Benchmarks extend losing streak to third straight session

Extending southward journey for third straight session, Indian equity benchmarks ended the sluggish day of trade near 6-month low with a cut of around half a percent on persistent selling by foreign institutional investors as concerns regarding MAT continue to float around. After a cautious start markets started losing traction and entered into red terrain in noon deals as traders were cautiously looking for the passing of the goods and services tax (GST) Bill in Rajya Sabha, where the ruling coalition of Prime Minister Narendra Modi is in a minority in the upper house of Parliament, which must endorse the bill with a two-thirds majority. Meanwhile, Finance ministers from 15 states were meeting today to discuss the next steps for a common GST, a day after Parliament’s lower house, the Lok Sabha, passed the much-awaited legislation to introduce the proposed tax system.

Depreciation in Indian rupee too dampened the sentiments. The rupee, which has been under pressure in last few sessions, slid further to breach Rs 64 to US dollar mark on sustained capital outflows. Rupee was trading at 64.21 per dollar at the time of equity markets closing compared with its previous close of 63.54 per dollar. The sentiments were also impacted by the continuous rise in international crude prices which will have bearing on the inflation in coming times.

Weak opening in European counters too dampened the sentiments. European shares fell to their lowest in more than two months in early deals on fears the recent surge in sovereign bond yields, the euro and energy costs could snuff out the only recently-formed hopes of a solid euro zone recovery. Asian markets edged lower on Thursday, taking the lead from overnight losses in US stocks on concerns about the sluggish US economy.

Back home, sentiments remained dampened on reports that foreign institutional investors sold shares worth a net 16.99 billion rupees ($265.80 million) on Wednesday, adding to their $360.88 million selloff in the previous session. Overseas investors have been net sellers this month with a net outflow of $693.8 million. Meanwhile, banking shares continued to be under pressure, with the Bank Nifty hitting five-month lows, on the back of heavy selling by overseas investors. Stocks related to realty space too edged lower, extending yesterday’s losses triggered by media reports that a united opposition forced the government to put off indefinitely the real estate bill. Additionally, shares of public sector oil marketing companies (OMCs) and airline stocks declined on worries a weak rupee could raise the cost of crude oil imports. Shares of oil exploration and production (E&P) companies also dropped.

The NSE’s 50-share broadly followed index Nifty declined by around forty points to end below the psychological 8,100 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex declined by around one hundred and twenty points to end below its crucial 26,600 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 813 shares on the gaining side against 1,858 shares on the losing side while 109 shares remain unchanged.

Finally, the BSE Sensex dropped by 118.26 points or 0.44% to 26599.11, while the CNX Nifty declined by 39.70 points or 0.49% to 8,057.30.

The BSE Sensex touched a high and a low of 26850.37 and 26423.99, respectively. The BSE Mid cap index was down by 1.95%, while Small cap index down by 1.68%.

The top gainers on the Sensex were TCS up by 3.27%, Bajaj Auto up by 2.51%, Coal India up by 2.21%, ITC up by 1.54% and Hero MotoCorp up by 1.21%. On the flip side, Axis Bank down by 2.95%, ONGC down by 2.94%, Maruti Suzuki down by 2.52%, Hindalco down by 2.47% and ICICI Bank down by 2.44% were the top losers.

The gaining sectoral indices on the BSE were IT up by 1.63%, Healthcare 1.37%, TECK up by 1.31% and FMCG up by 0.14% while, Bankex down by 2.33%, Realty down by 2.20%, INFRA down by 2.18%, Consumer Durables down by 2.01% and Oil & Gas down by 1.96% were the losing indices on BSE.

Meanwhile, in an encouraging development for the economy, International Monetary Fund (IMF) in its latest economic health check report termed ‘India as the fastest growing economies in the world’, by estimating its growth rate at 7.5% this year and the next. Notably, according to the IMF's Regional Economic Outlook for Asia-Pacific, China’s economy was slowing to 6.8% GDP in 2015 and 6.3% in 2016.Further, it also forecasted that Growth in Asia-Pacific to continue to outperform the rest of the world, and remain steady at 5.6% in 2015, easing slightly to 5.5% in 2016.

It opined that this growth will be driven by domestic demand, underpinned by healthy labour markets, low interest rates, and the recent fall in oil prices. It also asserted that global recovery though would remain moderate and uneven, but will continue to support Asia’s exports.

IMF’s Regional Economic Outlook underlined the need for a strong push for structural reforms across most, if not all, economies in the region and further noted that structural reforms, besides boosting productive capacity could help rebalance growth toward consumption, which remains a priority for some major Asian economies.

Also, it highlighted that major reforms areas included measures to address supply-bottlenecks in India, state-owned enterprises, and financial liberalization in China, and initiatives to raise services productivity, and labour force participation in Japan. The report noted the opportunities that lower oil prices provided to undertake further fiscal reforms, which were aimed at lowering energy subsidies.

IMF in its report also said that Asia, which accounts for nearly 40% of global output, contributes nearly two-thirds of global growth, will remain the global growth leader, even though potential growth-the economy's speed limit-is likely to slow.

The CNX Nifty touched a high and low of 8,122.60 and 7,997.15 respectively.

The top gainers on Nifty were HCL Technologies up by 3.63%, Tata Consultancy Services up by 3.53%, ACC up by 2.45%, Ambuja Cements up by 2.12% and Coal India up by 2.11%. On the flip side, Bank of Baroda down by 5.43%, Kotak Mahindra Bank down by 3.72%, IDFC down by 3.57%, Oil & Natural Gas Corporation down by 3.29% and Yes Bank down by 3.24% were the top losers.

European Markets were trading in the red; France's CAC was down by 1.36%, UK’s FTSE was down by 1.51% and Germany's DAX was down by 0.86%.

The Asian markets closed in red on Thursday, with China stocks closing lower as losses in the Oil Equipment Services & Distribution, Electricity and Utilities sectors led shares lower. China’s leaders, caught off guard by a sharp economic slowdown and worried about the risk of job losses, are likely to resort to fiscal stimulus to revive growth after a run of monetary policy easing proved less effective. The world’s second-largest economy grew at an annual 7% in the first quarter, the weakest rate since the global financial crisis, and data since then suggests it has lost further momentum. The Politburo, the ruling Communist Party’s top decision-making body, stated last week that it would pay high attention to the downward pressure on the economy and pledged to step up policy adjustments by boosting fiscal spending. Indonesia’s government will not allow this year’s budget deficit to widen to more than 2.2% of gross domestic product. Finance Minister Bambang Brodjonegoro stated that the government’s deficit target of 1.9% this year is dependent on total revenue increasing by 14% and tax collection by 30%, a scenario that the World Bank has warned was unrealistic. Japan’s Monetary Base remained unchanged at 35.2% compared to the preceding month. Malaysian Trade Balance rose to 7.82B, from 4.50B in the preceding month.