Consolidation continues on D-Street for second day in a row

Extending their consolidation mood for second day in a row, Indian equity benchmarks ended the Friday’s session slightly in the red on the back of feeble global cues. It turned out to be a choppy day of trade for the domestic markets, where key indices got off to a positive start, but surrendered all their gains in late morning deals to languish into the negative terrain thereafter. Though, some amount of recovery was witnessed in last leg of trade but it was not enough to pull benchmarks into positive trajectory. Meanwhile, investors remained on sidelines ahead of Consumer Price Index (CPI) and Index of Industrial Production (IIP) data scheduled to be released next week.

Losses remained capped on report that heavy showers across north and northwest India, narrowed the overall monsoon deficit in the country to 14% and has accelerated crop growth. Some support also came on report that the government may allow EPFO to invest in the stock markets, potentially making this the biggest source of domestic institutional investment after LIC. Meanwhile, foreign portfolio investors (FPIs) bought shares worth a net Rs 1697.74 crore on September 4, 2014, as per provisional data from the stock exchanges.

Sluggish opening in European counterparts too dampened the sentiments with CAC, DAX and FTSE were trading lower in early deals ahead of U.S. monthly payrolls data, seeking insight on the outlook for U.S. interest rates. The U.S. Labor Department is expected to report that non-farm payrolls rose to 225,000 in August, after rising 209,000 in July. The unemployment rate is expected to slip to 6.1% from 6.2%. Asian markets ended mostly in the red following the European Central Bank’s surprise rate cut.

Back home, depreciation in Indian rupee too dampened the sentiments after the US dollar firmed up against other Asian currencies. The rupee was trading at Rs 60.44 at the time of equity markets closing as compared to the previous close of Rs 60.35. Meanwhile, power sector witnessed selling despite report that Power traded at the spot market increased last month to 2.5 billion units (BUs) due to high demand amidst weak monsoon and fuel shortages.

On the flip side, metals and mining stocks remained on buyers’ radar, as the Central Government will soon introduce amendments to Mines and Minerals Development and Regulation Act to enhance mining in country. Additionally, select stocks from Infrastructure space edged higher after the Minister of Urban Development M Venkaiah Naidu has said that the guidelines for the Government's flagship scheme ‘100 smart cities’ are in advanced stage of finalization.

The NSE’s 50-share broadly followed index Nifty declined by around ten points to end below the psychological 8,100 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex dropped by around sixty points to finish below the psychological 27,100 mark. Broader markets, however, traded with traction and ended the session with a gain of around half a percent. The market breadth remained in favour of advances, as there were 1753 shares on the gaining side against 1247 shares on the losing side while 87 shares remain unchanged.

Finally, the BSE Sensex declined by 59.23 points or 0.22%, to 27026.70, while the CNX Nifty lost 9.10 points or 0.11% to 8,086.85.

The BSE Sensex touched a high and a low of 27178.80 and 26920.56, respectively. The BSE Mid cap index was up by 0.56%, while the Small cap index was gained 1.25%.

The top gainers on the Sensex were Bajaj Auto up by 1.46%, Larsen & Toubro up by 1.27%, ONGC up by 1.12%, SBI up by 1.10% and Cipla up by 1.00%. On the flip side, Hero MotoCorp down by 2.16%, HDFC down by 2.10%, Coal India down by 1.80%, BHEL down by 1.50% and ICICI Bank down by 1.46% were the top losers in the index.

On the BSE Sectoral front Realty up by 1.15%, Capital Goods up by 0.86%, Metal up by 0.69%, IT up by 0.51% and PSU up by 0.45% were the top gainers, while Auto down by 0.65%, FMCG down by 0.32% and Bankex down by 0.30% were the only losers in the space.

Meanwhile, in a move to avoid any shutdown of coal based power plants in the country, Coal India (CIL) has asked its subsidiaries to rush additional stocks to feed the power utilities reeling under acute fuel crunch. Coal is dominant fuel used for power production in the country and acute coal shortage in the country has become primary reason for power deficit in the country as coal-fired plants account for around 59% of India's total installed electricity capacity. 

As per Central Electricity Authority (CEA), 29 out of 100 thermal power plants across the country as on September 1 have been left with coal stock of less than four days. Coal India has about over 30 million tonnes (MT) of stocks lying at different places and is using rail transport mode to supply coal to power companies on priority basis. Coal India has also urged the power units to use trucks to transport coal from remote mines.

Meanwhile, the government is also taking measures to enhance the domestic coal production and has recently asked coal India to prepare an action plan soon to liquidate 39 MT of stock. Coal India (CIL), the only producer of coal in the country, is struggling to meet domestic coal requirements amid concerns like shutdown of mining activities in Talcher Coalfields in Odisha. CIL production fell 4.21 percent short of its production target to 462.53 MT in FY14. The government has set coal production target at 507 MT for CIL for FY15.

The CNX Nifty touched a high and low of 8,122.70 and 8,049.85 respectively.

The top gainers of the Nifty were NMDC up by 4.70%, DLF up by 4.48%, Asian Paints up by 2.32%, Kotak Mahindra Bank up by 2.19% and Jindal Steel & Power up by 2.12%. On the other hand, United Spirits down by 3.86%, Coal India down by 2.48%, Hero MotoCorp down by 2.43%, HDFC down by 2.09% and BHEL down by 2.00% were the top losers.

European markets were trading in red, France's CAC 40 was down by 0.50%, Germany’s DAX was down by 0.26% and United Kingdom's FTSE 100 was down by 0.57%.

Asian markets ended mostly in red on Friday, with the regional benchmark indices paring its weekly advance. China’s stocks rose for a sixth day, capping the benchmark index’s biggest weekly gain in 19 months, amid speculation that that government is accelerating measures to support the economy and reverse a four-year slump in equities. Japan’s indices fell, reversing earlier gains, as investors awaited the release of US monthly employment data. Prime Minister Shinzo Abe’s administration gave its clearest signal yet of concern about damage to the economy from April sales-tax increase, with the finance minister saying that a back-up plan for stimulus will be prepared. Indonesia’s foreign exchange reserves rose to $111.2 billion by the end of August from $110.5 billion the previous month, fueled by strong oil and gas export revenue. This is the highest level of Indonesia’s foreign exchange reserves since December 2012. South Korean GDP rose to a seasonally adjusted 0.5%.