Benchmarks witness blood bath on feeble global cues

Pressurized by feeble global cues, Indian barometer gauges witnessed blood bath on Tuesday with both the major indices losing over a percentage point and ending below their crucial 7,900 (Nifty) and 26,300 (Sensex) levels. Investors remained on sidelines ahead of the second quarter earnings with Infosys to kick-start the September quarter earnings season on Friday. Selling was both brutal and wide-based as none of sectoral indices on BSE were spared. Counters, which featured in the list of worst performers, include metal, capital goods, consumer durables and realty.

Market-participants failed to draw any sense of relief from better-than-expected Service PMI data. Widely-tracked HSBC purchasing managers’ index (PMI) rose to 51.6 points in September against 50.6 in August. Investors also shrugged off report suggesting that CII Business Confidence Index (CII-BCI) for July-September quarter FY15 shot up to 57.4, up from 53.7 in April-June quarter and 49.9 in Jan-March quarter this year. Meanwhile, World Bank has said that Indian economy, which accounts for 80% of South Asia’s output, is set to grow by 6.4% in 2015-16 as against 5.6% in 2014-15.

Selling got intensified as European markets made an awful start with CAC, DAX and FTSE were trading with a cut of over half a percent after German industrial orders saw their biggest monthly drop since the height of the global financial crisis in 2009, its industrial output figures for August plunged by 4.0 percent. In Asia pacific region, Japanese stocks regained the lost ground with Bank of Japan’s Chief allaying fears about the negative impacts of the weak Yen, though caution among investors regarding bank’s policy decision later in the day kept Nikkei suppressed.

Back home, sentiments remained dampened on report that foreign portfolio investors (FPIs) sold shares worth a net Rs 63.24 crore on October 1, 2014. Meanwhile, selling in metal counter too dampened the sentiments amid growth concerns in China, the world’s largest consumer of metals. On the flip side, shares of tyre manufacturers rallied in otherwise subdued market on hopes of higher margins due to falling rubber prices. Prices of natural rubber, the most important raw material for the industry, have dropped to multi-year low in the international market on account of poor demand from countries like China and oversupply of the commodity.

The NSE’s 50-share broadly followed index Nifty tumbled by over ninety points to end below the psychological 7,900 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex declined by around three hundred points to finish below its psychological 26,300 mark. Broader markets too witnessed blood-bath and ended the session with a cut of around a percent. The market breadth remained in favor of decliners, as there were 1,111 shares on the gaining side against 1,767 shares on the losing side while 113 shares remain unchanged.

Finally, the BSE Sensex plunged by 296.02 points or 1.11%, to 26271.97, while the CNX Nifty dropped by 93.15 points or 1.17% to 7,852.40.

The BSE Sensex touched a high and a low of 26570.38 and 26250.24, respectively. The BSE Mid cap index was down by 0.90%, while the Small cap index was down by 0.79%.

The top gainers on the Sensex were NTPC up by 1.19%, GAIL India up by 1.09%, Tata Motors up by 0.43%, Wipro up by 0.37% and Tata Power up by 0.25%. On the flip side, Hindalco down by 4.35%, Sesa Sterlite down by 4.32%, Cipla down by 3.67%, Dr. Reddys Lab down by 3.18% and HDFC down by 3.11% were the top losers in the index.

On the BSE Sectoral front Metal down by 2.65%, Healthcare down by 1.85%, Capital Goods down by 1.78%, Consumer Durables down by 1.72% and Realty down by 1.27% were the top losers, while there were no gainers in the space.

Meanwhile, the World Steel Association (WSA) has projected India’s steel demand growth at 3.4% to 76.2 million tonnes in 2014. In its short-range demand outlook, the WSA has stated that India’s outlook is improving, following the election of a new government which is promising pro-business reforms.

The association further noted that structural reforms and improving confidence will push steel demand growth for the next year even higher at 6%, a significant rise as compared to 1.8% during 2013. However, elevated inflation and fiscal consolidation remain key downside risks to the outlook, it added.

Over the past couple of years, Indian steel industry is struggling with slowdown due to the weak steel demand. India’s finished steel consumption grew at a four-year low rate of 0.6% to 73.93 million tonnes in FY14 mainly impacted by a prevailing economic slowdown and high interest rates. During the April-August period of 2014-15, India's steel consumption grew by just 0.3% to 31.17 million tonnes (MT).  Construction sector accounts for around 60% of the country's total steel consumption, while automobile sector consumes 15%. Both sectors have been plagued by a slowdown in the economy. Along with weak demand, high input cost due to increased prices of raw material, such as iron ore has also become a main concern for domestic steel players, impacting their margins.

On global front, the WSA forecasted that global apparent steel demand growth will decline to 2% in the current year from 3.8% growth recorded last year mainly due to slowdown in Chinese demand. The growth rate for next year would remain static at 2% in 2015 to reach at 1,594 MT. The CNX Nifty touched a high and low of 7,943.05 and 7,842.70 respectively.

The top gainers of the Nifty were NTPC up by 1.62%, GAIL up by 1.16%, Power Grid Corporation of India up by 1.07%, Tata Power Company up by 0.93% and Wipro up by 0.64%. On the other hand, DLF down by 5.68%, NMDC down by 5.57%, Jindal Steel & Power down by 4.92%, Hindalco Industries down by 4.90 % and Sesa Sterlite down by 4.49% were the top losers.

European markets were trading in red, France’s CAC 40 was down by 1.06%, United Kingdom’s FTSE 100 was down by 0.61% and Germany’s DAX was down by 0.79%.

Asian markets ended mostly in red on Tuesday, while Hong Kong market closed in green after agreement on formal talks between protesters and Hong Kong officials boosted shares in the city. The Bank of Japan maintained its record stimulus as the yen traded near a six-year low and economists pushed back forecasts for further monetary easing. The central bank kept its pledge to increase the monetary base at an annual pace of 60 trillion yen to 70 trillion yen ($643 billion). The central bank projects prices to rise in the midterm and some BOJ board members believe it wouldn’t be appropriate to trigger a more rapid weakening of the currency with more stimulus now. Japan’s index of leading economic indicators rose to a seasonally adjusted 104.0, from 105.4 in the preceding month.

Sales at major Hong Kong retailer chains have fallen as much as 50 percent during the bulk of the Chinese National Day holidays after pro-democracy protests disrupted the shopping season. The Hong Kong Retail Management Association stated that sales dropped at least 15 percent during the first five days of the holidays known as Golden Week, versus a year earlier. Taiwanese Trade Balance fell to a seasonally adjusted annual rate of 3.50B, from 4.11B in the preceding month while Taiwanese CPI fell to a seasonally adjusted annual rate of 0.72%, from 2.07% in the preceding quarter. Malaysian Trade Balance rose to 3.86B, from 3.60B in the preceding month.