Post Session: Quick Review

Local equity markets, after witnessing gains in previous trading session, succumbed to selling pressure on Thursday and ended with loss of over 0.15% , which dragged both Sensex and Nifty below psychologically crucial 27,250 and 8,250 levels respectively. Markets largely overlookeed encouraging April WPI data, which strengthened the case for rate cut in RBI’s upcoming monetary policy on June 2, 2015, cashed in all their profits after previous sessions’ splendid gains.  On the macro-front, in a severe disinflationary trend warranting a radical measure, the annual rate of inflation, based on monthly wholesale price index (WPI) ebbed to- 2.65% in April as compared to -2.33% witnessed in March. The number was also way lower than the street expectation of a figure of -2.07% for the month under review.  However, the session was really productive for broader indices, which went home with gains of over 0.80%.

On the global front, Asian stocks drifted Thursday after weak retail sales figures suggested the U.S. economy is struggling to maintain growth momentum. Meanwhile, European stocks fell Thursday, on track for a third consecutive session of loss, as investors digest gyrations in the euro and monitor developments in Greece’s ongoing debt crisis.

Closer home, most of the sectoral indices on BSE concluded into positive territory, stocks from PSU, Realty and Oil & Gas counters were the prominent gainers of the session. On the flip side, Information Technology, Consumer Durables and Technology counters were the top losers of the session. IT stocks declined as the rupee edged higher against the dollar. In stock-specific action, shares of urea makers RCF and fertilizer & Chemicals Travancore concluded lower after the Union Cabinet gave its approval to a comprehensive New Urea Policy 2015 for the next four financial years. The overall market breadth on BSE was in the favour of advances which thumped declines in the ratio of 1476:1221; while 109 shares remained unchanged.

The BSE Sensex ended at 27206.06, down by 45.04 points or 0.17% after trading in a range of 26948.62 and 27293.99. 18 stocks advanced against 12 stocks decline on the index.

The broader indices concluded in green; the BSE Mid cap index was up by 0.89%, while Small cap index up by 0.92%.

The top gaining sectoral indices on the BSE were PSU up by 1.19%, Realty up by 1.07%, Oil & Gas up by 1.02%, Auto up by 0.85%, Metal up by 0.76% while, IT down by 0.71%, Consumer Durables down by 0.41%, TECK down by 0.34%, Capital Goods down by 0.17% were the losing indices on BSE.

The top gainers on the Sensex were Hindalco up by 2.92%, SBI up by 2.37%, Bajaj Auto up by 1.87%, Mahindra & Mahindra up by 1.71% and Tata Steel up by 1.70%. On the flip side, Vedanta down by 1.65%, Sun Pharma Inds. down by 1.12%, Infosys down by 1.09%, Wipro down by 1.04% and HDFC down by 0.92% were the top losers.

Meanwhile, in the first major downgrade for Indian markets in the past one year, global brokerage HSBC changed its stance on the foreign darling country to 'underweight” from “overweight” on the expectations of corporate earnings remaining muted, monsoon turning weak and growing odds against further rate cuts. It asserted that were little room for further rate cuts and firmly established El Nino conditions were negative for India's rural, agricultural economy. It also noted the incremental potential for more equity outflows as foreign positions looked stretched.

Notably, downgrade comes at a time when Indian markets were facing irk from foreign investors on concerns related to the controversial MAT levy and delay in the ambitious indirect tax (GST) and land reforms.

The global brokerage in its research report termed India as the second most expensive and one of the most over-owned markets in Asia, after a strong rally on the back of reform optimism generated by the Modi government over the past one year. At the same time, HSBC upgraded its stance on markets like The Philippines and Hong Kong “neutral” from “underweight”.

Further, it also highlighted that down-rating was largely in absence of any recovery in India's capex cycle' and further China's policy stimulus which is likely to boost commodity prices also is negative for India.

According to EPFR data, India was the most over-owned equity market in Asia by mutual funds.  And since other markets had become more interesting, India could be used as a funding market. 30 share benchmark index BSE's Sensex, which had peaked above 30,000-points within months of the new government led by Prime Minister Narendra Modi taking over reins last May, has dropped more than 3,000 points from the high. Its gain in the past one year has more than halved to just about 2,000 points.

The CNX Nifty concluded at 8224.20, down by 11.25 points or 0.14% after trading in a range of 8137.30 and 8236.25. 29 stocks advanced against 21 stocks declining one’s on the index.

The top gainers on Nifty were Asian Paints up by 4.45%, PNB up by 3.97%, Hindalco up by 2.96%, BPCL up by 2.83% and Idea Cellular up by 2.47%. On the flip side, Lupin down by 3.41%, Vedanta down by 1.56%, HCL Tech. down by 1.28%, Infosys down by 1.12% and Kotak Mahindra Bank down by 1.10% were the top losers.

European markets were holding up in green; with France’s CAC trading up by 0.21 points or 0% to 4,962.07; Germany’s DAX trading up by 7.47 points or 0.07% to 11,358.93 and  UK’s FTSE 100 trading up by 1.09 points or 0.02% to 6,948.54.

The Asian markets ended mostly in green, while Indonesia stock exchange was closed on account of ‘Ascension Day’ holiday. Indonesia’s finance ministry plans to tighten a tax regulation to ensure firms’ have sufficient cash buffers against the amount of debt they take in a bid to better manage their foreign debt exposure and boost the government’s tax revenue. Bank Indonesia Governor Agus Martowardojo stated that Indonesia will ease restrictions on property and auto loans and allow foreigners to buy apartments as it looks to boost economic activity. The Governor added that the central bank may cut the loan-to-value ratio for property and auto loans as soon as this month, allowing banks to finance buyers with lower down payments. The National Bureau of Statistics data showed that the value of new home sales continued to fall slowly in China in the first four months of this year. Nationwide, over 1.49 trillion yuan ($240 billion) worth of new homes, excluding government-subsidized affordable housing, were sold in China between January and April, an annual drop of 2.2 percent. Japan’s M2 Money Stock remained unchanged at a seasonally adjusted 3.6% compared to the preceding month.