Benchmarks end April F&O expiry session on pessimistic note

Indian equity markets truly depicted the choppiness of F&O expiry session on Thursday with key gauges ending the session with a cut of around three fourth of a percent. After a cautious start, markets traded range-bound throughout the session and ended the session below their crucial 27,100 (Sensex) and 8,200 (Nifty) levels. Traders continued to remain concerned about capital outflows by foreign investors on MAT and lower-than-expected Q4 earnings posted by some blue-chip companies. It was reported that finance ministry will likely to bring in clarity on application of minimum alternate tax on other income streams for foreign investors including interest on bond, private equity and foreign direct investments (FDI), in the Finance Bill, 2015 when it comes up for discussion in the Finance Bill, 2015 when it comes up for discussion.

Sentiments remained dampened on report that foreign portfolio investors sold shares worth a net Rs 718.31 crore on April 29, 2015, as per provisional data. Moreover, investors failed to draw any sense of relief from report that FDI inflows in the manufacturing sector rose by almost 45% from the period of October, 2014 - February, 2015 at $6,916.99 million compared to $ 4,770.94 million in the same period in the previous financial year.

Global cues too remained sluggish on lower-than-expected growth in the US economy for the first quarter at 0.2%, significantly lower than 2.2% posted in the previous quarter and cautious comments from the Federal Reserve. European counters were trading mostly in the red in early deals, weighed down by a selloff in technology stocks after disappointing numbers from Nokia and by a strengthening euro. Asian markets ended mostly in the red with investor sentiment dented by a weaker than expected first quarter growth figure in the US.

Back home, depreciation in Indian rupee against dollar weighed down sentiments. The rupee weakened by 28 paise to 63.58 against the US dollar today at the Interbank Foreign Exchange due to month-end demand for the American currency from importers amid capital outflows. Selling in software and technology stocks too dampened the sentiments on weak economic data in US, the biggest outsourcing market for the Indian IT firms. Select stocks from banking space too edged lower after the Reserve Bank of India (RBI) has levied a penalty of Rs 1.5 crore each on three banks-- Dena Bank, Oriental Bank of Commerce and Bank of Maharashtra-- for violation of Know Your Customer (KYC) and non adherence of RBI norms on fund transfer, transactions and opening of fixed deposits. However, stocks of Axis Bank spurted around three percent after the bank reported better than expected 18.36% growth in quarterly net profit of Rs  2,180.59 crore for the January-March quarter against Rs 1,842.32 crore in the same quarter of the previous fiscal.

NSE’s 50-share broadly followed index, Nifty declined by around sixty points to end below the psychological 8,200 support level, while Bombay Stock Exchange’s Sensitive Index - Sensex slipped by over two hundred and ten points to end below its psychological 27,100 mark. Broader markets too struggled to get any traction during the trade and ended the session mixed. The market breadth remained in favour of decliners, as there were 1,292 shares on the gaining side against 1,401 shares on the losing side while 133 shares remain unchanged.

Finally, the BSE Sensex plunged by 214.62 points or 0.79% to 27011.31, while the CNX Nifty declined by 58.25 points or 0.71% to 8,181.50.

The BSE Sensex touched a high and a low of 27242.05 and 26897.54, respectively. The BSE Mid cap index was up by 0.07%, while Small cap index down by 0.15%.

The top gainers on the Sensex were Axis Bank up by 2.70%, BHEL up by 2.13%, Sesa Sterlite up by 1.38%, Reliance Industries up by 1.36% and Cipla up by 1.22%. On the flip side, HDFC down by 2.70%, Tata Steel down by 2.37%, Mahindra & Mahindra down by 2.25%, Coal India down by 2.22% and Tata Motors down by 2.21% were the top losers.

 The gaining sectoral indices on the BSE were Realty up by 1.54%, Oil & Gas up by 0.37%, Bankex up by 0.22%, Healthcare up by 0.19% and Power up by 0.17% while, Metal down by 1.60%, FMCG down by 1.20%, Auto down by 1.05%, IT down by 0.80% and TECK down by 0.80% were the losing indices on BSE.

 Meanwhile, giving some relief to the cash strapped sugar sector, the government has hiked import duty on sugar to 40 percent and scrapped the excise duty on ethanol made from molasses. The government has said that these measures would significantly improve the adverse price sentiments in respect of sugar and also boost liquidity of millers, facilitating the clearing up of cane arrears. Though, India imports very small quantity of sugar but the move will help sugar mills clear dues worth Rs 21,000 crore to farmers.

The scrapping of excise duty will give the millers Rs 5 per litre extra on ethanol they produce from sugarcane. The Cabinet also decided to remove central excise duty on ethanol supplied for blending, presently being levied at 12.36 percent. Ethanol produced from molasses generated in the next sugar season (starting October 2015) and supplied for ethanol blending would be exempted from excise duty. Price benefit would be passed on the to the sugar mills/distilleries.Apart from hike in import duty and removal of excise duty on ethanol, the government has also decided to withdraw the 'Duty Free Import Authorization' scheme (DFIA). Under this, exporters of sugar could import permissible quantities of raw sugar without any duty for subsequent processing and disposal. The withdrawal of the scheme will prevent leakage of sugar made from such duty free imports in the domestic markets.

The government has said that decision to raise the customs duty is aimed at preventing any imports in case international prices of sugar were to depress further, however Industry body ISMA said that the decision to hike import duty and remove excise duty on ethanol would help the millers only in the long run and demanded that the Centre should buy 10 percent of sugar produced this year to help clear cane arrears.

The CNX Nifty touched a high and low of 8,229.40 and 8,144.75 respectively.

The top gainers on Nifty were BHEL up by 3.66%, Axis Bank up by 3.27%, Lupin up by 1.94%, Reliance Industries up by 1.76% and Asian Paints up by 1.41%. On the flip side, Idea Cellular down by 3.33%, ACC down by 3.00%, Zee Entertainment Enterprises down by 2.42%, Ambuja Cements down by 2.35% and Tata Motors down by 2.19% were the top losers.

European Markets were trading mostly in the red; Germany's DAX lost 0.03% and France's CAC was down by 0.06% while UK's FTSE 100 was up by 0.07%.

The Asian markets closed mostly in red on Thursday, with Japanese stock felling sharply as the central bank’s massive policy easing appears to have stalled in its aim to increase overall prices. The Bank of Japan maintained its massive monetary stimulus, holding off on additional easing for now on hopes that rising wages will spur spending and eventually nudge inflation towards its 2 percent target. With inflation having ground to a halt due to slumping oil prices, the BOJ is seen slightly cutting its core consumer inflation forecast of 1.0 percent for the current fiscal year ending in March 2016. As widely expected, the BOJ maintained its pledge to increase base money at an annual pace of 80 trillion yen ($674 billion) through purchases of government bonds and risky assets. Japanese Housing Starts rose to a seasonally adjusted 0.7%, from -3.1% in the preceding quarter. South Korean industrial production fell to a seasonally adjusted annual rate of -0.4%, from 2.3% in the preceding month whose figure was revised down from 2.6%. Thai Industrial Production fell to a seasonally adjusted -1.80%, from 3.55% in the preceding month while Taiwanese GDP rose to 3.46%, from 3.35% in the preceding month.