Markets end F&O expiry session in red but close July series higher by over 3%

Indian equity markets truly depicted the choppiness of an F&O expiry session on Thursday and after a cautious start markets extended their southward journey to close with a cut of around a percentage point. Final hour of trade proved to be the curse for the markets and bourses settled below their crucial 25,900 (Sensex) and 7,750 (Nifty) bastions. However June series proved a strong one for the markets with benchmark indices gaining over 3% each for the series.

After trading in tight band for most part of the day’s trade, domestic gauges crashed like house of card in the last leg of trade as investors offloaded their positions an hour before the end of F&O contract expiry day. Sentiments remained dampened as foreign investors sold $63.4 million worth of equities for the first time in the last ten sessions on July 30, as per provisional data released by the stock exchange. Investors also shrugged off National Statistical Commission Chairman Pronob Sen’s statement that the country’s growth can be as high as 6.5 percent in the current fiscal. He has also said that government’s economic growth projection of 5.4 percent to 5.9 percent stated in the Economic Survey is very modest.

Selling got intensified as European markets turned cautious after a positive start and were trading in the  red terrain in early deals  as both the U.S. and the European Union agreed to expand sanctions on Russia late Tuesday, with the new restrictions targeting the Russian energy, defense, and finance sectors. Asian markets too ended mostly in the red after the U.S. Federal Reserve said it would make further cuts to its monetary stimulus as expected.

Back home, sentiments remained down-beat on the back of depreciation in Indian rupee against dollar as the dollar strengthened following encouraging GDP data from the US. The rupee was trading at 60.51 at the time of equity markets closing versus its previous close of 60.07. Meanwhile, slump in banking counter too played spoil sport for the Indian equity markets after government mulling to divest stake in public sector banks in November this year. Software stocks too edged lower after HCL Technologies slumped after April-June U.S. dollar revenue growth lagged some estimates. India’s fourth largest software services firm reported a 53.7% jump in its consolidated net profit to Rs 1,834 crore for the fourth quarter ended June 30, 2014. On the flip side, shares of state-owned oil marketing companies such as Hindustan Petroleum, Bharat Petroleum and Indian Oil Corporation edged higher on talk that the government has sought fuel subsidy support from upstream oil companies for the first quarter ended June 30, 2014.

NSE’s 50-share broadly followed index, Nifty declined by over seventy points to end below the psychological 7,750 support level, while Bombay Stock Exchange’s Sensitive Index - Sensex slipped by over one hundred and ninety points to end below its psychological 25,900 mark. However, broader markets outperformed benchmarks and ended the session with a gain of around quarter a percent. The market breadth remained in favour of decliners, as there were 1,490 shares on the gaining side against 1,539 shares on the losing side while 98 shares remain unchanged.  

Finally, the BSE Sensex plunged by 192.45 points or 0.74%, to 25894.97, while the CNX Nifty declined by 70.10 points or 0.90%, to 7,721.30.

The BSE Sensex touched a high and a low of 26118.88 and 25853.69, respectively. The BSE Mid cap index was up by 0.18%, while Small cap index gained 0.25%.

The top gainers on the Sensex were Cipla up by 1.92%, Tata Steel up by 1.56%, Coal India up by 0.49%, Gail India up by 0.17% and RIL up by 0.05%. On the flip side, the key losers were NTPC down by 3.01%, Axis Bank down by 2.52%, Mahindra & Mahindra down by 1.73%, Tata Power down by 1.66% and HDFC down by 1.60%.

On the BSE sectoral front, Realty up by 0.24%, Healthcare up by 0.17% and Metal up by 0.05 % were the only gainers, while Power down by 1.35%, Bankex down by 1.18%, Consumer Durables down by 0.98%, Capital Goods down by .84% and Auto down by 0.62% were the top losers in the space.

Meanwhile, to improve the gas distribution infrastructure in the country, Oil Ministry is currently working on a new public-private-partnership (PPP) model for laying gas pipelines in the country. Finance Ministry during budget 2014-15 announced plans to double the country's gas pipeline network to 30,000 km to complete the national gas grid, mainly through the PPP model.

Oil Ministry has asked the Petroleum and Natural Gas Regulatory Board to initiate work on it. Further, the Board has already been authorised to call for bids for 9,000 km of pipeline infrastructure. PPP mechanism consists two models such as viability gap funding and tariff based funding and the board may opt for a consultant to determine which model will be suitable for the development of national gas grid. 

Under the tariff-based competitive bidding, project developers bid on the basis of a pre-fixed tariff with an option to keep a portion open for cost escalation. Whereas viability gap funding is essentially a subsidy to provide support to infrastructure projects that fall short of financial viability due to inability to raise tariffs to commercial levels and their long gestation period. Meanwhile, industry is of the view that board should go with viability gap funding model for gas infrastructure sector for certain segments as a particular zone or area may not have sufficient demand to make the project economically viable for the developer.

The CNX Nifty touched a high and low of 7,791.85 and 7,711.15 respectively.

The major gainers of the Nifty were Cipla up by 2.12%, Tata Steel up by 1.57%, BPCL up by 1.25%, Lupin up by 0.55% and Bajaj Auto up by 0.17%. On the flip side, the key losers were NTPC down by 3.24%, IDFC down by 2.56%, Asian Paints down by 2.47%, Axis Bank down by 2.44% and HCL Technologies down by 2.41%.

European markets were trading in red; UK’s FTSE 100 was down by 0.26%, Germany’s DAX was down by 0.95 % and France’s CAC 40 was down by 0.68%.

The Asian markets concluded Thursday’s trade mostly in red, with benchmark index paring its third straight monthly gain. Hong Kong stocks rose, with the city’s benchmark index capping its biggest monthly advance since September 2012, as property shares extended gains. Japanese Housing Starts rose to a seasonally adjusted -9.5%, from -15.0% in the preceding quarter while Japan’s Average Cash Earnings fell to a seasonally adjusted 0.4%, from 0.6% in the preceding quarter whose figure was revised down from 0.8%. Hong Kong Retail Sales fell to a seasonally adjusted annual rate of -6.9%, from -4.1% in the preceding month. Taiwanese GDP rose to 3.84%, from 3.14% in the preceding month. Singaporean Unemployment Rate remained unchanged at 2.0%, compared to the preceding quarter.

The Asian markets were trading mostly in red; KOSPI Index dropped by 6.49 points or 0.31% to 2,076.12, Jakarta Composite declined by 9.84 points or 0.19% to 5,088.80, FTSE Bursa Malaysia KLCI tumbled by 6.98 points or 0.37% to 1,871.36, Taiwan Weighted was down by 131.17 points or 1.39% to 9,315.85 and Nikkei 225 declined by 25.46 points or 0.16% to 15,620.77.

On the flip side, Hang Seng gained 24.64 points or 0.10% to 24,756.85, Shanghai Composite was up by 20.32 points or 0.93% to 2,201.56 and Straits Times was up by 20.41 points or 0.61% to 3,374.06.