Markets enter into negative territory in afternoon session

Indian equity benchmarks slipped into the negative territory in afternoon session and were trading near intra-day low point of the day dragged down by sharp selling witnessed in frontline blue chip stocks such as Hindalco Inds, HDFC and BHEL among others. The sentiments were on pessimistic mood as weak rainfall in India during the ongoing monsoon season has raised concerns of a first drought in five years. Till now, the overall rainfall stood at around 45 percent, below the seasonal average. Further, weak global cues also weighed on the sentiments. Stocks of metal, oil and gas and powers sectors were under pressure. Selling was broad based with both mid and small cap indices trading down by over 0.30%. Though, most of the sectoral indices were trading in red, heavy buying witnessed in defensive sector stocks such as IT, teck and healthcare stocks capped the markets losses. IT stocks were on buying radar after Infosys reported a better-than-expected consolidated net profit for Q1FY15. Shares of real estate companies have rallied by up to 6% after key positive announcements made by the Finance Minister in Budget 2014-15. 

On global front, Asian equity indices were trading in red with Hang Seng down by 0.31% and Taiwan Weighted down by 0.72%. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 7,600 and 25,500 levels respectively. The market breadth on BSE was negative, out of 2,462 stocks traded, 1,004 stocks advanced, while 1,368 stocks declined on the BSE.

The BSE Sensex is currently trading at 25,225.40 down by 147.35 points or 0.58% after trading in a range of 25,548.33 and 25,217.57. There were 10 stocks advancing against 20 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.67%, while Small cap index down by 0.37%.

The gaining sectoral indices on the BSE were Healthcare up by 1.25%, IT up by 1.24%, Teck up by 0.94%, FMCG up by 0.82% and Consumer Durables up by 0.41%. On the flip side, Metal down by 2.21%, Oil and Gas down by 1.74%, Power down by 1.67%, Capital Goods down by 1.35% and Bankex down by 0.97% were the losing indices on BSE.  

The top gainers on the Sensex were TCS up by 1.90%, Sun Pharma up by 1.61%, Dr Reddy’s Lab up by 1.42%, ITC up by 1.40% and Hero Motocorp up by 1.13%. On the flip side, Hindalco Inds down by 3.72%, HDFC down by 3.13%, BHEL down by 2.10%, Gail India down by 2.07% and ONGC down by 1.88% were the top losers on the BSE.

Meanwhile, weak rainfall in India during the ongoing monsoon season has raised concerns of a first drought in five years. Till now, the overall rainfall stood at around 45 percent, below the seasonal average. Poor monsoon can impact Indian economic growth as the agriculture sector, which comprises around 15% of the GDP, is mainly depended upon the monsoon rains. Further, a poor monsoon can impact India’s exports, stoke inflation particularly food inflation and lead to lower demand for products ranging from cars to consumer goods. In 2009, India had faced worst drought in nearly four decades that forced the country to import large amount of food commodities.

The Indian Meteorological Department (IMD) had already highlighted that southwest monsoon may be below normal, with the country likely to receive 93 percent of the long-period average (LPA) rainfall. The department further indicated that probability of the El Nino effect, which may result in deficient rains, especially in the latter half of the monsoon season. Except for the northeast, every other part in India is predicted to get below normal rainfall this season. As per the IMD’s region-wise prediction, seasonal rainfall over north-west India is likely to be 85% of LPA, 94% over central India, 93% over south peninsula and 99% of LPA over north-east India.

Inflation in food articles rose by 9.50% y-o-y in May as compared to 8.64% in April. Food inflation can increase in near term as weak monsoon rains would impact the performance of Indian agriculture sector.

The CNX Nifty is currently trading at 7,528.95 down by 38.80 points or 0.51% after trading in a range of 7,625.85 and 7,519.55. There were 15 stocks advancing against 35 declining on the index.

The top gainers of the Nifty were TCS up by 1.87%, Dr Reddy’s Lab up by 1.69%, ITC up by 1.64%, Lupin up by 1.54% and Sun Pharma up by 1.52%. On the flip side, NMDC down by 4.04%, Hindalco Inds down by 3.43%, HDFC down by 3.02%, McDowell down by 2.71% and Asian Paints down by 2.70% were the major losers on the index.

Most of the Asian equity indices were trading in red; Straits Times up by 0.60% to 3,289.23 and Shanghai Composite up by 0.42% to 2,047. While, Hang Seng down by 0.31% to 23,167.94, Taiwan Weighted down by 0.72% to 9,495.84, Jakarta Stock Index down by 1.66% to 5,013.45 and Nikkei 225 down by 0.28% to 15,173.92