Markets continue to reel under pressure; positive start of European counter may aid

The street expects Industrial production to grow 1.8% from a year earlier in July, slower than June's 3.4% increase, while India's consumer price inflation, closely tracked by the Reserve Bank of India, is expected to edge lower to 7.80% in August from July's 7.96%. Thus, sulking in red, both Sensex and Nifty were trading below the psychologically crucial 27,000 and 8,100 levels respectively, with losses of around three tenths of a percent. However, broader indices, yet again acting contrary to the trend, were outperforming larger peers, with gains in the range of 0.85%-1.25%. However, some of bourses’ losses could be downsized given the positive start of European markets, despite negative Asian markets cues.

On the global front, European shares rose early on Thursday, with Scottish-based banks Lloyds and Royal Bank of Scotland rallying after a poll showed a majority of Scots intend to vote against independence in next week's referendum.

Closer home, with profit-booking taking a toll on Indian equity markets for yet another session, most of the sectoral indices on BSE were reeling under selling pressure, with the worst hit being the stocks belonging from Healthcare, Metal and Consumer Durable counters. On the flip side, only stocks from banking, Realty and Infrastructure counters were showing resilience, by holding their head above water. Healthcare stocks plunged was led by shares of Sun Sun Pharmaceuticals Industries, which dipped 6% on reports that the company’s manufacturing facility in Halol (Gujarat) is undergoing a surprise inspection by the US Food and Drug Administration (US FDA). Besides, shares of disinvestment candidates such as Oil and Natural Gas Corporation (ONGC), Coal India and NHPC also succumbed to selling pressure after the Union Cabinet on Wednesday cleared a dilution of the government's stake in these companies. However, fertilizer stocks were in demand and trading higher on back of heavy volumes in otherwise weak market on the bourses. In a related development for the industry, with an aim to achieve sustainable growth in food production and incorporate global best practices in fertiliser usage, the centre in planning to bring out a new fertiliser policy for the country. The overall market breadth on BSE was in the favour of advances which thumped declines in the ratio of 1186:716; while 17 shares remained unchanged.

The BSE Sensex is currently trading at 26980.82, down by 76.59 points or 0.28% after trading in a range of 26904.50 and 27150.78. 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 0.86%, while Small cap index up by 1.24%.

The gaining sectoral indices on the BSE were INFRA up by 0.62%, Realty up by 0.61%, FMCG up by 0.42%, Capital Goods up by 0.34% and Bankex up by 0.28% while, Metal down by 0.90%, Consumer Durables down by 0.52%, Oil & Gas down by 0.39%, PSU down by 0.35% and TECK down by 0.35% were the losing indices on BSE.

The top gainers on the Sensex were Hindustan Unilever up by 1.12%, SBI up by 0.98%, HDFC up by 0.80%, Hero MotoCorp up by 0.47% and Axis Bank up by 0.42%. On the flip side, Sun Pharma Inds down by 4.01%, Coal India down by 3.18%, ONGC down by 1.73%, Wipro down by 1.59% and Mahindra & Mahindra down by 1.35% were the top losers.

Meanwhile, in order to tide over the revenue shortfall, the government has approved a proposal for diluting equity stake in blue chip companies Coal India, ONGC and NHPC, which is likely to fetch around Rs 43,000 crore to exchequer.

At present, the government shareholding in the coal mining company is 89.65 percent and will disinvest 10 percent stake worth around Rs 23,000 crore. Government stake in ONGC stands at 68.94 percent and will disinvest 5 percent stake worth Rs 18,000 crore. Besides these two, 11.36 percent disinvestment in hydro power generator NHPC was also approved. The government holds 85.96 percent stake in company and expected to garner worth Rs 2,800 crore respectively. The stake sale in the three companies would be done through the Offer for Sale (OFS) process, popularly known auction route. The government has already selected merchant bankers for managing ONGC and NHPC disinvestment and is in the process for Coal India.

The disinvestment proceed will help the government to narrow fiscal deficit as well as can be used to provide much-needed push to economic growth. Furthermore, the government is likely to take advantage of robust state of domestic stock markets helped by heavy inflow of funds from the foreign institutional investors (FIIs).

Meanwhile, the government has missed its disinvestment target for past five consecutive financial years. During FY11 and FY12, the government had raised Rs 22,144 crore and Rs 13,894 crore through disinvestment, against the budgeted target of Rs 40,000 crore in each year. In FY13, it had raised Rs 23,956 crore, as against the target of Rs 30,000 crore. In the previous fiscal, the government was able to disinvest only around Rs 16,000 crore as against the set target of Rs 40,000 crore mainly on account of subdued economic and markets conditions.

The CNX Nifty is currently trading at 8078.60, down by 15.50 points or 0.19% after trading in a range of 8057.30 and 8127.95. There were 21 stocks advancing against 29 stocks declining on the index.

The top gainers on Nifty were IDFC up by 2.80%, Bank of Baroda up by 1.78%, Hindustan Unilever up by 1.24%, SBI up by 1.21% and PNB up by 1.01%. On the flip side, Sun Pharma Inds. down by 3.95%, Coal India down by 3.05%, ONGC down by 1.83%, NMDC down by 1.77% and Mahindra & Mahindra down by 1.47% were the top losers.

Asian markets were trading mixed; with FTSE Bursa Malaysia KLCI gaining by 0.05 points or 0% to 1,870.90; Straits Times rising by 6.96 points or 0.21% to 3,345.59; Jakarta Composite adding 23.32 points or 0.45% to 5,166.31 and Nikkei 225 advancing by 120.42 points or 0.76% to 15,909.20. On the flip side, Hang Seng declined by 70.33 points or 0.28% to 24,635.03; Taiwan Weighted shed 34.66 points or 0.37% to 9,322.95; KOSPI Index descended by 15.25 points or 0.74% to 2,034.16 and Shanghai Composite lost 6.13 points or 0.26% to 2,312.18.

European markets got off to a positive start; with France’s CAC gaining by 4.15 points or 0.09% to 4,454.94; UK’s FTSE 100 rising by 13.72 points or 0.2% to 6,843.83 and Germany’s DAX adding 19.04 points or 0.2% to 9,719.21.