Markets extend early losses amid selling in IT stocks

Indian equity benchmarks added losses to continue its weak trade in the afternoon session hovering near the lowest point of the day on account of selling in IT and teck stocks and taking cues from weak Asian markets. IT stocks were on selling radar as sentiments got a hit after some of the founders of IT major Infosys decided to sell shares for $1.1 billion in the company. Further, profit booking in capital goods, consumer durables and banking stocks also dragged down the domestic benchmarks. Most of the sectoral indices were trading in negative territory with IT as top losing index trading down by over 2%. Investors also seem to be cautious ahead of the major macro data of IIP, CPI and WPI later in the week. Further, 50% decline in engineering exports from India to China due to prevailing slowdown in the latter's economy added to the pessimistic sentiments. However, broader indices were outperforming the major indices as both the mid cap and small cap indices were trading in green.

ITC was trading up by around 1% higher to Rs 395. In past three trading sessions, the stock rallied 10% from Rs 363 on December 3 on media reports that the government was reconsidering a proposal to ban sale of loose cigarettes. Dolphin Offshore Enterprises has surged around 8% to Rs 210 after the company said its wholly-owned subsidiary has received an extension of contract for its accommodation barge Vikrant.

On global front, most of the Asian markets were trading in red with Jakarta Composite down 0.8% and Taiwan Weighted down 0.21%. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 8,600 and 28,500 levels respectively. The market breadth on BSE was positive, out of 2,539 stocks traded, 1,251 stocks advanced, while 1,189 stocks declined on the BSE.

The BSE Sensex is currently trading at 28372.20, down by 85.90 points or 0.30% after trading in a range of 28360.04 and 28494.85. There were 15 stocks advancing against 15 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.13%, while Small cap index up by 0.27%.

The gaining sectoral indices on the BSE were Realty up by 0.71%, PSU up by 0.42%, FMCG up by 0.31%, Metal up by 0.13% and Oil & Gas up by 0.07%. On the flip side, IT down by 2.12%, TECK down by 1.44%, Capital Goods down by 0.44%, Consumer Durables down by 0.33% and Bankex down by 0.21% were the losing indices on BSE.

The top gainers on the Sensex were Coal India up by 2.79%, Bharti Airtel up by 1.67%, Sun Pharma Inds. up by 1.50%, Tata Power up by 1.06% and Cipla up by 0.84%. On the flip side, Infosys down by 3.37%, TCS down by 1.89%, Dr. Reddys Lab down by 1.88%, Hindalco down by 1.78% and Sesa Sterlite down by 1.53% were the top losers.

Meanwhile, India’s engineering exports to China declined nearly 50% to $310 million in the month of October against $612 million in the same month of previous year due to the prevailing slowdown in China’s economy. Further, the total exports of iron and steel, which mainly moved to China, went down by 18% to $704 million in October 2014 from $858 million  Engineering exports include transport equipment, capital goods, other machinery/equipment and light engineering products like castings, forgings and fasteners. Exports of total engineering products declined by 9.36% y-o-y to $5.03 billion in October 2014.

Further, the recession in European countries has been also impacting domestic engineering overseas shipments. The consignments to UK were down by 29% to $169 million in October 2014 from $238 million a year ago. Likewise, shipments to Italy were down 22% to $127 million from $163 million and for Germany, exports of engineering items went down by over 4% to $163 million from $171 million. However, owing to better performance in the previous months, the cumulative value of engineering exports recorded a positive growth of 18.46% in the first seven months of the current fiscal over the same period last fiscal.

As engineering sector accounts for around 20% of total exports, the impact of slowdown of the Chinese economy was clearly evident on country’s total exports. India’s total export declined by 5% to $26 billion in October from $27 billion in October 2013. On the other hand, country’s imports increased by 3.62% y-o-y to $39.45 billion in the reported month. With the surge in imports and reducing overseas shipments, trade deficit also increased to $13.35 billion from $l0.59 billion.

The CNX Nifty is currently trading at 8511.25, down by 27.05 points or 0.32% after trading in a range of 8509.85 and 8546.35. There were 23 stocks advancing against 27 stocks declining on the index.

The top gainers on Nifty were Coal India up by 2.87%, DLF up by 2.04%, Bharti Airtel up by 1.86%, Zee Entertainment up by 1.74% and Sun Pharma Inds up by 1.47%. On the flip side, Infosys down by 3.46%, TCS down by 2.02%, Dr. Reddys Lab down by 1.96%, Ambuja Cement down by 1.69% and HCL Tech. down by 1.62% were the top losers.

Most of the Asian markets were trading in red, Shanghai Composite up by 64.42 points or 2.19% to 3,002.07 and Hang Seng up by 80.32 points or 0.33% to 24,082.96. While, Jakarta Composite down 41.48 points or 0.8% to 5,146.51, Taiwan Weighted down 19.28 points or 0.21% to 9,187.29, KOSPI Index down 7.67 points or 0.39% to 1,978.95, FTSE Bursa Malaysia KLCI down 7.66 points or 0.44% to 1,741.71, Nikkei 225 down 1.26 points or 0.01% to 17,919.19 and Straits Times down 0.91 points or 0.03% to 3,323.48.