Benchmarks end lower amid weak global cues, sluggish industrial growth

Monday’s trading session turned out to be a daunting one for stock markets in India and benchmarks ended below their crucial 26,850 (Sensex) and 8050 (Nifty) levels. Sentiments remained down-beat since beginning of the trade amid weak global cues and disappointing industrial growth in July. The industrial production declined to 0.5 per cent in July compared to an upwardly revised 3.9 per cent growth in June.

Also, investors shrugged off better-than-expected wholesale price index (WPI) for the month of August. India’s main inflation gauge, based on monthly WPI, stood at 3.74% for the month of August as compared to 5.19% in the previous month and 6.99% during the corresponding month of the previous year. However, June inflation figures were revised upwards to 5.66% from 5.43% earlier. Moreover, India’s retail inflation fell to 7.8 per cent in August from 8.0% in July. Meanwhile, Ficci’s Survey indicated that India’s GDP will grow at 5.6 percent during 2014-15 and economic activity is expected to continue with this momentum in the second half of the current fiscal.

Global cues too remained sluggish with European markets made a sluggish start with CAC, DAX and FTSE all were trading lower in early deals as investors globally look to the Federal Reserve’s monetary policy announcement due this week, amid weak data out of China. The Asian markets ended in the red with some of the indices witnessing cut of over half a percent, after weak Chinese factory and retail data announced during the weekend, added to the evidence that a slowdown is deepening.

Back home, depreciation in Indian rupee too dampened the sentiments. Rupee was trading at 61.08 per dollar at the time of equity markets closing compared with its previous close of 60.65. Meanwhile, shares of metal companies edged lower on weak Chinese economic data. China’s factory output grew at the weakest pace in nearly six years in August raising fears the world's second-largest economy may be at risk of a sharp slowdown.

On the flip side, stocks related to realty and infra counters edged higher on report that Industrial and infrastructure project proposals will get security clearance within 12 weeks as the Home Ministry has streamlined the process by issuing a detailed guideline in this regard. State-owned bank shares too edged higher after Raghuram Rajan’s comment on appointment process in state-owned banks. Additionally, Tyre makers extended recent rally with shares of MRF, Goodyear India and TVS Srichakra scaling record high levels during the session.

The NSE’s 50-share broadly followed index Nifty declined by around sixty points to end below the psychological 8,050 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex dropped by over two hundred and forty points to finish below the psychological 26,850 mark. Broader markets, however, outperformed benchmarks and ended the session with a gain around half a percent. The market breadth remained in favour of advances, as there were 2025 shares on the gaining side against 1041 shares on the losing side while 100 shares remain unchanged.

Finally, the BSE Sensex plunged by 244.48 points or 0.90%, to 26816.56, while the CNX Nifty declined by 63.50 points or 0.78% to 8,042.00.

The BSE Sensex touched a high and a low of 26998.07 and 26790.91, respectively. The BSE Mid cap index was up by 0.18%, while the Small cap index gained 0.71%.

The top gainers on the Sensex were Cipla up by 2.15%, Hero MotoCorp up by 1.56%, Dr. Reddys Lab up by 0.53%, HDFC Bank up by 0.51% and Infosys up by 0.06%. On the flip side, Hindalco down by 3.08%, Tata Steel down by 2.06%, Sesa Sterlite down by 1.86%, ONGC down by 1.83% and Coal India down by 1.66% were the top losers in the index.

On the BSE Sectoral front Healthcare up by 0.41%, Realty up by 0.18% and Infrastructure up by 0.18% were the only gainers, while Metal down by 1.69%, Oil & Gas down by 0.96%, IT down by 0.96%, Capital Goods down by 0.89% and FMCG down by 0.76% were the top losers in the space.

Meanwhile, Auto industry that has recently started witnessing some signs of recovery may come to a rude shock, as the Commerce Ministry has said that it cannot continue protecting the industry while duty barriers are coming down all over the world.

Commerce Secretary Rajeev Kher has said that India is protecting the domestic auto industry from overseas competition while signing free trade agreements with different nations and groups, but for negotiating trade agreements one has to keep in mind the overall interest of different sectors. He further stated that the government has consciously nurtured the industry by creating a tariff protection but the time has come when the automotive plan needs to look to what extent we want to continue with that and how we want to bring it down to some kind of global par.

Though, at the 54th Society of Indian Automobile Manufacturers (SIAM) Annual Convention, where Kher put his views, the minister of Heavy Industries and Public Enterprises, Anant Gangaram Geete, assuring the automobile industry of complete support, promised that it will be the golden age of the Indian automobile industry for the next five years. The minister extended unconditional support to the industry in every way possible and support Prime Minister Narendra Modi’s vision of making India a hub for manufacturing for industry.

Meanwhile, the Indian passenger car sales in August 2014 grew 15.6 per cent signalling a slow growth. Passenger cars saw a growth of 5.24% for April-August 2014, while Utility Vehicle segment saw a growth of 9.46%. Though, the CV segment remained in negative territory with de-growth of 13.66% from April-August 2014.

The CNX Nifty touched a high and low of 8,077.30 and 8,030.00 respectively.

The top gainers of the Nifty were Lupin up by 4.34%, United Spirits up by 2.69%, Cipla up by 2.33%, PNB up by 1.31% and Hero MotoCorp up by 1.18%. On the other hand, Jindal Steel & Power down by 4.98%, Hindalco Industries down by 3.20%, Ambuja Cements down by 2.09%, Kotak Mahindra Bank down by 2.08% and UltraTech Cement down by 2.06% were the top losers.

Most of European markets were trading in red, France's CAC 40 was down by 0.25% and United Kingdom's FTSE 100 was down by 0.24 %, while Germany’s DAX was up by 0.08%.

Asian markets ended mostly in red on Monday, after the weakest growth in Chinese industrial output since 2008 added to evidence the world’s second-biggest economy is losing momentum. China’s factory output grew at the weakest pace in nearly six years in August while growth in other key sectors also cooled raising fears that world’s second-largest economy may be at risk of a sharp slowdown unless Beijing takes fresh stimulus measures. The output data, combined with weaker readings in retail sales, investment and imports, pointed to a further loss of momentum as the cooling housing market increasingly drags on other sectors from cement to steel and saps consumer confidence. Industrial output rose 6.9% in August from a year earlier - the lowest since 2008 when the economy was buffeted by the global financial crisis - compared with expectations for 8.8% and slowing sharply from 9.0% in July. Chinese Retail Sales fell to an annual rate of 11.9%, from 12.2% in the preceding month.

Singaporean Unemployment Rate remained unchanged at 2.0% compared to the preceding quarter while Singaporean Retail Sales rose to a seasonally adjusted 5.5%, from 0.4% in the preceding month. Singapore home sales declined to the lowest level this year in August as developers offered fewer projects amid cooling demand from long-standing property curbs. Developers sold 432 units last month compared with a revised 509 units in July. That’s the lowest since December when 259 units were sold.