session: Quick Review

Sliding for fourth straight session in row after hitting life-time high level, Indian equity markets nursed heavy losses of over 1.25% on Friday, marking their biggest weekly fall since March 2013 that took Sensex and Nifty below their psychologically crucial 25,100 and 7,500 levels respectively. Meanwhile for the week, Nifty and Sensex plummeted over 3.5%, CNX Midcap index took a hit of over 8% and Smallcap index shut shop with losses of over 7%. Profit-booking by market-participants on the concerns of weak monsoons in the backdrop of somber global cues, mainly contributed to the slide of markets. According to reports by weather department, the overall rainfall stood at around 45%, below the seasonal average, raising the chances of draught in five years.

Besides, reluctance of market-participants to build position ahead of May IIP also added to the pessimistic milieu. Street widely expects industrial output (IIP) to expand by 3.8% annually, up for the second straight month after posting a 3.4% rise in April - it’s first since January.

Nevertheless, skepticism about whether the new government of Prime Minister Narendra Modi could achieve its ambitious fiscal deficit target also triggered some profit-booking. Prime Minister Narendra Modi's new government unveiled its maiden budget which sought to revive growth and curb borrowing, provided no clarity on the way to reduce the fiscal deficit and restore investor confidence.

On the global front, Asian stock markets concluded in red on Friday, following the lead of Wall Street as sentiments were spooked by worries about the soundness of a bank in Portugal that raised the specter of more financial turmoil in Europe. The cautious mood was driven by fears that emerged Thursday about the financial stability of Portugal's Espirito Santo International, which reportedly missed a debt payment this week and was cited for accounting irregularities, echoing issues that sparked Europe's debt crisis four years ago. On the flip side, European shares edged higher on Friday, stabilizing after steep falls in the previous session but with sentiment still cautious as Portugal's biggest bank attempted to reassure investors after trading in its shares was suspended

Closer home, majority of the sectoral indices on BSE ended into negative territory, with the prominent losers being the stocks from Realty, Capital Goods and Power counters. On the flip side, stocks from Information Technology, Healthcare and Technology counters were the only silver linings.  IT stocks sprang to life after India’s second largest information technology (IT) Service Company Infosys cheered the street by throwing up a positive surprise on the margins and volumes growth front and posting earnings for April-June 2014 (Q1FY2015) on expected lines. India’s second largest information technology (IT) services company Infosys cheered investors by throwing up a positive surprise on the margins and volumes growth front and posting earnings for April-June 2014 (Q1FY2015) on expected lines.

On the flip side, Realty stocks which emerged as budget day darlings after FM proposed tax incentives for REITs, reversed all their gains, ended with losses on profit-booking. Additionally, Banks also tanked on potential losses on bond portfolios after the 10-year yield hits its highest level since May 21, with State Bank of India collapsing over 5% and HDFC Bank plummeting over 1.5%.  The market breadth on the BSE ended negative; advances and declining stocks were in a ratio of 1599: 2, 324, while 8 scrips remained unchanged. (Provisional)

The BSE Sensex plummeted by 348.40 points or 1.37% to settle at 25024.35, after trading in a range of 24978.33 and 25548.33. 10 stocks advanced against 20 stocks declining one’s on the index. (Provisional)

The broader indices nursed heavier losses than frontline indices; with BSE Mid cap index plunging by 2.81%, Small cap index plummeting 3.31%.(Provisional)

On the BSE sectoral font, IT up by 1.42%, TECK up by 1.06%, FMCG up by 0.51% were the top gainers. On the flip side, Realty down by 5.16%, Capital Goods down by 4.75%, Power down by 4.54%, PSU down by 3.95%, Metal down by 3.69% were the top losers. (Provisional)

The top gainers on the Sensex were Sun Pharma Inds up by 2.28%, TCS up by 2.13%, Dr Reddys Lab up by 2.00%, Hindustan Unilever up by 1.42% and Wipro up by 1.42%. On the flip side, BHEL down by 8.10%, Hindalco down by 5.59%, SBI down by 4.96%, Larsen & Toubro down by 4.89% and Tata Steel down by 4.01% were the top losers. (Provisional)

Meanwhile, agreeing to a long-pending demand from the insurance companies, Finance Minister Arun Jaitley in the Union Budget proposed raising the Foreign Direct Investment (FDI) cap from 26% to 49%, with full Indian management and control through the FIPB route. This measure is expected to provide impetus for spurring growth of the cash starved insurance industry and enable foreign players to bring in capital required for growing distribution, product suite and strengthening the risk framework. This may also enable existing players to expand their reach in Tier II and Tier III cities.

The proposal to hike FDI limit in Insurance companies, which has been pending since 2008 when the previous UPA government came up with Insurance laws (Amendment) Bills, would help insurance firms to get much needed capital from overseas partners.

Further, Finance Minister also proposed raising the composite cap of foreign exchange in defence sector to 49% from 26% at present. India is the largest buyer of defence equipment in the world since country’s domestic manufacturing capabilities are still at a nascent stage. The country buys substantial part of defence requirements directly from foreign players, companies controlled by foreign governments and foreign private parties at a considerable outflow of foreign exchange.

Additionally, to encourage development of smart cities which will also provide habitation for the new middle class, the Finance Minister lowered the requirement of the built up area and capital conditions from 50,000 sq m to 20,000 sq m and from $10 million to $5 million respectively with a three years post completion lock in.

The CNX Nifty plunged 108.15 points or 1.43% and concluded at 7459.60, after trading in a range of 7447.20 and 7625.85. 12 stocks advanced against 38 stocks declining one’s the index. (Provisional)

The top gainers on Nifty were Sun Pharma Industries up by 2.45%, HCL Technologies up by 1.97%, Dr. Reddys Lab up by 1.89%, TCS up by 1.81% and Hindustan Unilever up by 1.58%. On the flip side, BHEL down by 8.41%, NMDC down by 7.11%, Jindal Steel & Power down by 6.82%, DLF down by 5.87% and Hindalco Industries down by 5.39% were the top losers. (Provisional)

European shares were trading in positive terrain; with Germany’s DAX rising by 0.10%, France’s CAC 40 adding 0.49% and United Kingdom’s FTSE 100 gaining by 0.20%.

The Asian markets concluded Friday’s trade mostly in red, as signs of financial stress in Portugal raised concerns that euro-area recovery remains fragile. China’s stocks rose, paring the benchmark index’s losses for the week; on speculation local governments are loosening property curbs to prevent economic growth from slowing further. Hong Kong stocks fell, with the city’s benchmark index capping its biggest weekly decline in two months. Japanese Economics Minister Akira Amari warned that it would be premature for the Bank of Japan to consider an exit strategy from its massive stimulus program, voicing hope instead for further monetary easing if achievement of its inflation goal falls behind schedule. Amari enlightened that while Japan appears to be emerging from years of persistent price declines, it was too early to formally declare a sustained end to deflation with the economic recovery still vulnerable to external shocks.

Indonesian stocks fell the most in six weeks and the rupiah snapped a four-day rally on concern investments will be delayed until a clear winner emerges from the nation’s disputed presidential election. Foreign investors pumped $362 million into Indonesian equities yesterday, the biggest inflow since March, on optimism Widodo will replicate nationally the success he had as Jakarta governor in cutting red tape and boosting tax revenue. Indonesia’s central bank held its benchmark interest rate at 7.5% for an eighth consecutive meeting, maintaining a tight policy setting to help narrow the current-account shortfall that it estimates widened to near a record last quarter.