Benchmarks extend losing streak for fourth straight session

Extending their southward journey for the fourth straight day, Indian barometer gauges witnessed blood bath on Friday with both the major indices losing around one and a half percentage point and ending below their crucial 7,500 (Nifty) and 25,100 (Sensex) levels. Investors remained on sidelines ahead of index of industrial production (IIP) data for the month of May to be released later in the day and consumer price index (CPI) data for the month of June to be released on July 14, 2014. The industrial output is seen rising 3.8% in May 2014, higher than 3.4% growth in April, while Consumer price inflation probably would have eased to 7.95% last month, down from May’s 8.28%.

Sentiments also remained down-beat on report that the overall rainfall stood at around 45%, below the seasonal average, raising the chances of draught in five years. Uncertainty about Narendra Modi government’s ambitious fiscal deficit target too triggered some profit-booking. The 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. Meanwhile, investors shrugged off better-than-expected first quarter numbers posted by Software major Infosys. India’s second largest information technology (IT) services company posted a 21.6% year-on-year growth in net profit at Rs 2,886 crore, and a 13.3% year-on-year growth in revenues at Rs 12,770 crore.

On the global front, European markets traded in fine fettle in early deals on Friday, as markets settled after a broad pullback overnight on concerns about Portugal’s banking sector that highlighted contagion risk in the euro zone. However, Asian markets ended mostly in the red 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.

Back home, selling was both brutal and wide-based as most of the sectoral indices on BSE ended in the red. Counters, which featured in the list of worst performers, included realty, capital goods, power, metal and public sector undertaking. Meanwhile, banking shares mainly PSUs fell for seventh straight session, touching over one-month low as the government has decided to reduce its stake in the public sector banks, enabling the lenders to raise equity from public though it will continue to the hold majority stake. Additionally, 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. On the flip side, the software and technology shares ended positive after Infosys reported a better-than-expected consolidated net profit for the first quarter ended June 30, 2014.

The NSE’s 50-share broadly followed index Nifty slipped by around one hundred and ten points to end below the psychological 7,500 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex declined by around three hundred and fifty points to finish below its psychological 25,100 mark. Broader markets too butchered during the trade and ended the session with a huge cut of around three percentage points. The market breadth remained in favor of decliners, as there were 710 shares on the gaining side against 2,217 shares on the losing side while 79 shares remain unchanged.

Finally, the BSE Sensex lost 348.40 points or 1.37%, to 25024.35, while the CNX Nifty declined by 108.15 points or 1.43%, to 7,459.60.

The BSE Sensex touched a high and a low of 25548.33 and 24978.33, respectively. The BSE Mid cap index was down by 2.81%, while Small cap index dropped 3.31%.

The top gainers on the Sensex were Sun Pharma up 2.28%, TCS up by 2.13%, Dr Reddys up by 2.00%, HUL up by 1.42% and Wipro up by 0.42%. On the flip side, the key losers were BHEL down by 8.10%, Hindalco down by 5.59%, SBI down by 4.96%, L&T down by 4.89% and Tata Steel down by 4.01%.

On the BSE sectoral front, IT up by 1.42%, Healthcare up by 1.09%, TECk up by 1.06% and FMCG up by 0.51% were the few gainers, while Realty down by 5.16%, Capital Goods down by 4.75%, Power down by 4.54%, PSU down by 3.95% and Metal down by 3.69% were the top losers in the space.

Meanwhile, with a view to speed up the development of road infrastructure in India, the Road Transport Ministry has asked Prime Minister Narendra Modi to empower the ministry to make it able to award projects worth over Rs 1,000 crore investment. Minister of Road Transport and Highways Nitin Gadkari has stated that a number of projects in the past have got delayed due to a number of committee approvals required for their implementation.

Nitin Gadkari has stated that Since May 26, Road Ministry has cleared Rs 40,000 crore worth of projects which were stuck due to inordinate delays in clearances.  The minister further added that the National Highways Authority of India (NHAI) will soon award new PPP (public-private-partnership) projects in the sector. However, the Minister rejected the possibility of attracting foreign direct investment in the road sector. Finance Minister in Budget 2014-15 has proposed Rs 37,880 crore investment in NHAI, including Rs 3,000 crore for the North East.

There is a need of widespread highway infrastructure in the country to boost the economic growth. Over the past few years, the highway sector has been struggling with slowdown. During FY14, the National Highways Authority of India (NHAI) has managed to award around 2,000 km of road projects as against the set target of 9,000 km, while in FY13 only 1,116 km of projects were awarded against a target of 9,500 km. Financial constraints, delay in land acquisition and environmental clearances and lack of project planning are the leading factors impacting road infrastructure development in the country.

The CNX Nifty touched a high and low of 7,625.85 and 7,447.20 respectively.

The major gainers of the Nifty were TCS up 2.47%, Sun Pharma up by 2.44%, HUL up by 1.92%, Dr Reddys up by 1.86% and HCL Tech up by 1.67%. On the flip side, the key losers were BHEL down by 8.64%, NMDC down by 7.91%, Jindal Steel down by 6.24%, Hindalco down by 5.93% and DLF down by 5.85%.

European markets were trading in red; UK’s FTSE 100 down by 0.24%, Germany’s DAX down by 0.14% and France’s CAC 40 was down by 0.68%.

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.