Benchmarks start F&O expiry week on pessimistic note

First day of May F&O expiry week turned out to be a disappointing session of trade for the Indian equity indices which got pounded by over a percentage point as traders remained cautious about the probable rate hike in the US by year end. After a negative opening, the domestic bourses never looked in recovery mood and ended the trade near intraday lows, breaching their crucial support levels of 27,700 (Sensex) and 8,400 (Nifty). Selling was both brutal and wide-based as, barring oil and gas; none of sectoral indices on BSE could manage a green close. Counters which featured in the list of worst performers included metal, fast moving consumer goods and consumer goods.

Moreover, foreign investors remained cautious with the Dispute Resolution Panel (DRP) of the income-tax department sending notices to foreign portfolio investors (FPIs), telling them that the hearing of MAT disputes would start soon. The investors would have to submit any additional material in this regard within the next nine days. Traders even over looked the Finance Minister Arun Jaitley’s statement, who while addressing the 31st Annual Conference of Principal Chief Commissioners of Income Tax said that we have to bring tax rate at global level while the same time removing the exemptions and expect a growth of 14-15 percent in direct tax collections this fiscal.

On the global front, European stocks edged lower, weighed by more concerns about the state of Greece's finances. Though, London's FTSE and the German DAX are both closed for the Whit Monday holiday. However, Asian markets ended mostly in the green led by Japanese stocks which edged higher by three fourth of a percent after country’s trade balance for April reached a deficit of Yen 53.4 billion, narrower than the Yen 319 billion deficit seen and exports rose 8.0%, better than the 6.4% increase expected and imports declined 4.2%, more than the 1.5% drop expected.

Back home, depreciation in Indian rupee too dampened the sentiments. Rupee was trading at 63.55 per dollar at the time of equity markets closing compared with its previous close of 63.52 per dollar. Selling in FMCG counter too weighed down sentiments, with ITC leading the fall. The FMCG major has dipped over 3% to in early morning trade after reporting a lower-than-expected 3.7% year-on-year (y-o-y) growth in its net profit at Rs 2,361 crore for the fourth quarter ended March 2015 (Q4) due to muted growth in cigarette business and decline in agri segment.

The NSE’s 50-share broadly followed index Nifty declined by around ninety points to end below the psychological 8,400 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex declined by over three hundred and ten points to end below its crucial 27,700 mark. Broader markets too struggled to get any traction during the trade and ended the session slightly in the red. The market breadth remained in favor of decliners, as there were 1,149 shares on the gaining side against 1,531 shares on the losing side while 114 shares remain unchanged.

Finally, the BSE Sensex plunged by 313.62 points or 1.12% to 27643.88, while the CNX Nifty dropped by 88.70 points or 1.05% to 8,370.25.

The BSE Sensex touched a high and a low of 27903.29 and 27614.32, respectively. The BSE Mid cap index was down by 0.08%, while Small cap index down by 0.22%.

The top gainers on the Sensex were ONGC up by 2.12%, Bharti Airtel up by 1.25%, Wipro up by 0.41% and Mahindra & Mahindra up by 0.20%. On the flip side, Vedanta down by 3.59%, ITC down by 3.29%, HDFC down by 2.70%, Tata Steel down by 2.58% and GAIL India down by 2.50% were the top losers.

The gaining sectoral indices on the BSE were INFRA up by 0.38% and Oil & Gas up by 0.13% while, Metal down by 1.70%, FMCG down by 1.62%, Capital Goods down by 0.86%, IT down by 0.74% and Bankex down by 0.69% were the losing indices on BSE.

Meanwhile, Industry body, the associated Chambers of Commerce & Industry of India (ASSOCHAM) in feedback from its members on new government’s completion of an eventful one year in office, has said that India Inc. expects some major initiatives and forward movement in key sectors of road, power, coal, non-renewable energy to be essentially led by the public sector investment in the next two quarters by the NDA Government.

The chamber further said that a holistic view must be taken about the stressed assets in banks so that we are not left with large and uncontrolled non-performing assets. Once these sectors look up, the manufacturing revival will pick up towards the completion of the recovery cycle. Besides, the international commodity pricing would also hold the key.

The industry body opined that for kick starting the economic growth, domestic consumer demand has to be revived with improving the sentiment on employment opportunities. 'Consumer demand and the employment prospects are closely connected. Sectors like tourism, aviation are some of the low hanging fruits, which must be ripened and plucked. They will create a huge employment opportunities along with creating an uptick for sectors such as construction and real estate.

ASSOCHAM has already given seven out of 10 for the one-year performance of the Modi government with regard to moderating inflation, stability in foreign exchange, reforms in insurance and defence production, there are select sectors of the economy which are under stress. These include the housing, real estate, banking and telecom. 

The CNX Nifty touched a high and low of 8,441.95 and 8,364.15 respectively.

The top gainers on Nifty were ONGC up by 1.70%, Bank of Baroda up by 1.67%, HCL Technologies up by 1.47%, BPCL up by 1.30% and Power Grid Corporation of India up by 1.28%. On the flip side, Tech Mahindra down by 5.46%, Ambuja Cements down by 3.97%, ITC down by 3.84%, Vedanta down by 3.03% and Tata Steel down by 2.67% were the top losers.

European Markets were trading in the red; France’s CAC was down by 0.68% while, Germany’s market was closed on account of ‘Whit Monday’ holiday and UK’s market was closed on account ‘Late May Bank’ holiday.

The Asian markets closed mostly in green on Monday, despite a negative lead from Wall Street on Friday. South Korea and Hong Kong markets were closed on account of ‘Buddha’s Birthday’ holiday. Japan posted a trade deficit in April following a single-month’s surplus in March. It reported 53.4 billion yen ($439.6 million) deficit in April for the world’s third-biggest economy compared with a 227.4 billion yen surplus in March, the first in several years. Japan’s Current Account fell to a seasonally adjusted -0.21T, from 0.00T in the preceding month whose figure was revised down from 2.07T. Singapore’s consumer prices recorded their biggest year-on-year drop in five years in April, an outcome that could open the way to further monetary easing if economic growth disappoints later this year. The all-items consumer price index fell 0.5 percent in April from a year earlier. That was the largest drop since late 2009 and exceeded the 0.1 percent drop expected in a poll. Taiwan lowered its growth forecast blaming increased competition from China in the tech industry. Gross domestic product was predicted to grow 3.28% in 2015, the statistics bureau stated, 0.5% below its previous forecast.