Benchmarks continue sulk in red; cautious European start to add to the selling pressure

After surrendering all their gains in late morning deals, benchmark equity indices continued to sulk into negative territory, though bit of recovery came to the fore that was way little to trigger any reversal of trend. Thus, languishing at day’s low, both Sensex and Nifty were trading below psychologically crucial 27,000 and 8,100 levels respectively, with losses of around three tenths of a percent. However, broader indices continuing to perform better than their larger counterparts were trading up with gains in the range of 0.15%-0.60%.

Markets after snapping their winning streak in previous trading session, were trading downbeat for second consecutive session in absence of any buying interest on the back of somber global cues amidst prevailing caution ahead of US economic data that would provide direction to the market after the European Central Bank stunned markets by cutting interest rates and embarking on a trillion-euro asset-buying binge.

On the global front, receiving mostly negative handover from Asian counterparts, European shares got off to a cautious start 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%.

Closer home, most of the sectoral indices on BSE were trading mostly in the negative territory, however stocks from Capital Goods, Information Technology and Oil & Gas counters were the prominent gainers of the session. On the flip side, maximum beating was taken by stocks belonging from Power, followed by Auto and Banking counters. Meanwhile, metals and mining stocks witnessed some buying interest after Central Government unveiled that it will soon introduce amendments to Mines and Minerals Development and Regulation Act to enhance mining in country. Additionally, infra stocks too witnessed some action as 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 overall market breadth on BSE was in the favour of advances which thumped declines in the ratio of 1464:1271; while 103 shares remained unchanged.

The BSE Sensex is currently trading at 26981.51, down by 104.42 points or 0.39% after trading in a range of 26958.51 and 27178.80. There were 12 stocks advancing against 18 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.15%, while Small cap index up by 0.61%.

The gaining sectoral indices on the BSE were Capital Goods up by 0.27%, IT up by 0.23%, Consumer Durables up by 0.21%, Realty up by 0.19% and Oil & Gas up by 0.18% while, Power down by 0.91%, Auto down by 0.63%, INFRA down by 0.59% and Bankex down by 0.57%, FMCG down by 0.15% were the losing indices on BSE.

The top gainers on the Sensex were Bajaj Auto up by 0.98%, ONGC up by 0.89%, Larsen & Toubro up by 0.82%, GAIL India up by 0.78% and Cipla up by 0.78%. On the flip side, HDFC down by 2.40%, Coal India down by 2.21%, BHEL down by 1.83%, Tata Power down by 1.40% and Hero MotoCorp down by 1.32% were the top losers.

Meanwhile, heavy rainfall over the past week narrowed the overall monsoon deficit in the country to 14%. Bringing some relief to farmers concerned about weak rains in July and August, rainfall during the past few days also hit some rain-starved regions such as Jammu and Kashmir and Rajasthan and accelerated crop growth.

According to the Indian Meteorological Department (IMD), water levels in most reservoirs of South India have increased significantly during past week. Increase in reservoirs will boost crop production in Andhra Pradesh, Telangana where rain deficit was more than 25%. However, there is no respite for the farmers of Punjab and Haryana where rain deficit is still 59% and above. The IMD stated that country's major reservoirs were filled to 71% (110.22 billion cubic metres) of the total capacity of 155.05 billion cubic metres, down from 82% last year, but better than the 10-year average of 69%.

Around 55% of agricultural land in the country depends entirely on rain. Timely and normal monsoon is also vital for rabi season (winter crops) also as it raises the water table and moisture content in the soil. Though, agriculture sector accounts for only about 15% of the economy, monsoon has a wider impact because it affects millions of people in villages who depend upon agriculture. Further, a poor monsoon can impact India’s exports, stoke inflation particularly food inflation and lead to lower demand for products ranging from cars to consumer goods.

The CNX Nifty is currently trading at 8069.10, down by 26.85 points or 0.33% after trading in a range of 8060.95 and 8122.70. There were 18 stocks advancing against 32 stocks declining on the index.

The top gainers on Nifty were NMDC up by 4.11%, DLF up by 2.93%, Asian Paints up by 1.92%, Jindal Steel & Power up by 1.84% and ONGC up by 1.04%. On the flip side, United Spirits down by 3.23%, Coal India down by 2.52%, HDFC down by 2.38%, BHEL down by 2.00% and BPCL down by 1.68% were the top losers.

Asian markets were mostly trading lower; Hang Seng down by 29.14 points or 0.12% to 25,268.78; Taiwan Weighted down by 20.95 points or 0.22% to 9,407.94; Straits Times down by 18.16 points or 0.54% to 3,328.18; Nikkei 225 down by 7.5 points or 0.05% to 15,668.68; KOSPI Index down by 6.85 points or 0.33% to 2,049.41 and FTSE Bursa Malaysia KLCI down by 1.13 points or 0.06% to 1,868.08. On the flip side, Jakarta Composite up by 6.08 points or 0.12% to 5,211.40 and Shanghai Composite up by 19.67 points or 0.85% to 2,326.53 were the top gainers on BSE.

European markets got off to a negative start; with Germany’s DAX declining by 15.06 points or 0.15% to 9,709.20; UK’s FTSE 100 shedding 7.47 points or 0.11% to 6,870.50 and France’s CAC losing 3.74 points or 0.08% to 4,491.20.