Benchmarks end F&O expiry session on pessimistic note

Indian equity markets truly depicted the choppiness of F&O expiry session on Thursday with key gauges ending the session with a cut of around two tenth of a percent. After a cautious start, markets traded range-bound throughout the session and ended the session slightly in the red. Sentiments weighed down after credit rating agency Moody’s said India’s economic growth rate in the January-March quarter is likely to slip to 7.2% from 7.5% in the previous three months, mainly on account of lower production and weak global demand. It also raised questions on the new GDP data series by the Central Statistical Organisation (CSO), which takes 2011-12 as the base year, saying that new data ‘is dubious’ as they do not align well with other indicators of economy.

Muted corporate earnings, growing prospects that the Federal Reserve may raise interest rates and the F&O rollover pressures were further accentuated the nervousness on the Street. However, losses remained capped as some support came with industry body CII’s statement that India’s economy can grow at 9-10 percent in the medium-term with a multi-pronged economic strategy. It has outlined ten areas requiring policy attention that can bring huge economic benefits for growth, investment and employment creation.

On the global front, European markets were trading mostly in the red in early deals, giving back some of the late gains made the previous day as euphoria about a possible deal between Greece and its creditors faded. Asian markets ended mixed with Chinese and Hong Kong shares tumbling on profit taking after recent gains, while the markets elsewhere across the region were posting modest gains on optimism over Greek debt deal after the country's Prime Minister Alexi Tsipras said his government is close to reaching a deal with its European and International Monetary Fund lenders.

Back home, sentiments remained dampened on report that foreign portfolio investors sold shares worth a net Rs 934.98 crore on May 27, 2015, as per provisional data. Market-men were also unable to get any advantage with the recovery in the currency, which after falling for three consecutive days has made a smart bounce back. The rupee was at 63.86 per dollar at the time of equity markets closing as compared to 64.01 per dollar level on Wednesday. Meanwhile, profit-booking on account of bad loan concerns dragged banking stocks lower.

NSE’s 50-share broadly followed index, Nifty slipped by over fifteen points to end below the psychological 8,350 support level, while Bombay Stock Exchange’s Sensitive Index - Sensex declined by around sixty points and managed to hold its crucial 27,500 mark. Broader markets too witnessed selling during the trade and ended the session with a cut of around half a percent. The market breadth remained in favour of decliners, as there were 1,255 shares on the gaining side against 1,406 shares on the losing side while 115 shares remain unchanged.

Finally, the BSE Sensex declined by 57.95 points or 0.21% to 27506.71, while the CNX Nifty lost 15.60 points or 0.19% to 8,319.00.

The BSE Sensex touched a high and a low of 27666.37 and 27354.35, respectively. The BSE Mid cap index was down by 0.53%, while Small cap index down by 0.16%.

The top gainers on the Sensex were Vedanta up by 2.53%, Tata Motors up by 2.52%, Infosys up by 2.30%, Hero MotoCorp up by 1.73% and BHEL up by 1.16%. On the flip side, Cipla down by 2.58%, Tata Power down by 2.18%, Sun Pharma down by 1.94%, Mahindra & Mahindra down by 1.93% and Bharti Airtel down by 1.76% were the top losers.

The gaining sectoral indices on the BSE were Consumer Durables up by 1.31%, IT up by 0.67%, TECK up by 0.41%, FMCG up by 0.20% and Oil & Gas up by 0.17% while, Healthcare down by 1.31%, Bankex down by 0.51%, Metal down by 0.38%, INFRA down by 0.20% and Realty down by 0.15% were the losing indices on BSE.

Meanwhile, Government in its effort to further ease doing business in India, has clarified that the approval of the Foreign Investment Promotion Board (FIPB) will not be required for mergers and acquisitions (M&As) in sectors where foreign direct investment (FDI) is allowed under automatic route. Currently, foreign investment is permitted either through the automatic route or the government approval route. The FIPB, which is an inter-ministerial body, clears investment proposals of up to Rs 3,000 crore, while those proposals involving investment of more than Rs 3,000 crore are given final clearance by the Cabinet Committee on Economic Affairs (CCEA).A new FDI circular was issued by the Department of Industrial Policy and Promotion (DIPP) as several corporates were confused on the issue and in the process the flow of investment was being delayed.

The circular also said that government permission will not be required for issuing ESOPs (employees stock option plans) in sectors under automatic route.  Currently, foreign investment is permitted either through the automatic route or the government approval route. During the April-February period of 2014-15, FDI grew by 39 per cent year-on-year to $28.81 billion. The government has recently taken several steps including reduction in number of approvals and clearances to improve ease of doing business in the country and attract domestic and foreign investments.

The CNX Nifty touched a high and low of 8,364.50 and 8,270.15 respectively.

The top gainers on Nifty were BPCL up by 3.28%, PNB up by 2.77%, Vedanta up by 2.40%, Tata Motors up by 2.29% and Hero MotoCorp up by 1.83%. On the flip side, Cipla down by 2.83%, Tata Power Company down by 2.44%, Grasim Industries down by 1.91%, Sun Pharmaceuticals Industries down by 1.90% and Bharti Airtel down by 1.80% were the top losers. Most of European Markets were trading in the red; Germany's DAX was down by 0.25% and France's CAC down by 0.46% while, UK's FTSE was up by 0.15%.

Asian markets made a mixed closing on Thursday with Chinese market suffering sharp plunge of over 6% after more brokers tightened margin trading requirements for clients and the central bank drained money market liquidity. It was their worst trading day since January 19 when markets fell over 7 per cent on an earlier crackdown on margin trading. It was reported that the central bank, the People’s Bank of China drained tens of billions of yuan from the financial system by selling repurchase agreements to targeted financial institutions. Also, there was speculation that the US is close to raising interest rates that spurred capital outflows.The slump in the Chinese markets weighed on the sentiment of all the emerging markets. Philippine equities slid to a four-month low after the nation’s economic growth trailed estimates.  On the other hand the Japanese market ended in green as the yen touched a 12-year low versus the dollar.