Benchmarks witness bloodbath on daunting global cues

After the late position squaring that led the Indian frontline indices to take a sharp plunge on Thursday, the pessimism got spilled over into Friday’s session as investors continued to trim down positions amid daunting global developments. Indian barometer gauges witnessed blood bath with both the major indices losing over one and a half percentage points and ending below their crucial 7,650 (Nifty) and 25,500 (Sensex) levels. Selling was both brutal and wide-based as none of sectoral indices on BSE were spared. Counters, which featured in the list of worst performers, include consumer durables, oil and gas, metal and capital goods.

Sentiments remained down-beat on report that India’s fiscal deficit in the first quarter of the current financial year crossed the halfway mark at 56.1% of the full-year’s target of Rs.5.3 trillion. Moreover, investors shrugged off positive economic development. The core sector output in the month of June has surged to nine-month high at 7.3% mainly driven by healthy production growth in coal, crude oil, cement and electricity. The output of eight core industries grew by 2.3% in May and 1.2% in the same month of previous year. Better-than-expected Manufacturing PMI too failed to lift the sentiments. The HSBC Manufacturing Purchasing Managers’ Index (PMI), a headline index designed to measure the overall health of the manufacturing sector, rose to 53.0 in the month of July from 51.5 in June.

Selling got intensified as European markets made an awful start with CAC, DAX and FTSE were trading with a cut of over a percent in early deals ahead of US jobs data. Asian markets ended under water on Friday after a sudden slump on Wall Street spilled over globally, though a surprisingly strong pick up in manufacturing helped Chinese markets hold at seven-month highs.

Back home, sentiments remained down-beat on the back of depreciation in Indian rupee against dollar. The rupee was trading at 61.09 at the time of equity markets closing versus its previous close of 60.54. Meanwhile, slump in banking counter too played spoil sport for the Indian equity markets. Sentiments also remained dampened on selling by institutional investors on concerns that robust US jobs data due later today may give the US Federal Reserve much needed comfort to taper its bond buying program and end its easy money policy stance by raising rates sooner-than-expected. Further, investors also remained cautious ahead of RBI monetary policy meet next week.

Meanwhile, auto stocks also collapsed post July sales figures, while banking stocks too were drubbed for yet another day on report that government is mulling to divest stake in public sector banks in November this year. However, telecom stocks rang loud during the session after Telecom Regulatory Authority of India (Trai) chairman Rahul Khullar said he sees mobile call rates rising by 8-9% over the year as phone companies weed out freebies.

The NSE’s 50-share broadly followed index Nifty tumbled by over one hundred and ten points to end below the psychological 7,650 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex declined by over four hundred and ten points to finish below its psychological 25,500 mark. Broader markets too witnessed blood-bath and ended the session with a cut of around a percentage point. The market breadth remained in favor of decliners, as there were 1,106 shares on the gaining side against 1,772 shares on the losing side while 117 shares remain unchanged.

Finally, the BSE Sensex plunged by 414.13 points or 1.60%, to 25480.84, while the CNX Nifty declined by 118.70 points or 1.54%, to 7,602.60.

The BSE Sensex touched a high and a low of 25862.68 and 25459.13, respectively. The BSE Mid cap index was down by 0.80%, while Small cap index lost 0.99%.

The top gainers on the Sensex were Maruti Suzuki up by 2.48%, Bharti Airtel up by 1.87%, Hindustan Unilever up by 1.22%, ICICI Bank up by 0.23% and Hero MotoCorp up by 0.11%. On the flip side, the key losers were Hindalco Inds down by 3.71%, Gail India down by 3.07%, Tata Power down by 3.06%, Cipla down by 3.02% and NTPC down by 2.93%.

On the BSE sectoral front, Consumer Durables down by 3.27%, Oil & Gas down by 2.16%, Capital Goods down by 1.90%, Metal down by 1.90% and Power down by 1.87% were the top losers in the space, while there were no gainers.

Meanwhile, in a cause of concern for the Finance Ministry, India’s fiscal deficit crossed half the budget estimate (BE) for 2014-15 in the first three months of the financial year. Fiscal deficit at the end Q1 FY15 was pegged at 56.1% of the budget estimate of Rs 5.31 lakh crore for the full fiscal year as growth in revenue receipts slowed and interest payments rose.

Total expenditure of the government during April-June was Rs 4.13 lakh crore or 23 percent of the entire year estimates. Of the total expenditure, plan spending was Rs 1,11,806 crore and non plan spending was Rs 3,01,797 crore. Conversely, revenue collection during the reported period was Rs 1,14,427 crore or 9.6 percent of the estimate, lowered than 11.1 percent of the estimates during  2013-14. Furthermore, total receipts (revenue and non-debt capital) of the government during the three months was Rs 1,15,744 crore. Revenue deficit in the three months was recorded at Rs 2,49,358 crore which was 65.9 percent of the estimates.

The government during budget 2014-15 has set fiscal deficit target at 4.1 percent of GDP this year and decided to lower it to 3 percent of GDP by 2016-17. In FY14, India’s fiscal deficit narrowed to Rs 5,08,149 crore or 4.5 percent of GDP as compared to 4.89% of GDP in the FY13. High fiscal deficit has adverse impact on country’s economy as it leads to three macro economic problems such as a balance of payments crisis, high interest rates because of crowding out and high inflation owing to the currency depreciation.

 The CNX Nifty touched a high and low of 7,716.70 and 7,593.90 respectively.

The major gainers of the Nifty were Bank of Baroda up by 2.43%, Maruti Suzuki India up by 2.18%, DLF up by 2.14%, UltraTech Cement up by 2.11% and Bharti Airtel up by 1.74%. On the flip side, the key losers were Hindalco Industries down by 3.81%, Reliance Industries down by 3.03%, Sun Pharmaceuticals Industries down by 3.02%, Cipla down by 3.01% and Jindal Steel & Power down by 3.00%.

European markets were trading in red; UK’s FTSE 100 was down by 1.39%, Germany’s DAX was down by 2.04% and France’s CAC 40 was down by 1.45%.

The Asian markets concluded Friday’s trade in red, with Hong Kong benchmark index ending eight-day winning streak, amid a rout that saw a gauge of worldwide equities slump the most in six months. Activity in China's vast factory sector expanded at the fastest pace in 27 months in July, while industry surveys across Asia showed a pick-up in export orders that hinted at a long-awaited revival in global trade. China's official manufacturing purchasing managers' index (PMI) rose to 51.7 in July - the strongest since April 2012 and up from 51 in June. The upbeat result was echoed in the HSBC/Markit China measure of manufacturing which climbed to an 18-month peak of 51.7, from June's 50.7. South Korean Trade Balance fell to a seasonally adjusted 2.52B, from 5.50B in the preceding quarter. South Korean CPI fell to a seasonally adjusted annual rate of 1.6%, from 1.7% in the preceding month. Thai CPI fell to a seasonally adjusted annual rate of 2.16%, from 2.35% in the preceding month.