Benchmarks magnify losses despite positive start of European equities

Benchmarks have magnified their losses in absence of any positive triggers and also ahead of expiry of monthly derivatives in the later part of the session. Trading with loss of over half a percent, both Sensex and Nifty were sulking below the psychologically crucial 26,600 and 7,960 levels respectively. Meanwhile, the losses were deeper for broader indices, which were trading lower in the range of 1.50%-2.30%.

Sentiment continued to remain down-beat right from start of trade after cancellation of coal blocks allocated to companies sparked concerns that more coal would be imported, which in turn would widen the trade and current account deficits. Further, absence of any positive trigger also is keeping market-participants of the tenterhooks. However, bourses may downsize their losses going ahead in the session on the back of positive start of European equities, which rebounded a day after tumbling on a sharp slowdown of business activity in the euro-zone amid hopes the ECB will step up its stimulus. Meanwhile, Asian pacific shares giving away earlier gains were set for mixed close as initial cheer from a rebound on Wall Street fizzled out. The US markets rebounded broadly overnight, buoyed by strong US housing data and dovish statements from a top Federal Reserve official.

Closer home, almost all the sectoral indices on BSE surrendered to the selling pressure, barring 4, which included Technology, Information Technology, Pharmaceuticals and Fast Moving Consumer Goods counters. While, IT stocks rallied after global rival Accenture said it expects better profitability this fiscal year, Healthcare stocks rebounded after previous two sessions of sharp fall post Department of Pharmaceuticals withdrew guidelines issued by it on May 29 which gave National Pharmaceutical Pricing Authority (NPPA) the powers to fix the prices of drugs that are not on the essential medicines list in response to a plea filed by an organization of drug manufacturers challenging the drug regulator’s July 10 notification that brought over 100 medicines under price control.

On the flip side, massive selling pressure was witnessed by stocks from Metal, Power and Oil & Gas counters. Power stocks tanked in trade after reports suggested that Supreme Court decision of cancelling the allocation of 214 coal blocks would cast a shadow over the Indian economy as it is bound to cripple the power sector and have a cascading effect on banks that pumped in huge amounts to finance these projects. Shares of oil and gas explorers fell after government delayed decision on gas price hike. The overall market breadth on BSE is in the favour of declines which thumped advances in the ratio of 2030:638; while 71 shares remained unchanged.

The BSE Sensex is currently trading at 26571.39, down by 173.30 points or 0.65% after trading in a range of 26568.24 and 26814.20. There were 13 stocks advancing against 17 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 1.62%, while Small cap index down by 2.31%.

The gaining sectoral indices on the BSE were TECK up by 0.92%, IT up by 0.84%, Healthcare up by 0.65% and FMCG up by 0.32% while, Metal down by 3.05%, Power down by 2.13%, Oil & Gas down by 1.76%, Realty down by 1.73% and Bankex down by 1.72% were the losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 2.58%, TCS up by 2.03%, Cipla up by 1.89%, GAIL India up by 1.70% and Dr. Reddys Lab up by 1.56%. On the flip side, Hindalco down by 9.72%, Axis Bank down by 4.16%, Tata Steel down by 3.96%, BHEL down by 3.75% and ONGC down by 3.16% were the top losers.

Meanwhile, just a day before embarking upon on the high profile US visit, Prime Minister Narendra Modi has launched the ambitious 'Make in India' campaign, wherein he rolled -out red carpet to attract industrialists and investors into the country to make India into a global manufacturing hub, create more jobs and boost the country's economy. The event is expected to witness participation of leading industrialists of the country including RIL’s chief Mukesh Ambani, Essar Group Chairman’s Shashi Ruia, Tata Grou’s chairman Cyrus Mistry; Mahindra Group CMD Anand Mahindra; Biocon CMD Kiran Mazumdar-Shaw and ITC Chairman Y C Deveshvar among others.

The government, through this campaign, plans to eliminate road-bumps for ensuring a smooth ride for investors, which would be by the way of setting up a dedicated cell to answer queries of business entities within 72 hours and also closely monitor all regulatory processes for making them simple.

Through this campaign, the government plans to chart out a new path, wherein entities are welcomed in a spirit of active cooperation. It has identified 25 key sectors in which country has the potential of becoming a world leader and brochures of these sectors will be separately released by the Prime Minister along with a general brochure. The brochures covering sectors like automobiles, chemicals, IT, pharmaceuticals, textiles, ports, aviation, leather, tourism and hospitality, wellness, railways among others will provide details of growth drivers, investment opportunities, sector specific FDI and other policies and related agencies.

Further, the campaign, launched at national as well as state level and in Missions abroad, will target top companies across sectors in identified countries, also aims to identify select domestic companies having leadership in innovation and new technology for turning them into global champions.

The CNX Nifty is currently trading at 7952.90, down by 49.50 points or 0.62% after trading in a range of 7947.90 and 8019.30. There were 18 stocks advancing against 32 stocks declining on the index.

The top gainers on Nifty were Bharti Airtel up by 2.67%, TCS up by 2.28%, GAIL India up by 1.94%, Cipla up by 1.87% and Dr. Reddys Lab up by 1.76%. On the flip side, Hindalco down by 9.64%, Jindal Steel & Power down by 8.60%, PNB down by 4.49%, Axis Bank down by 4.23% and BHEL down by 4.13% were the top losers.

Asian markets were trading mixed; with FTSE Bursa Malaysia KLCI increased 0.28 points or 0.02% to 1,840.36; Jakarta Composite increased 10.51 points or 0.2% to 5,184.52; Nikkei 225 increased 206.69 points or 1.28% to 16,374.14. On the flip side, Hang Seng decreased 154.71 points or 0.65% to 23,766.90; Taiwan Weighted decreased 86.9 points or 0.96% to 9,011.59; Straits Times decreased 3.05 points or 0.09% to 3,289.76; KOSPI Index decreased 1.53 points or 0.08% to 2,034.11 and Shanghai Composite decreased 0.03 points or 0% to 2,343.54.

European markets were trading into positive territory; with France’s CAC gaining by 3.03 points or 0.07% to 4,416.75; UK’s FTSE 100 trading higher by 9.35 points or 0.14% to 6,715.62 and Germany’s DAX advancing by 22.37 points or 0.23% to 9,684.34