Benchmarks end at one-month low on September F&O expiry

Indian equity markets truly depicted the choppiness of F&O expiry session on Thursday and after a cautious start markets extended their southward journey to close at one-month low with a cut of over a percentage point. Final hour of trade proved to be the curse for the markets and bourses settled below their crucial 26,500 (Sensex) and 7,950 (Nifty) bastions. For the September series, Nifty concluded with loss of over half a percent, while Sensex ended with cut of around 0.30%.

After trading in tight band for most part of the day’s trade, domestic gauges crashed like house of card in the last leg of trade as investors offloaded their positions an hour before the end of F&O contract expiry day. Somberness continued to persist after Supreme Court’s ruling on Wednesday that scrapped 214 of the coal blocks allocated between 1993 and 2010. Not only the metal and power stocks but the banking sector stocks, which have lent for the coal blocks too remained under pressure. Moreover, investors remained sidelines ahead of Reserve Bank of India’s (RBI) policy review on September 30, 2014. Caution set in after reports suggested that RBI’s governor, Raghuram Rajan underscored that the back of inflation needs to be broken since it remains persistently high and the Apex Bank would only be in comfortable position once the inflation is contained. 

On the global front, European markets witnessed traction in early trade on Thursday, extending the previous session’s rebound as a further drop in the euro fuelled expectations of a boost to the region's corporate earnings. Asian markets, giving away earlier gains, ended mixed as initial cheer from a rebound on Wall Street fizzled out.

Back home, sentiments remained down-beat on the back of depreciation in Indian rupee against dollar. The rupee was trading at 61.30 at the time of equity markets closing versus its previous close of 60.96. Sentiments also remained dampened on report that foreign portfolio investors were net sellers to the tune of Rs 794 crore in the cash market on September 24, 2014, as per provisional stock exchange data. Meanwhile, slump in Oil & Gas counter too played spoil sport for the Indian equity markets as Cabinet Committee on Economic Affairs deferred its decision on revising gas prices to November 15. Additionally, banking shares also sulked for second consecutive session on concerns of asset quality due to their exposure to coal mines.

NSE’s 50-share broadly followed index, Nifty declined by over ninety points to end below the psychological 7,950 support level, while Bombay Stock Exchange’s Sensitive Index - Sensex tumbled by over two hundred and seventy points to end below its psychological 26,500 mark. Broader markets too witnessed selling during the trade and ended the session with a cut of over two percent. The market breadth remained in favour of decliners, as there were 681 shares on the gaining side against 2280 shares on the losing side while 89 shares remain unchanged.

Finally, the BSE Sensex plunged by 276.33 points or 1.03%, to 26468.36, while the CNX Nifty dropped by 90.55 points or 1.13% to 7,911.85.

The BSE Sensex touched a high and a low of 26814.20 and 26349.55, respectively. The BSE Mid cap index was down by 2.40%, while the Small cap index was down by 3.21%.

The top gainers on the Sensex were Dr. Reddys Lab up by 2.52%, TCS up by 2.43%, GAIL India up by 2.22%, Cipla up by 1.33% and Infosys up by 1.21%. On the flip side, Axis Bank down by 4.64%, SBI down by 4.38%, Hindalco down by 4.32%, BHEL down by 4.10% and Reliance Industries down by 3.68% were the top losers in the index.

On the BSE Sectoral front IT up by 1.12%, TECK up by 0.94% and Healthcare up by 0.15% were the only gainers, while Realty down by 3.21%, Oil & Gas down by 3.08%, Metal down by 3.00%, PSU down by 3.00% and Power down by 2.80% were the top losers in the space.

Meanwhile, amid the uncertainty of government increasing the gas prices, the domestic natural gas production has fallen for yet another month in August by 8.3 per cent, after falling 9% in July. During the month, natural gas production was 2.729 billion cubic meters against 2.977 billion cubic meters in the same month last year. The natural gas output has declined 5.8 per cent to 14.076 billion cubic meters in April-August FY2015.

The decline in gas production was primarily due to lower production from onshore fields as production from offshore fields grew marginally. India, the fourth largest energy consumer globally, recorded the largest volumetric decline in natural gas production by a massive 16.3 per cent to 33.7 billion cubic meters from 40.3 billion cubic meters in the previous year.

Crude oil production too fell in August by 4.8 per cent to 3.024 million tonnes against 3.179 mt in the same month last year. Falling domestic production has led to lower refinery throughput. Refinery throughput was 4.3 per cent lower in August at 18.550 mt compared to 19.387 mt in the same month last year. This in turn affected the total production of petroleum products from refineries which fell 3.9 per cent to 18.327 mt compared to 19.084 mt in same period last year.

The natural gas output of ONGC fell by 9 per cent to 1.763 billion cubic meters, while that of Oil India increased 4 per cent to 0.234 billion cubic meters in August 2014. The natural gas output of private/JV companies declined by 10.1 per cent to 0.732 billion cubic meters in August 2014. Last month ONGC’s natural gas production fell nearly 9 per cent, mainly because of the GAIL pipeline blast in Andhra Pradesh.

The CNX Nifty touched a high and low of 8,019.30 and 7,877.35 respectively.

The top gainers of the Nifty were GAIL up by 3.24%, TCS up by 2.72%, Dr. Reddy's Laboratories up by 2.37%, Zee Entertainment Enterprises up by 1.73% and Infosys up by 1.65%.

On the other hand, Jindal Steel & Power down by 7.55%, PNB down by 5.89%, NMDC down by 4.59%, Hindalco Industries down by 4.20% and Axis Bank down by 4.18% were the top losers.  Most of European markets were trading in green, France’s CAC 40 was up by 0.25% and Germany’s DAX was up by 0.31%, while United Kingdom’s FTSE 100 was down by 0.27%.

Asian markets ended mixed on Thursday, with Nikkei 225 closing at the highest in more than six years. Corporate governance in Singapore deteriorated in the past two years amid slowing reforms on the subject, dipping below the perceived strength of Hong Kong for the first time since 2007. According to a survey, Hong Kong scored the highest in Asia Pacific this year with 65, followed by Singapore’s 64, though both were tied for first in the rankings because of the minimal difference in the results. Japan passed Thailand for third, while the Philippines and Indonesia ranked last. The Asian Development Bank trimmed its growth forecast on Indonesia’s economy to 5.3% from 5.7% previously, citing weak commodity prices and the government’s policy to stabilize the economy. The Manila-based institution also revised down its growth forecast on gross domestic product for next year to 5.8% from 6%. The government set a target of 5.4% growth for this year and 5.8% for 2015. Bambang Brodjonegoro, Vice-minister of Finance stated that annual inflation in Indonesia is expected to be under 5% in September and as little as 0.2% on a month-on-month basis. The bureau of statistics will release September inflation and trade data on October 1. Japan’s corporate services price index (CSPI) rose to a seasonally adjusted annual rate of 3.5%, from 3.4% in the preceding month whose figure was revised down from 3.7%.