Post Session: Quick Review

Reacting negatively to the policy announcement of the Reserve Bank of India (RBI), Indian equity markets slumped on Tuesday with benchmarks witnessing cuts of over two percent each, breaching their crucial psychological support levels of 27200 (Sensex) and 8250 (Nifty). It was sudden and sharp selling pressure that dragged the range bound trading markets deep in red. Though, the central bank cut the repo rate by 25 basis points but it seems to have already been factored in with traders expecting a cut of 50 basis points, as the RBI signaled a long pause on monsoon concern. The selling aggravated with the RBI’s caution on return of inflationary pressure, it said that inflation is expected to be pulled down by base effects till August but to start rising thereafter to about 6.0 per cent by January 2016 - slightly higher than the projections in April. It further added that strong food policy and management will be important to help keep inflation and inflationary expectations contained over the near term.

On the global front, most of the Asian markets made a lower ending with the Japanese market declining after a 12-day rally, the European markets started on a somber note resuming declines after halting a two-day drop on Monday, as Greece’s creditors said talks must step up over the country’s fate before it runs out of time and money.

Back home, the markets were badly butchered with selling aggravating in second half and benchmarks ending at the lowest point of the day with the closing of the trade. In a double whammy, while the RBI raised concern about the bounce back in inflation, the met department downgraded its June-September monsoon forecast from 93% to 88%. Rainfall of less than 90% is considered to be a drought year. The arrival of the monsoons has already been delayed in the country’s southern tip, Kerala, by about four-five days. The mood was cautious from the very beginning, as the output of eight core industries contracted by 0.4 percent in April on poor performance of electricity, cement, refinery products and fertiliser sectors. Back on street, the broader markets that were showing some resistance in early deals gave up finally and ended in line with the benchmarks, down by over 2 percent. Sectorally none of the gauges got any respite and suffered sharp selling with rate sensitives taking the hardest hit.Realty and banking suffered the most on the BSE down by around 4 percent, while FMCG, auto, metal and healthcare followed with cut of around 2%. Banking stocks were under immense pressure on concerns over further easing of interest rates as RBI said that further easing depends on strength of monsoon.

 The BSE Sensex ended at 27188.38, down by 660.61 points or 2.37% after trading in a range of 27146.68 and 27902.53. There was just 1 stock in green against 29 stocks in red on the index.(Provisional)

The broader indices too ended in deep red; the BSE Mid cap index was down by 2.22%, while Small cap index lost 2.06%.(Provisional)

The top losing sectoral indices on the BSE were Realty down by 3.83%, Bankex down by 3.46%, FMCG down by 2.83%, Metal down by 2.11%, Auto down by 2.08%, while there were no gainers.(Provisional)

The top gainers on the Sensex were Bharti Airtel up by 0.41%. On the flip side, Axis Bank down by 4.57%, ITC down by 4.23%, SBI down by 4.22%, ICICI Bank down by 4.00% and Hindalco down by 3.89% were the top losers.(Provisional)

Meanwhile, showing their worst monthly fall and boosting the case of a rate cut by the Reserve Bank of India (RBI) the output in the eight key infrastructure industries, comprising nearly 38 % of the weight of items included in the Index of Industrial Production (IIP), declined in April for a second month in a row, by 0.4 per cent. Output had fallen by annual 0.1 per cent in March and the decline in April was the worst since the 0.3% dip in July 2005.

Coal and steel were only two sectors that saw some growth, while five sectors recorded a decline in output highlighting the pervasiveness of the slowdown. The overall growth of eight core industries in the entire 2014-15 fiscal stood at 3.5% against 4.2% in the previous fiscal. The growth rate of core sector industries has been declining since November last year.

Coal production having weight of 4.38% increased by 7.9% in April, 2015 over April, 2014. Its cumulative index during April to March, 2014-15 increased by 8.4% over corresponding period of previous year. Steel production having weight of 6.68% increased by 0.6% in April, 2015, while its cumulative index during April to March, 2014-15 increased by 0.8% over the corresponding period of previous year.

On the other hand, Crude Oil production having weight of 5.22% declined by 2.7% in April, 2015, while its cumulative index during April to March, 2014-15 declined by 0.9% over the corresponding period of previous year. Natural Gas production having weight of 1.71% declined by 3.6% in April, 2015, its cumulative index during April to March, 2014-15 declined by 5.2% over the corresponding period of previous year. Petroleum Refinery production having weight of 5.94% declined by 2.9% in April, 2015, though its cumulative index during April to March, 2014-15 increased by 0.4 % over the corresponding period of previous year.

Fertilizer production having weight of 1.25% too showed a modest declined by 0.04% in April, 2015 and its cumulative index during April to March, 2014-15 declined by 0.1% over the corresponding period of previous year. Cement production having weight of 2.41% declined by 2.4 % in April, 2015, though its cumulative index during April to March, 2014-15 increased by 5.7 % and Electricity generation having weight of 10.32% declined by 1.1 % in April, 2015, while its cumulative index during April to March, 2014-15 increased by 8.1% over the corresponding period of previous year.

The CNX Nifty ended at 8236.45, down by 196.95 points or 2.34% after trading in a range of 8226.05 and 8445.35. There were just 3 stocks on gainers side against 47 stocks on decliners side on the index.(Provisional)

The top gainers on Nifty were Zee Entertainment up by 2.25%, Lupin up by 0.49% and Bharti Airtel up by 0.36%. On the flip side, Axis Bank down by 4.38%, SBI down by 4.30%, Indusind Bank down by 4.05%, ITC down by 4.04% and Hindalco down by 3.97% were the top losers.(Provisional)

The European markets made a soft start, Germany’s DAX lost 95.01 points or 0.83% to 11,341.04, UK’s FTSE 100 was down by 61.37 points or 0.88% to 6,892.21 and France’s CAC was trading lower by 27.29 points or 0.54% to 4,998.01.

Asian markets closed mostly in red on Tuesday, with Hong Kong shares ending lower, in line with a broad sell-off across Asia and despite gains on Wall Street. Indonesia’s Stock Exchange was closed today on account of ‘Vesak Day’ holiday. Bank of Japan Governor Haruhiko Kuroda stated that it was important for currency rates to reflect economic fundamentals and move in a stable manner. Kuroda added that he had no comment on the current level of the yen or the speed of its recent depreciation. Japanese Finance Minister Taro Aso refrained from commenting on renewed weakness in the yen, after issuing a warning last week about its slide. Japan’s Monetary Base rose to 35.6%, from 35.2% in the preceding month while Japan’s Average Cash Earnings rose to a seasonally adjusted 0.9%, from 0.0% in the preceding quarter whose figure was revised down from 0.1%. Hong Kong Retail Sales rose to a seasonally adjusted annual rate of -2.2%, from -2.9% in the preceding month. South Korean CPI rose to a seasonally adjusted annual rate of 0.5%, from 0.4% in the preceding month. Thai CPI fell to a seasonally adjusted annual rate of -1.27%, from -1.04% in the preceding month.