Benchmarks slump ahead of IIP, CPI data; Sensex breaches 26,900 mark

Indian barometer gauges witnessed bloodbath on Tuesday with both the major indices losing over two percentage points and ending below their crucial 8,150 (Nifty) and 26,900 (Sensex) levels. Selling was both brutal and wide-based as none of sectoral indices on BSE were spared. Counters, which featured in the list of worst performers, include realty, power, capital goods, banking and metal. Sentiments remained dampened since beginning of the trade as investors remained on sidelines ahead of the Industrial production (IIP) and Consumer Price Index (CPI) data to be unveiled later in the day. IIP is expected to have slowed to 2.8-3.0 percent in March from three-month high of 5.0 percent a month before, while Consumer price inflation is expected to have eased to a four-month low of 4.9 percent in April from 5.2 percent a month ago.

Further, delay in the passage of land acquisition and GST bill also added to the worries of investors. The contentious Land Acquisition Bill will be referred to a 30-member joint committee both Houses of the Parliament while the Goods and Services Tax (GST) Bill will be referred to a select committee of the Rajya Sabha. Meanwhile, giving further credence to India Meteorological Department’s early forecast in April of a sub-par southwest monsoon season, Australian Meteorological Department said that the El Nino weather phenomenon has started to take shape in the tropical pacific which is likely to result in deficient rainfall in the monsoon season.

Selling got intensified as European markets made an awful start with CAC, DAX and FTSE were trading with a cut of around half a percent as a sell-off in global bond markets led investors to trim their risk exposure. Asian markets ended mostly in the red as insufficient progress on talks between debt-strapped Greece and its creditors kept investors on edge. 

Back home, depreciation in Indian rupee too dampened the sentiments. Rupee was trading at 64.18 per dollar at the time of equity markets closing compared with its previous close of 63.85 per dollar. Banking stocks witnessed much of drubbing ahead of the release of April CPI data, which will be guide RBI’s decision on interest rates in its upcoming monetary policy meeting. Banking stocks also slid on account of disappointing number of UCO Bank, which slid over 8% after reporting net profit of Rs 209.20 crore for the fourth quarter ended 31 March 2015 as against Rs 303 crore the same quarter last fiscal.

The NSE’s 50-share broadly followed index Nifty ended lower by around two hundred points to end below its psychological 8,150 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex tumbled by around six hundred and thirty points to breach its psychological 26,900 mark. The broader too struggled to get any traction throughout the session and ended the trade with a cut of over one and a half percent. The market breadth remained in favour of decliners, as there were 746 shares on the gaining side against 1,962 shares on the losing side while 95 shares remain unchanged. 

Finally, the BSE Sensex plunged by 629.82 points or 2.29% to 26877.48, while the CNX Nifty dropped by 198.30 points or 2.38% to 8,126.95.

The BSE Sensex touched a high and a low of 27502.91 and 26837.39, respectively. The BSE Mid cap index was down by 1.72%, while Small cap index down by 1.72%.

The top gainers on the Sensex were Dr. Reddys Lab up by 3.31% and Hero MotoCorp up by 3.18%. On the flip side, Tata Steel down by 6.29%, BHEL down by 5.07%, Vedanta down by 4.98%, ICICI Bank down by 4.59% and Tata Power down by 3.64% were the top losers.

The losing sectoral indices on the BSE were Realty down by 3.30%, Power down by 3.12%, Capital Goods down by 3.10%, Bankex down by 3.09% and Metal down by 2.97%, while there were no gainers.

Meanwhile, government has sought suggestions on a draft paper to frame policy on the capital goods industry, envisioning an increase in its contribution from 12 per cent at present to 20 per cent of the total manufacturing activity in the country by 2025. The “Draft Base Paper for National Policy on Capital Goods and Engineering” prepared by the Department of Heavy Industry points out that imports continue to address 35 to 40 percent of domestic demand with the proportion being significantly higher in “critical components” segment for each subsector.

The capital goods sector contributes 12% to the total manufacturing activity and 15% of the GDP, but this component in industrial production has lagged in recent years due to slow pace of domestic demand leading to growing dependence on imports and following slow growth in the world economy.

The draft paper has highlighted the fact that support facilities, technology development institutions and skilled man-power continue to lag behind global standards, even as cost disabilities such as higher cost of power, finance and infrastructure lead to higher operating cost. The paper has asked suggestions to help implementing full-fledged scheme on “Enhancement of Competitiveness in the Indian capital goods sector” through enabling policies for technology transfer, up-gradation and innovation. It has set a mission to become one amongst top 10 capital goods producing nations of the world and raise exports to a significant level of at least 40% of total production.

The CNX Nifty touched a high and low of 8,326.65 and 8,115.30 respectively.

The top gainers on Nifty were Dr. Reddy's Laboratories up by 3.43% and Hero MotoCorp up by 3.30%.On the flip side, Bank of Baroda down by 7.48%, Tata Steel down by 6.39%, Cairn India up by 5.81%, Vedanta down by 5.30% and Bharat Heavy Electricals down by 4.99% were the top losers.

European Markets were trading in the red; France's CAC was down by 1.74%, Germany's DAX was down by 2.14% and UK’s FTSE was down by 1.77%.

The Asian markets closed mixed on Tuesday, while China stocks closed higher as gains in the Electricity, Utilities and Retailers sectors led shares higher. China is likely to maintain a surplus on its current account this year, while cross-border capital flows could become more volatile, the country’s foreign exchange regulator stated. The State Administration of Foreign Exchange (SAFE) stated in its annual report for 2014, that the country had a current account surplus of $219.7 billion in 2014, up 48 percent from the previous year. The regulator added that China will also keep diversifying its foreign exchange reserve investment in 2015 and improve profitability. Members of Japan’s top economic advisory panel will propose that the government focus on higher economic growth and spending cuts to meet fiscal targets. Private-sector members of the Council on Economic and Fiscal Policy (CEFP) will propose later that the government keep gross domestic product growth above 2 percent in real terms and 3 percent in nominal terms. Japan’s index of leading economic indicators rose to a seasonally adjusted 105.5, from 104.8 in the preceding month.