Benchmarks end slightly in red; Sensex holds 27,800 mark

Indian equity benchmarks ended the volatile day of trade with modest cut on Thursday as investors opted to book some of their profit after previous session’s rally. Also, investors remained on sidelines ahead of earning numbers of blue-chips including ITC and SBI due tomorrow. Moreover, marketmen were unable to get any respite with the government constituting committee on MAT issue headed by Justice A.P. Shah, with other members Dr. Girish Ahuja and Dr. Ashok Lahiri. To begin with, the Committee will examine the matter relating to levy of MAT on FIIs for the period prior to April 01, 2015.

However, losses remained capped as some encouragement came with Reserve Bank of India Governor Raghuram Rajan’s statement that government has taken steps to propel growth. He also said that investors’ unhappiness over the taxation issues could have been avoided, but once raised, they have to go through a legal process which is on. Meanwhile, Finance Minister Arun Jaitley has said that inflation will not be a significant challenge though there is a possibility of below average monsoon and food prices getting impacted. Moreover, Jaitley added, “steps taken by the government has kept food prices low and pro-active government will always keep food prices low”.

On the global front, European markets were trading mostly in the negative terrain after data pointed to a mixed picture for the euro zone's economic recovery, with German private-sector growth slowing again in May even as France extended its timid recovery. Asian markets closed mixed on Thursday. Japanese shares hit a new 15-year high on hopes that its long-moribund economy was finally coming to life, but weak China factory activity capped stock market gains in much of the rest of Asia.

Back home, selling in metal counter too dampened the sentiments after a preliminary Chinese factory gauge missed the estimates and came in at 49.1, raising demand concern from the second largest consumer of metals. Stocks related to FMCG space too edged lower after reports suggested that El Nino conditions in the tropical Pacific region were likely to strengthen, according to Australian Bureau of Meteorology, which closely tracks weather in the region. Additionally, select stocks from software counter ended in red on the back of an appreciating rupee.

The NSE’s 50-share broadly followed index Nifty ended slightly lower but managed to hold its crucial 8,400 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex edged lower by around thirty but hold its psychological 27,800 mark. The broader markets too struggled to get any traction and ended the session slightly in the red. The market breadth remained in favour of decliners, as there were 1,184 shares on the gaining side against 1,507 shares on the losing side while 130 shares remain unchanged.

Finally, the BSE Sensex declined by 27.86 points or 0.10% to 27809.35, while the CNX Nifty lost  2.25 points or 0.03% to 8,421.00.

The BSE Sensex touched a high and a low of 27911.44 and 27712.73, respectively. The BSE Mid cap index was down by 0.41%, while Small cap index down by 0.05%.

The top gainers on the Sensex were Bajaj Auto up by 6.94%, Coal India up by 3.51%, Axis Bank up by 2.19%, Sun Pharma up by 1.52% and Larsen & Toubro up by 1.50%. On the flip side, Tata Steel down by 5.11%, Vedanta down by 3.29%, Cipla down by 1.98%, ICICI Bank down by 1.68% and ITC down by 1.53% were the top losers.

The gaining sectoral indices on the BSE were Realty up by 0.96%, Auto up by 0.80%, Capital Goods up by 0.53%, IT up by 0.27% and PSU up by 0.24% while, INFRA down by 0.88%, FMCG down by 0.76%, Power down by 0.61%, Oil & Gas down by 0.46% and Metal down by 0.39% were the losing indices on BSE.

Meanwhile, Finance Secretary Rajiv Mehrishi has said that Indian economy is expected to expand at 8.5-9 percent over 10-15 year time frame once the structural issues hampering growth are addressed by the government. Mehrishi added that “India has a growth potential close to 8.5 percent to 9 percent over the next 10-15 years... The short term growth may be lower on account of structural issues which we are tackling”.

Finance Secretary further stated that strong economic growth, is necessary for solving many socio-economic problems facing the country and the government has taken various initiatives to deal with the structural issues like going in for auction of key infrastructure inputs such as coal and spectrum, setting up of the MUDRA Bank and streamlining the norms for foreign direct investment (FDI).

Talking about the India Meteorological Department’s (IMD) projection of below normal monsoon, the Finance Secretary said: 'A weak monsoon generally leads to low rural economic growth and spike in prices of food commodities. However, this year food prices are expected to remain stable”, as the government was also taking a host of steps to address rural distress “through programmes rather that price distorting measures”. India’s growth is expected to be at least 8 percent in the current fiscal on account of initiatives taken by the government to boost investment and growth.

The CNX Nifty touched a high and low of 8,446.35 and 8,382.50 respectively.

The top gainers on Nifty were Bajaj Auto up by 7.56%, Coal India up by 3.32%, Tech Mahindra up by 2.50%, Grasim Industries up by 2.41% and Axis Bank up by 2.02%. On the flip side, Tata Steel down by 4.79%, Vedanta down by 3.26%, Idea Cellular down by 2.50%, Cipla down by 2.20% and Bank of Baroda down by 1.97% were the top losers.

European Markets were trading in the red; Germany's DAX was down by 0.50%, France's CAC down by 0.48% and UK's FTSE was down by 0.09%.

The Asian markets closed mixed on Thursday, with mainland markets rallying after another weak reading on Chinese manufacturing activity raised hopes for further stimulus measures by Beijing. Manufacturing activity in Asia’s top two economic powerhouses remained stuck in low gear in May, but an absence of inflation pressures suggested that authorities could inject yet more stimulus if needed. The lackluster performance in China and Japan, along with alarmingly weak export data from South Korea and Taiwan, put the burden of supporting global growth squarely on Europe and particularly the United States, which is struggling to get back on track after a fierce winter. China’s flash HSBC/Markit Purchasing Managers' Index (PMI) fell to 49.1 in May, below the 50-point level that separates growth in activity from a contraction on a monthly basis. Standard & Poor’s raised the outlook on Indonesia’s BB-plus sovereign rating to positive from stable, acknowledging the Southeast Asian nation’s improved policies aimed at better monetary and financial sector management. S&P is the only international agency which has Indonesia in the junk category. Fitch, at BBB-minus, and Moody’s, at Baa3, have rated it in the investment grade category.

Japanese Prime Minister Shinzo Abe’s plan to cut the country’s debt pile will rely on the Bank of Japan keeping government bond yields low for years to come, which could force the bank to maintain its massive monetary stimulus for longer than it wants. Abe has pledged to come up with plans to fix Japan’s tattered finances, but he is reluctant to raise taxes or cut spending drastically for fear of hurting the fragile economy.  Japan’s All Industries Activity Index fell to a seasonally adjusted -1.3%, from 0.2% in the preceding month whose figure was revised up from 0.1%. The Markit/JMMA flash Japan Manufacturing Purchasing Managers Index (PMI) rose to a seasonally adjusted 50.9 in May from a final 49.9 in April.