Markets continue to trade in red amid weak Asian cues

Indian equities added losses to continue their weak trade in the afternoon session hovering near the lowest point of the day on account of selling in frontline blue chip counters and taking cues from weak Asian markets. Markets continued to trade in negative territory despite some positive economic and industry related announcements as sustained capital outflows by foreign investors and selling by retail investors ahead of earnings season beginning dampened investors’ sentiments. Further, while majority of the sectoral indices were trading in red, sharp selling which was witnessed in metal and PSU stocks mainly dragged the major indices down. Selling was broad based with both mid cap and small cap indices trading in negative territory.  However, some support to domestic markets came in from the gains in realty, IT and teck stocks.  In scrip specific movement, Ballarpur Industries has surged 10% to Rs 17.85 after the company said its step down subsidiary Bilt Paper BV has entered into a definitive agreement with International Finance Corp. (IFC) for the sale of new shares worth $100 million.  Apollo Tyres has rallied after the Reserve Bank of India (RBI) allowed foreign investors to buy up to 45% stake in the company.

On global front, most of the Asian markets were trading in red with Nikkei 225 down 0.73% and Taiwan Weighted down 0.6%. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 7,900 and 26,500 levels respectively. The market breadth on BSE was negative, out of 2,530 stocks traded, 1,130 stocks advanced, while 1,280 stocks declined on the BSE

The BSE Sensex is currently trading at 26438.41, down by 129.58 points or 0.49% after trading in a range of 26376.96 and 26570.38. There were 12 stocks advancing against 18 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.15%, while Small cap index down by 0.02%.

The gaining sectoral indices on the BSE were Realty up by 0.67%, IT up by 0.33%, TECK up by 0.32% and Auto up by 0.07%. On the flip side, Metal down by 1.48%, PSU down by 0.67%, INFRA down by 0.62%, Oil & Gas down by 0.61% and Bankex down by 0.50% were the losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 1.73%, Hindustan Unilever up by 0.67%, Wipro up by 0.64%, Bajaj Auto up by 0.59% and NTPC up by 0.43%. On the flip side, Hindalco down by 3.96%, HDFC down by 2.85%, Sesa Sterlite down by 2.42%, Cipla down by 2.21% and Mahindra & Mahindra down by 2.05% were the top losers.

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 is currently trading at 7898.70, down by 46.85 points or 0.59% after trading in a range of 7883.35 and 7943.05. There were 17 stocks advancing against 33 stocks declining on the index.

The top gainers on Nifty were Tata Motors up by 1.73%, Bajaj Auto up by 0.80%,  HCL Tech up by 0.75%, Power Grid Corp up by 0.66% and Hindustan Unilever up by 0.65%. On the flip side, Hindalco down by 4.25%, Cairn India down by 3.49%, Jindal Steel & Power down by 3.25%, Ultratech Cement down by 2.98% and HDFC down by 2.88% were the top losers.

Most of the Asian markets were trading in red, Jakarta Composite up by16.21 points or 0.32% to 5,016.35 and Hang Seng up by114.27 points or 0.49% to 23,429.31.  While, Nikkei 225 down 116.42 points or 0.73% to 15,774.53, Taiwan Weighted down 54.33 points or 0.6% to 9,040.81 and Straits Times down 7.1 points or 0.22% to 3,246.14