Benchmarks extend losing streak for seventh straight session

Monday turned out to be another disappointing session for the Indian equity indices which got pounded by over one and a half percentage point, as investors sold stocks across sectors amid sluggish global cues. After a negative opening, the domestic bourses never looked in recovery mood and extended the losing streak to seventh day in a row, breaching their crucial support levels of 28,300 (Sensex) and 8,550 (Nifty). Selling was both brutal and wide-based as none of sectoral indices on BSE could manage a green close. Counters which featured in the list of worst performers included capital goods metal and realty.

Sentiments remained dampened on reports that foreign portfolio investors sold shares worth a net Rs 96.45 crore on February 7, 2015, as per provisional data. Moreover, there were worries of exit polls predicting an AAP win in the Delhi assembly elections. Though, it would do little to change national political scenario but its leader Arvind Kejriwal’s rhetoric against big business is raising fear in the markets. Investors remained on sidelines ahead of index of industrial production (IIP) data for December 2014 on February 12, 2015. On the same day, the government will release data for the annual rate of inflation based on the combined consumer price index (CPI) for urban and rural India in January 2015.

Selling got intensified after European markets made a sluggish start, tracking losses on Wall Street and in Asia, with disappointing Chinese trade data further raising concerns about the pace of economic growth in the world's second-biggest economy. Asian markets ended mostly in the red after dismal Chinese trade figures fuelled concern over a slowdown in the world’s second largest economy, while solid US jobs data were a mixed blessing as they raised chances of a US interest rates hike mid-year.

Back home, depreciation in Indian rupee too dampened the sentiments. The rupee was at 62.14 per dollar at the time of equity markets closing as compared to 61.70 per dollar level on Friday. Meanwhile, power stocks succumbed to selling pressure, with Tata Power losing 2.5% on fears that AAP may again lower power tariffs in Delhi like it did in its earlier stint. Metal stocks too edged lower, tracking international prices after a surprisingly weak Chinese import data fuelled worries that economic growth may be more fragile than anticipated. Additionally, public sector oil marketing companies (OMCs) BPCL, HPCL and IOC edged lower as global crude oil prices edged higher and as the rupee edged lower against the dollar.

The NSE’s 50-share broadly followed index Nifty tumbled by over one hundred and thirty points to end below the psychological 8,550 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex declined by over four hundred and ninety points to finish below its psychological 28,300 mark. Broader markets too witnessed selling pressure and ended the session with a cut of over around one and a half percentage points. The market breadth remained in favor of decliners, as there were 927 shares on the gaining side against 1,911 shares on the losing side while 112 shares remain unchanged.

Finally, the BSE Sensex declined by 490.52 points or 1.71% to 28227.39, while the CNX Nifty dropped 134.70 points or 1.56% to 8526.35.

The BSE Sensex touched a high and a low of 28566.50 and 28183.32, respectively. The BSE Mid cap index was down by 1.41%, while Small cap index was lower by 1.50%.

The top gainers on the Sensex were Dr. Reddys Lab up by 2.01%, Bajaj Auto up by 1.76%, ONGC up by 1.51%, Sun Pharma up by 1.37% and Wipro up by 1.06%. On the flip side, Larsen & Toubro down by 6.61%, Tata Steel down by 5.79%, Sesa Sterlite down by 4.53%, GAIL India down by 4.52% and Cipla down by 3.90% were the top losers.

On the BSE Sectoral front Capital Goods down by 4.31%, Realty down by 2.73%, Metal down by 2.54%, Auto down by 2.27%, Bankex down by 2.06%, while there were no gainers on the index.

Meanwhile, in what could be an extremely encouraging development for the economy, global brokerage firm, HSBC, underscored that India’s current account deficit will bounce back in surplus after a span of 32 quarters of deficit, for January-March quarter. Further, it expects the deficit to halve to 0.60% of GDP in 2015-16 and remain at manageable levels the year after, on account of receding oil prices, which makes import cheaper.

Crude prices slipped to multi years low between June 2014 and January 2015, reflecting higher-than-expected oil and shale gas production in the US and lower demand in emerging markets coupled with OPEC's refusal to lower output. In the December quarter alone crude prices have fallen around 60%, further positive for the economy.

In other positive for the economy, HSBC pared its oil price expectation to just over $60/barrel for end-2015, further rising it to $68/barrel by the end of 2016, highlighting that a benign impact across India's macro economy, ranging from an improved growth outlook and lower inflation, to healthier fiscal accounts.

In a bit of concern, HSBC has lowered its GDP’s projection at 5.3% in FY15 as against 5.5% earlier, and further pared it to 6.3% in FY16 from 6.5% and 6.8% in FY17 against 7.1%.

The CNX Nifty touched a high and low of 8605.55 and 8516.35 respectively.

The top gainers on Nifty were Bajaj Auto up by 2.06%, HCL Tech up by 2.03%, Dr. Reddys Lab up by 1.80%, Sun Pharma up by 1.58% and ONGC up by 1.52%. On the flip side, Larsen & Toubro down by 6.60%, Tata Steel down by 5.75%, Sesa Sterlite down by 4.65%, GAIL India down by 4.62% and Cipla down by 3.88% were the top losers.

European Markets were trading in the red; Germany's DAX was down by 1.60%, UK's FTSE 100 was down by 0.89% and France's CAC was down by 1.06%.

The Asian indices ended mostly in red on Monday, on dismal Chinese trade data, raising concerns about a deepening slowdown in the world’s second-largest economy. China’s trade performance slumped in January, with exports falling 3.3 percent from year-ago levels, while imports tumbled 19.9 percent, far worse than expected, highlighting deepening weakness in the Chinese economy. Largely as a result of the sharply lower imports - particularly of coal, oil and commodities - China posted a record monthly trade surplus of $60 billion. The slide in imports is the sharpest since May 2009, when Chinese factories were still slashing inventories in reaction to the global financial crisis. Exports have not produced a negative annual reading since March 2014. The dismal trade performance will increase concerns that an economic slowdown in China - originally considered a desirable adjustment away from an investment-intensive export model toward one based on domestic consumption - is at risk of derailing.

Japan’s central bank policymaker stated that the country will not slip back into deflation as improvements in the economy offset the temporary pressure on prices from slumping oil costs, signaling that no immediate expansion of monetary stimulus was necessary. Taiwanese Trade Balance rose to a seasonally adjusted annual rate of 4.80B, from 4.45B in the preceding month.