Benchmarks resume southward journey

Resuming their southward journey, Indian equity benchmarks ended the Wednesday’s trade with a cut of around half a percent as investors remained on sidelines ahead of the outcome of the US Federal Reserve’s stance on interest rates at its two-day policy meet which ends today. Markets traded choppy throughout the session, though attempted recovery in afternoon deals but the recovery proved short-lived and markets ended the session below their crucial 28,700 (Sensex) and 8,700 (Nifty) levels. Sentiments also remained dampened as IMF chief Christine Lagarde has said that a possible interest rate hike by the US Federal Reserve could pose risks to market stability in emerging economies, including India, even if it is well managed by central banks.

However, losses remained capped on the buzz  of government approving the release of Rs 33,000 crore in tranches to states and Union Territories as CST compensation. As part of the roll-out of proposed Goods and Services Tax (GST) regime, the CST is being phased out and has been reduced to 2 per cent, from the earlier 4 percent. Some support also came in with a Crisil Research study showing that India’s household spending will rise by Rs 1.4 trillion or 2 percent in the next fiscal on the back of low fuel prices, benign food inflation and a rising income growth. Meanwhile, foreign portfolio investors were net buyers in equities to the tune of Rs 265.52 crore on Tuesday as per provisional stock exchange data.

On the global front, European markets were trading mostly in the red in early deals on Wednesday ahead of Federal Reserve meeting that is expected to lay the groundwork for the first increase in US interest rates in nearly a decade. Asian markets ended higher on renewed buying interest. However, upside gains remained capped as investors are keenly awaiting the policy statement on interest rates from the US Federal Reserve later today.

Back home, software and technology stocks remained under pressure for yet another session of rupee’s strength. Additionally, stocks related to domestic two-wheeler took a hit following the drop in rural demand due to agrarian stressors such as unseasonal rains and hailstorms which have impaired the rural economy. On the flip side, metal shares rose amid expectations that China will announce further stimulus measures aimed at boosting economic growth.

The NSE’s 50-share broadly followed index Nifty declined by around forty points to end below the psychological 8,700 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex declined by over one hundred and ten points to end below its crucial 28,700 mark. Broader markets, however, outperformed benchmarks and ended the session with a gain of over quarter a percent. The market breadth remained in favor of decliners, as there were 1,262 shares on the gaining side against 1,585 shares on the losing side while 141 shares remain unchanged.

Finally, the BSE Sensex plunged by 114.26 points or 0.40% to 28622.12, while the CNX Nifty dropped by 37.40 points or 0.43% to 8,685.90.

The BSE Sensex touched a high and a low of 28806.97 and 28546.76, respectively. The BSE Mid cap index was up by 0.28%, while Small cap index was up by 0.25%.

The top gainers on the Sensex were Reliance Industries up by 1.39%, SBI up by 1.34%, Hero MotoCorp up by 0.81%, Coal India up by 0.75% and Sesa Sterlite up by 0.57%. On the flip side, NTPC down by 3.11%, BHEL down by 2.20%, Tata Motors down by 2.00%, Wipro down by 1.87% and Mahindra & Mahindra down by 1.77% were the top losers.

The gaining sectoral indices on the BSE were Oil & Gas up by 0.69%, Bankex up by 0.48%, Metal up by 0.40%, Healthcare up by 0.23% and Realty up by 0.14% while, Power down by 1.09%, IT down by 0.94%, TECK down by 0.77%, Capital Goods down by 0.72% and Auto down by 0.63% were the losing indices on BSE.

Meanwhile, amid speculation of cartelisation during their bidding process in the coal block auctions, the government is re-examining the bids for nine coal blocks, including those where Jindal Steel and Balco emerged the top bidders, and a final decision on their fate would be taken by this weekend.

Coal Secretary Anil Swarup, though has said that the government wasn't looking at cartelisation aspect at the moment and it was only re-examining and not reviewing, 'because there was no decision taken. Review happens when you take a decision.' He further stated that if some irregularities are found the government can re auction the mines, it can allot the mines to the state or it can give the blocks to Coal India.

The bids of four coal blocks of the schedule II mines (ready to produce) which are being re-examined are Gare Palma IV 2, Gare Palma IV 3, Gare Palma IV-1 and Marki Mangli III, while for schedule III mines are Brinda and Sasai mine (one bid was invited for both the mines), Meral mine, Dumri mine, Tara mine and Mandla South mine.

Earlier, there were reports that some bidders could have indulged in cartelisation to keep the prices low for the concerned mines. So far, a total of 33 coal blocks have been auctioned in two tranches, while in the first lot 19 coal mines were auctioned, in the second lot 14 coal blocks went for sale.

The CNX Nifty touched a high and low of 8,747.25 and 8,664.00 respectively.

The top gainers on Nifty were BPCL up by 3.22%, ZEEL up by 2.84%, NMDC up by 1.89%, Reliance Industries up by 1.41% and State Bank of India up by 1.27%. On the flip side, NTPC down by 3.52%, BHEL down by 2.76%, Wipro down by 2.09%, ACC down by 2.05% and Ambuja Cements down by 1.97% were the top losers.

Most of European Markets were trading in the red; Germany's DAX was down by 1.00% and France's CAC was down by 0.39%, while UK's FTSE 100 was up by 0.54%.

The Asian markets ended mostly in green on Wednesday, with China’s main stock index rising to its highest in almost seven years, breaking through a key psychological resistance level to raise investors’ hopes that the market has resumed a bull run begun midway through last year. The Bank of Japan board decided by an 8 to 1 vote to leave the bank’s policy target unchanged while revising down its near-term inflation outlook on weak energy prices as expected. The collapse of crude oil prices last year has clouded the prospect for the central bank plan to anchor 2% inflation in about two years from April 2013, when it launched aggressive easing. That has caused the BoJ to revise down its near-term inflation outlook. At the same time however, the BoJ sees the economic recovery intact. Japan’s index of leading economic indicators rose to a seasonally adjusted 105.5, from 105.1 in the preceding month. Hong Kong Unemployment Rate remained unchanged at a seasonally adjusted 3.3% compared to its preceding month.