Benchmarks end lower for second consecutive day on weak global cues

Extending their previous session's southward journey, Indian equity benchmarks ended volatile day of trade in red terrain on Thursday with frontline gauges declining below their crucial 25,600 (Sensex) and 7,650 (Nifty) levels on the back of selling by funds and retail investors in the absence of any positive triggers. Sentiments mainly got dampened after Geo-political tensions aggravated after Russian President Vladimir Putin issued a decree banning the imports of agricultural products from nations that have imposed sanctions on Russia over Moscow’s involvement in the Ukraine conflict.

Immense volatility characterized trading whereby benchmark equity indices kept altering between green and red terrain throughout the session. Nevertheless, broader indices suffered brutal selling pressure, ending with losses of over half a percent. In the extremely choppy session of trade, selling which came during late hours of trade mainly led to second consecutive down-session of performance, otherwise recovery which crept in the second half of trading session hinted of a positive session of trade.

Global cues too remained sluggish as European markets made a negative start with CAC, DAX and FTSE were trading in the red in early deals ahead of key policy decisions from the European Central Bank and the Bank of England. Asian markets too ended in the red, led by Japanese market which ended lower after the yen gained 0.5 percent against the dollar.

Back home, selling in software and technology counters too dampened the sentiments. Stocks like, Infosys, Wipro, TCS and HCL Technologies edged lower, as the global technology major Cognizant Technology Solutions, despite posting June quarter earnings in line with expectations, scaled down its annual revenue growth estimate to be at least 14 per cent, against the earlier estimate of 16.5 per cent.

On the flip side, stocks of companies associated with the railways rallied after the Union Cabinet on Wednesday cleared the proposal to allow 100% foreign direct investment (FDI) in railway infrastructure. Additionally, shares of defence equipment makers remained on buyers’ radar after the Government increased the FDI investment limit in the sector to 49 per cent.

The NSE’s 50-share broadly followed index Nifty tumbled by over twenty points to end below the psychological 7,650 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex declined by over seventy points to finish below its psychological 25,600 mark. Broader markets too witnessed selling pressure and ended the session with a cut of over half a percent. The market breadth remained in favor of decliners, as there were 1,304 shares on the gaining side against 1,631 shares on the losing side while 117 shares remain unchanged.

Finally, the BSE Sensex declined by 76.26 points or 0.30%, to 25589.01, while the CNX Nifty lost 22.80 points or 0.30%, to 7,649.25.

The BSE Sensex touched a high and a low of 25778.05 and 25526.05, respectively. The BSE Mid cap index was down by 0.55%, while Small cap index lost 0.53%.

The top gainers on the Sensex were Tata Steel up by 0.96%, ONGC up by 0.88%, Mahindra & Mahindra up by 0.81%, Coal India up by 0.71% and SBI up by 0.43%. On the flip side, the key losers were Infosys down by 1.68%, TCS down by 1.56%, Hindalco Inds down by 1.25%, SSLT down by 1.18% and Tata Motors down by 1.16%.

On the BSE sectoral front, Consumer Durables up by 0.75%, Oil & Gas up by 0.46% and PSU up by 0.27% were the only gainers, while IT down by 1.27%, Teck down by 1.14%, Infrastructure down by 0.55%, Realty down by 0.34% and Power down by 0.31% were the top losers in the space.

Meanwhile, Power and coal minister Piyush Goyal has asserted that in order to help raise electricity generation in the country, Coal India (CIL) will reduce the volume of coal offered through e-auctions by almost 50%.

Coal shortage in the country has become a concern for Indian power sector as coal-fired plants account for 59% of India's installed electricity capacity. Further, power companies need long-term supply assurances from coal producers, thus e-auctions do not fit to their plans. Further, the Minister added that the government is formulating plan for rationalising coal linkages in order to improve efficiency. Currently, coal linkages in the country are completely irrational as fuel is being transported from a far-off place to power plants, which already has nearby coal sources.

Piyush Goyal further said that government is making all efforts to increase coal production in the country and presently a study is being carried out on around 200 mines and a report on the same would be ready by Aug 31. Goyal said that the government is mulling a more robust financial restructuring plan to improve the financial health of power distribution companies.

CIL is the only producer of coal in the country and is struggling to meet domestic coal requirements. CIL production fell 4.21 percent short of its production target to 462.53 million tonnes in FY14 amid concerns like shutdown of mining activities in Talcher Coalfields in Odisha. The government has set coal production target at 507 million tonnes for CIL for FY15. The CNX Nifty touched a high and low of 7,708.95 and 7,630.40 respectively.

The major gainers of the Nifty were ACC up by 2.97%, Jindal Steel & Power up by 2.82%, Tata Steel up by 1.11%, Kotak Mahindra Bank up by 0.91% and BHEL up by 0.89%. On the flip side, the key losers were PNB down by 2.62%, Infosys down by 2.12%, HCL Technologies down by 1.82%, Bank of Baroda down by 1.64% and SSLT down by 1.56%.

European markets were trading in red; UK’s FTSE 100 was down by 0.17%, Germany’s DAX was down by 0.02% and France’s CAC 40 was down by 0.40%.

Asian equity indices ended mostly in red on Thursday, with the regional benchmark index heading for a three-week low, as tensions mounted over Ukraine. China’s stocks fell the most in six weeks, led by financial and energy companies, amid concern recent gains were excessive relative to growth prospects. China will release its July trade data tomorrow, with export growth forecast to have decelerated to 7% as imports expanded 2.6%, down from 5.5% in June, according to a survey. The statistics bureau will release inflation figures on August 9, followed by industrial production, fixed-asset investment and retail sales on August 13. Taiwanese Trade Balance rose to a seasonally adjusted annual rate of 2.61B, from 1.89B in the preceding month.

Malaysian property companies are grappling with higher costs in an industry already reeling from central bank curbs on lending last year and the first interest-rate increase in more than three years in July. Property transactions in 2013 sank the most since the aftermath of the 1997 Asian financial crisis, while home prices in the first quarter rose at the slowest pace since 2010.