Benchmarks extend losing streak for fifth straight session

Extending their losing streak to fifth straight day, Indian equity benchmarks ended the Thursday’s session at two-week lows, as Greece concerns hit global markets. Key gauges, after trading in tight band for most part of the session, witnessed intense volatility in late trade where indices slipped into the red terrain after hitting their crucial 29,200 (Sensex) and 8,800 (Nifty) levels as traders squared off positions by close of trade.

Sentiments remained dampened after the Minister of State for Finance, Jayant Sinha, expressed concern about the rupee’s appreciation against all major currencies, except the US dollar. Moreover, investors remain concerned with RBI Governor Raghuram Rajan’s statement that inflation is still a concern for the central bank and the monetary policy continues being “conventional”. He also clarified that the mid-policy action was also to assuage the concerns of some people, who were calling RBI as “tardy” in its policy formulating.

Selling got intensified after European markets made a negative start after the European Central Bank (ECB) abruptly cancelled its acceptance of Greek bonds in return for funding, shifting the burden onto the country’s central bank. Asian markets ended mostly in the red with Shanghai and Hong Kong reversing early gains despite China cutting the amount of funds banks must hold in reserve.

Back home, sentiments remained down-beat on the back of depreciation in Indian rupee against dollar. The rupee was trading at 61.81 at the time of equity markets closing versus its previous close of 61.75. Meanwhile, foreign institutional investors continue to remain net sellers to the tune of Rs 83.80 crore on February 4, 2015, as per provisional stock exchange data.

Meanwhile, shares of public sector banks declined after Allahabad Bank and Indian Overseas Bank (IOB) reported disappointing set of Q3 numbers. Allahabad Bank registered a fall of 49.56% in its net profit at Rs 164.11 crore for the quarter under review as compared to Rs 325.36 crore for the same quarter in the previous year, while IOB reported a net loss of Rs 516.03 crore for the quarter under review as compared to a net profit of Rs 75.07 crore for the same quarter in the previous year. Additionally, shares of companies engaged in oil exploration & production (E&P) declined as crude oil prices declined sharply on February 4, 2015. On the flip side, shares of software and technology edged higher tracking better-than-expected numbers in the fourth quarter as well as the accounting year ended December 31 by IT Services Company Cognizant posted on Wednesday. It gave a robust growth forecast for the next year.

NSE’s 50-share broadly followed index, Nifty declined by over ten points but managed to hold its psychological 8,700 support level, while Bombay Stock Exchange’s Sensitive Index - Sensex dropped by over thirty points to end below its psychological 28,900 mark. Broader markets struggled to get any traction during the trade and ended the session with a cut of over a percentage points. The market breadth remained in favour of decliners, as there were 1,024 shares on the gaining side against 1,873 shares on the losing side while 119 shares remain unchanged.

Finally, the BSE Sensex declined by 32.14 points or 0.11% to 28850.97, while the CNX Nifty dropped 12.00 points or 0.14% to 8711.70.

The BSE Sensex touched a high and a low of 29277.83 and 28753.29, respectively. The BSE Mid cap index was down by 1.28%, while Small cap index ended lower by 1.31%.

The top gainers on the Sensex were Wipro up by 3.18%, Infosys up by 2.41%, TCS up by 1.51%, HDFC up by 1.28% and Axis Bank up by 1.28%. On the flip side, Tata Power down by 7.48%, Sesa Sterlite down by 4.06%, ONGC down by 3.38%, Hindalco down by 2.80% and BHEL down by 2.67% were the top losers.

On the BSE Sectoral front IT up by 2.09%, TECK up by 1.34% and FMCG up by 0.59% were the gainers , while Power down by 2.80%, Realty down by 2.74%, Consumer Durables down by 2.25%, Infrastructure down by 2.18% and Metal down by 1.90% were the top losing indices on BSE.

Meanwhile, striking a hawkish tone, Reserve Bank of India’s governor, Raghuram Rajan underscored that India’s central bank has still long way to go in fighting inflation and that the bank had a credibility to control inflation if it picks up.

The governor further appeared shaky on the aspect of winning over inflation and highlighted that the country in true sense would win the war over reining inflation, if it could survive upon the supply shock in the future, if they wouldn’t increase inflation expectation.

Rajan`s words of caution come a few days after the RBI held interest rates steady in its latest policy review after a surprise rate cut in mid-January. Further, the governor also stressed on the need for the country to accelerate growth, citing that India should not settle for 'anything less than double-digit growth' in the medium term.

Lastly, he emphasized that India was importing 'disinflationary conditions' from the rest of the world, helping contain domestic inflation, but he warned that countries were required to be mindful of 'an exchange rate that was too strong and not competitive.

The CNX Nifty touched a high and low of 8838.45 and 8683.65 respectively.

The top gainers on Nifty were BPCL up by 4.02%, HCL Tech up by 3.80%, Wipro up by 3.08%, Infosys up by 2.38% and TCS up by 1.52%. On the flip side, Tata Power down by 7.55%, Jindal Steel & Power down by 4.88%, Sesa Sterlite down by 4.06%, Bank Of Baroda down by 3.98% and ONGC down by 3.23% were the top losers.

European Markets were trading in the red; Germany's DAX was down by 0.20%, UK's FTSE 100 was down by 0.04% and France's CAC was down by 0.38%.

The Asian equity benchmarks ended mostly in red on Thursday, on overnight news that European Central Bank has decided to suspend the collateral waiver facility for Greek banks dampening investor sentiment. However, China’s central bank cut the amount of cash that banks must hold as reserves, the first industry-wide cut in more than two and half years, as it increased efforts to shore up flagging growth in the world’s second-largest economy. The move, which came less than three months after China also cut interest rates for the first time in over two years, was widely expected by investors, who had bet that monetary policy had to be further loosened to lift economic growth from 24-year low. Indonesian GDP remained unchanged at a seasonally adjusted annual rate of 5.01% in January compared to the preceding month. Southeast Asia’s biggest economy has been slowing in recent years as the price of its key commodity exports dropped owing to weakening demand from regional powerhouse China and other major markets. Taiwanese CPI fell to a seasonally adjusted annual rate of -0.94%, from 0.61% in the preceding quarter.