Benchmarks extend losing streak to third straight day; Sensex breaches 28,500 mark

Extending their southward journey to third straight session, Indian equity benchmarks ended the Friday’s trade with a cut of over a percent as global rating agency Standard and Poor's stated that a policy logjam and “red tape” have hindered investments in India. Sentiments remained down beat since morning as the domestic bourses never looked in recovery mood and ended the trade near intraday lows, breaching their crucial support levels of 28,500 (Sensex) and 8,650 (Nifty). Selling was both brutal and wide-based as barring metal; none of sectoral indices on BSE could manage a green close. Counters which featured in the list of worst performers included healthcare, software and technology.

Sentiments also remained dampened on reports that foreign institutional investors were net sellers in equities to the tune of Rs 214 crore on April 16, as per provisional stock exchange data. Moreover, investors failed to draw and sense of relief with Reserve Bank of India Governor Raghuram Rajan’s statement that on some issues the government and the central bank were “trying to persuade one another” but on many others the two sides are on the same page. Traders have even over looked the report of Moody’s analytics, a group company of global rating agency Moody’s stating that Indian economy is expected to grow marginally higher at 7.3% during the year compared with 7.2% in 2014 and interest rate cuts will buttress private sector spending.

Selling got intensified after European counters made a sluggish start with CAC, DAX and FTSE were trading lower in early deals. Asian markets ended mostly in the red on Friday as investors remained cautious on mixed economic reports and growing worries about Greece’s finances soured investor sentiment. However, Chinese Shanghai ended higher as investors continued hunting for riskier assets amid lingering speculation the government will take more measures to bolster economic growth.

Back home, depreciation in Indian rupee too dampened the sentiments. Rupee was trading at 62.35 per dollar at the time of equity markets closing compared with its previous close of 62.30. Meanwhile selling in software stocks too dampened the sentiments on concerns over fourth-quarter earnings after bellwether Tata Consultancy Services' results failed to cheer investors. Tata Consultancy Services posted a 30.7 per cent fall in net profit for the fourth quarter due to a one-off bonus paid to employees. The company reported a net profit of Rs 3,858 crore for the March quarter, excluding cumulative bonus payout of Rs 2,628 crore to employees.

Private lenders also witnessed profit taking on reports that foreign portfolio investors have pared their holdings in at least 21 banks in the March quarter (fourth quarter, or Q4) on concerns of deteriorating asset quality and the impact it would have on earnings of the lenders. However, Metal shares bucked the weak trend and ended higher led by Tata Steel, on high production in the financial year 2014-15. Additionally, ONGC and Oil India edged higher as the government exempting oil producers from payment of fuel subsidy in the fourth quarter after the finance ministry agreed to meet all of the revenue loss on fuel sales.

The NSE’s 50-share broadly followed index Nifty declined by over hundred points to end below the psychological 8,650 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex declined by over two hundred and twenty points to end below its crucial 28,500 mark. Broader markets too struggled to get any traction during the trade and ended the session with a cut of around two percentage points. The market breadth remained in favor of decliners, as there were 1,166 shares on the gaining side against 1,665 shares on the losing side while 109 shares remain unchanged.

Finally, the BSE Sensex dropped by 223.94 points or 0.78% to 28442.10, while the CNX Nifty plunged by 100.70 points or 1.16% to 8,606.00.

The BSE Sensex touched a high and a low of 28696.19 and 28403.76, respectively. The BSE Mid cap index was down by 2.01%, while Small cap index was down by 1.45%.

The top gainers on the Sensex were Sesa Sterlite up by 3.18%, Tata Steel up by 2.53%, Hindalco up by 1.86%, BHEL up by 1.18% and NTPC up by 1.15%. On the flip side, Sun Pharma down by 4.80%, TCS down by 4.22%, Axis Bank down by 3.23%, Bharti Airtel down by 2.70% and Wipro down by 2.46% were the top losers.

The gaining sectoral indices on the BSE were Metal up by 1.14% and PSU up by 0.07% while, Healthcare down by 3.05%, TECK down by 2.02%, IT down by 2.00%, Consumer Durables down by 1.80% and Bankex down by 1.64% were the losing indices on BSE.

Meanwhile, taking cues from the global price trends, the government has raised import tariff value of gold to $388 per 10 grams and reduced the import tariff on silver to $524 per kg. The import tariff value which is revised on a fortnightly basis taking into account global prices, stood at $ 385 per 10 grams of gold and $543 per kg for silver, during the last fortnight of March.The notification for the import tariff value which is the base price at which customs duty is determined to prevent under-invoicing was issued by the designated body, the Central Board of Excise and Customs. Gold in Singapore, which normally sets the price trend on the domestic front, rose 0.4 per cent to $1,207.70 an ounce and silver 0.3 per cent to $16.40 an ounce. Gold is the second-largest import item for India after petroleum. Higher gold import bill adversely affects the country's current account deficit.

In the global market gold prices have been under pressure in recent days as investors wager that Fed officials might raise interest rates as early as June if economic data continue to show improvement. The US central bank has kept rates pinned near zero since December 2008 but is widely expected to move borrowing costs higher in the second half of 2015. Further, the China's slowing economy too has added to downward pressure on the precious metal.

The CNX Nifty touched a high and low of 8,699.85 and 8,596.70 respectively.

The top gainers on Nifty were Sesa Sterlite up by 3.31%, Tata Steel up by 2.75%, Hindalco Industries up by 2.08%, NTPC up by 1.22% and BHEL up by 1.12%. On the flip side, Lupin down by 6.55%, IndusInd Bank down by 6.47%, Yes Bank down by 5.03%, Sun Pharmaceuticals Industries down by 4.41% and TCS down by 4.22% were the top losers.

European Markets were trading in the red; Germany’s DAX was down by 1.65%, France's CAC was down by 1.19% and UK's FTSE 100 was down by 0.48%.

Asian markets ended the Friday’s session mostly in the red as investors remained cautious on mixed economic reports and growing worries about Greece’s finances soured investor sentiment. Japanese shares fell to a more than one-week low as a stronger yen dampened investor sentiment and investors braced for the earnings season that begins later this month. Moreover, Hong Kong’s Hang Seng index edged lower as investors locked in some profits after a recent rally triggered by inflows from mainland investors. However, Chinese Shanghai edged higher by over two percent as investors continued hunting for riskier assets amid lingering speculation the government will take more measures to bolster economic growth. Investors also drew some solace from a bullish research report by brokerage Shenwan Hongyaun, which predicted that China’s stock market will rise further on the back of central government support.