Bourses magnify losses tailing negative start of European counterparts

Magnifying losses, local equity markets were languishing at day’s low level on sustained selling pressure by market-participants, who preferred booking profits after eight consecutive sessions of bourses’ uptrend in the backdrop of negative start of European counterparts. Sentiment failed to draw any solace from avoidance of country’s rating downgrade from International Monetary Fund (IMF), who otherwise chopped its 2014 forecast for global economic growth to take into account weakness early in the year in the United States and China, the world's two biggest economies. Additionally, Finance Minister’s assurance of stable tax regimes also failed to soothe frayed nerves. Rather, sentiment took a hit after FM unveiled that its government did not decide its stance on a policy in place to allow foreign direct investment in supermarkets. Sulking at day’s low, both Sensex and Nifty continue trading below the crucial 26,150 and 7,800 levels respectively, with losses of around half a percent. Meanwhile, broader indices falling fast and thick into negative territory, were trading with colossal losses of around 1%-1.50%.

On the global front, Asian shares pulled away from this week's three-year highs on Friday after a mostly flat day on Wall Street, though a fresh S&P closing record and upbeat U.S. employment data underpinned sentiment. Meanwhile, European shares got off to lower start after data from France and Germany showed business activity in those countries strengthened in both July and June, but risks to the euro zone economy from any tougher sanctions on Russia limited the euro's gains.

Closer home, sentiment remained somber right from the start of trade after IT major Wipro reported dismal guidance, which sent the stocks tumbling down with cut of over 6%. On the BSE, with most of the sectoral indices were trading into negative territory, only stocks from Fast Moving Consumer Goods counter was showcasing resilience on portfolio de-risking, on the flip side, stocks from Realty, Power and Infra and Oil & Gas counters were the weak pillars of trade. The overall market breadth on BSE was in the favour of declines which thumped advances in the ratio of 1511:378; while 37 shares remained unchanged.

The BSE Sensex is currently trading at 26134.30, down by 137.55 points or 0.52% after trading in a range of 26113.83 and 26300.17. 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 1.02%, while Small cap index down by 1.50%.

The gaining sectoral indices on the BSE were FMCG up by 0.51% while, Realty down by 2.17%, Metal down by 1.96%, Power down by 1.90%, INFRA down by 1.62%, Oil & Gas down by 1.49% were the losing indices on BSE.

The top gainers on the Sensex were Sun Pharma Industries up by 2.89%, HDFC up by 2.14%, Hindustan Unilever up by 2.02%, Maruti Suzuki up by 1.24% and Dr. Reddys Lab up by 1.14%. On the flip side, Wipro down by 4.94%, BHEL down by 4.61%, Sesa Sterlite down by 2.67%, Hindalco down by 2.58% and Tata Motors down by 2.46% were the top losers.

Meanwhile, Optimistic over the fundamentals of Indian economy, the International Monetary Fund (IMF) has retained its growth forecast at 5.4 percent in 2015 and a stronger 6.4 percent growth next year. Among the BRICS nations, India is the only emerging economy to escape a cut in growth forecast in the IMF’s update of its World Economic Outlook.

The IMF stated that growth has bottomed out in India and activity is projected to pick up gradually after the post-election recovery in business sentiment, offsetting the effect of an unfavourable monsoon on agricultural growth. After growing at around 9 percent during FY07-FY11, Indian economic growth slowed down to 6.7 percent during FY12 and below 5 percent during FY13 and FY14.

On global front, IMF has stated that weaker growth in the US, China and several important emerging markets forced the Fund to downgrade global economy growth forecast to 3.4 percent from 3.7 projected earlier. It added that global growth could be weaker for longer, given the lack of robust momentum in advanced economies despite very low interest rates and the easing of other brakes to the recovery. The IMF expects China to grow at 7.4 percent this year, 0.2 percentage point lower than its previous forecast. Russian economy is expected to grow by only 0.2 percent this year, down from its previous forecast of 1.3 percent as escalating sanctions against Russia for its actions in Ukraine sparked capital flight out of the country, exacerbating a fall in investment levels. The fund also cut growth expectations for Brazil and Mexico by more than half a percentage point for the year as weaker US growth and timid investment weigh on growth.

Meanwhile, the IMF suggested that the governments in both advanced and emerging-market economies must take structural reforms to close infrastructure gaps, strengthen productivity and lift potential growth rate.

The CNX Nifty is currently trading at 7788.60, down by 42.00 points or 0.54% after trading in a range of 7780.55 and 7840.95. There were 13 stocks advancing against 37 stocks declining on the index.

The top gainers on Nifty were Sun Pharma Inds. up by 3.05%, Lupin up by 2.34%, Hindustan Unilever up by 2.22%, HDFC up by 2.07% and Dr. Reddys Lab up by 1.47%. On the flip side, Cairn India down by 4.95%, Wipro down by 4.91%, BHEL down by 4.53%, DLF down by 4.16% and IDFC down by 2.97% were the top losers.

Asian stocks too were trading mostly into negative territory; with KOSPI Index adding 7.23 points or 0.36% to 2,033.85; Shanghai Composite advancing 19.73 points or 0.94% to 2,124.79; Hang Seng rising 46.86 points or 0.19% to 24,188.36; Nikkei 225 surging 173.45 points or 1.13% to 15,457.87. On the flip side, Taiwan Weighted declining by 88.25 points or 0.93% to 9,439.29; Jakarta Composite sliding by 18.47 points or 0.36% to 5,080.18; Straits Times shedding 11.15 points or 0.33% to 3,342.74 and FTSE Bursa Malaysia KLCI surrendering 7.62 points or 0.41% to 1,869.43

European markets got off to a negative start; with Germany’s DAX declining by 34.17 points or 0.35% to 9,759.89; France’s CAC sliding by 26.8 points or 0.61% to 4,383.85 and  UK’s FTSE 100 shedding 11.77 points or 0.17% to 6,809.69