Markets extend the southbound journey despite decline in WPI inflation

The start of the new week remained the same old story for the Indian markets with major indices slipping further. The selling pressure continued unabated despite WPI inflation coming at an all time low and IMF chief just ahead of her two days visit to India calling the country a bright spot in the global economy. It was profit taking mainly in the blue-chips that kept the benchmarks in a tight band throughout the session. Though, there were minor attempts to enter into green but they failed to sustain and bourses remained in red for almost all of the session.

The global cues though remained mostly supportive with most of the Asian markets snapping the session in green amid some concerns of this week’s Federal Reserve meeting for clues on the timeline for higher US interest rates, even Japanese Nikkei ended in green despite profit booking at fresh 15 years high. The European markets too made a good start, as the European Central Bank started buying sovereign debt.

Back home, Indian markets extended their southbound journey on Monday, albeit with marginal cuts. Major indices despite getting a positive start never looked confident and trade remained choppy till last. The early cautiousness remained even though inflation measured on wholesale price index (WPI) came at a record (-) 2.06 per cent in February - keeping inflation in the negative zone for the fourth straight month - on account of cheaper food, fuel and manufacturing products. Strength in rupee too was unable to support the markets, rupee moved higher on fresh selling of the American currency by exporters. The metals and mining stocks were under pressure after it was reported that the government has decided to re-examine the bids of 5 blocks awarded in the Phase 2 of coal auctions which were held for Schedule III coal mines. The mines being examined include Brinda & Sasai coal block awarded to Usha Martin, Meral block to Trimula Industries, Dumri block to Hindalco, Tara block to Jindal Power and Mandala South coal block to Jaypee Cement. Usha Martin lost 2%, Hindalco lost 3%, while Jindal Steel & Power ended higher by over 2% and Jaiprakash Associates was up by 0.5%. There were lots of scrip specific movements that kept the markets buzzing despite a rangebound trade, beleaguered realty major DLF surged over 4% after the Securities Appellate Tribunal (SAT) quashed the market regulator SEBI’s order banning DLF, its promoters and key executives from raising money in the capital market. DLF can now raise funds through CMBS. On the other hand the engineering, construction major L&T slumped after reports of it paying considerably lower Q4FY15 advance tax of Rs 170 crore compared to Rs 290 crore in same quarter last fiscal. However, advanced tax payments took ICICI Bank in green after it reportedly paid higher advance tax of Rs 1295 crore compared to Rs 980 crore in same quarter last year.

The NSE’s 50-share broadly followed index Nifty lost around fifteen points and ended below the 8,650 level, while Bombay Stock Exchange’s Sensitive Index -- Sensex lost over 65 points  to end below the psychological 28,500 mark. Broader markets underperformed the benchmarks and ended the session with loss of around half a percent. The market breadth remained in favour of decliners, as there were 1,854 shares on the declining side against 1,031 shares on the gaining side, while 123 shares remained unchanged.

Finally, the BSE Sensex declined by 65.59 points or 0.23% to 28437.71, while the CNX Nifty lost 14.60 points or 0.17% to 8,633.15.

The BSE Sensex touched a high and a low of 28581.82 and 28384.09, respectively. The BSE Mid cap index was down by 0.34%, while Small cap index was down by 0.87%.

The top gainers on the Sensex were Infosys up by 2.28%, Sun Pharma up by 1.59%, Tata Power up by 1.57%, BHEL up by 1.45% and Wipro up by 1.40%. On the flip side, Sesa Sterlite down by 5.16%, Hindalco down by 3.64%, Bharti Airtel down by 2.80%, NTPC down by 2.29% and Dr. Reddys Lab down by 1.77% were the top losers.

The top gaining sectoral indices on the BSE were IT up by 1.17%, Realty up by 1.15%, TECK up by 0.52%, Consumer Durables up by 0.39% and Healthcare up by 0.30%,  while Metal down by 1.49%, FMCG down by 0.96%, Infrastructure down by 0.83%, Power down by 0.78% and Oil & Gas down by 0.75% were the losing indices on BSE.

Meanwhile, India's trade deficit narrowed to a 17-month low of $6.85 billion in February against $8.3 billion in the same month last year on account of 55% decline in oil imports. Although, deficit narrowed, exports fell for third straight month. According to official data released, extending January's 11.12% decline exports fell 15.02% to $21.54 billion. Cumulatively, during 11-months period April 2014 to February 2015, India's exports were $286.58 billion, significantly short of the Centre's full-year target of $340 billion.

Disappointment on exports front was witnessed despite the 2% drop in the value of the rupee since February 1, indicating exporters' failure in taking advantage of the increase in the currency's competitiveness. This was mainly on account on the back of lower realizations from petroleum exports and poor performance in sectors such as engineering, pharmaceuticals and gems & jewellery.

On the flip side, overall imports fell 15.66% to $28.39 billion. Oil imports were down over 55 per cent to $6.1 billion on the back of an over 50% slide in global crude oil prices. However, gold imports rose 48% to $1.98 billion in February. Meanwhile, non-oil, non-gold imports expanded 8.7%, compared with 3.4% in the previous month, suggesting a pick-up in economic activity in February.

Lastly, expressing disappointment over the trade data for the month of February, Federation of Indian Export Organisations (FIEO) President M. Rafeeque Ahmed attributed the 'dismal performance' to the contraction in global demand, lowering prices of metal and commodities as well as volatility in currencies. He, however pointed that decline in February exports on low base is a factor of worry.

The CNX Nifty touched a high and low of 8,663.55 and 8,612.00 respectively.

The top gainers on Nifty were DLF up by 4.51%, ZEEL up by 3.43%, Asian Paints up by 3.19%, Jindal Steel & Power up by 3.17% and HCL Technologies up by 2.27%. On the flip side, SSLT down by 5.31%, Hindalco Industries down by 3.26%, Bharti Airtel down by 3.21%, Cairn India down by 2.95% and NTPC down by 2.26% were the top losers.

European Markets were trading in the green; Germany's DAX was up by 1.02%, France's CAC was up by 0.86% and UK's FTSE 100 was up by 0.49%.

The Asian markets ended mostly in green on Monday, despite of downbeat session on Wall Street. Chinese Premier Li Keqiang stated that the country’s economy is facing considerable pressure due to the slowdown but the government has a host of policies to halt the slide. Growth in China’s fiscal revenue cooled to its slowest in at least a year between January and February as China’s foundering economy dampened tax collection and other key sources of government income. Fiscal revenue rose 3.2% to 2.57 trillion yuan ($410.5 billion) in the first two months of the year. That was far less than an average 8.6% gain in fiscal income seen in 2014, and the slackest pace seen in at least a year. China’s cooling housing sector, which accounts for about 15% of the Chinese gross domestic product, has been an increasing drag on the world’s second-biggest economy as a glut of unsold homes dampened home prices and property investment. Indonesian Trade Balance rose to a seasonally adjusted 0.74B, from 0.71B in the preceding month.