Benchmarks witness bloodbath on RBI’s cautious stance, deficient monsoon

Tuesday turned out to be a disappointing session for the Indian equity indices which got pounded by around two and a half percentage points as investors sold stocks across sectors after the Reserve Bank of India (RBI) lowered its FY16 GDP growth estimate amid sub normal monsoons concerns and crude price hike. After a cautious start, the domestic bourses never looked in recovery mood and ended the trade near two and a half week lows, breaching their crucial support levels of 27,200 (Sensex) and 8,250 (Nifty). Selling was both brutal and wide-based as none of sectoral indices on BSE could manage a green close. Counters which featured in the list of worst performers included realty, banking and fast moving consumer goods.

Sentiments remained down beat after the RBI at its monetary policy review signaled that further rate cuts could be delayed. Though, it reduced the benchmark repo rate, or the rate at which banks borrow from the central bank, by 25 basis points to 7.25% which was in-line with expectations. Meanwhile, it has kept both CRR and SLR rates unchanged. Sentiments also remained dampened after India Meteorological Department (IMD) has downgraded this year’s monsoon forecast to 88% of the long-term average from April forecast of 93% of the long-term average. Contraction in the output of eight core industries by 0.4 per cent in April on poor performance of electricity, cement, refinery products and fertiliser sector too dampened the sentiments.

Selling got intensified as European markets, after a positive start, turned in red and were trading with a cut of around half a percent in early deals amid ongoing uncertainty over Greece's debt situation. Most of the Asian equity indices ended the session in the red terrain as investors remained cautious, as upbeat economic data from the US reinforced the view that the US Federal Reserve is on track to hike interest rates later in the year.

Back home, depreciation in Indian rupee against dollar too dampened the sentiments. The rupee was trading at 63.87 per dollar at the time of equity markets closing versus its previous close of 63.71 per dollar. Slump in rate sensitive counters too played spoil sport for the Indian equity markets. Bank shares edged lower amid concerns of sluggish credit growth while asset quality concerns continued to weigh on the sector. Additionally, stocks related to aviation space too edged lower after Jet fuel prices have been hiked by a steep 7.5 per cent, in Delhi it was raised by Rs 3,744.08 per kilolitre (kl) or 7.54 per cent, to Rs 53,353.92.

The NSE’s 50-share broadly followed index Nifty tumbled by around two hundred points to end below the psychological 8,250 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex declined by over six hundred and sixty points to finish below its psychological 27,200 mark. Broader markets too witnessed blood-bath and ended the session with a cut of over two percentage points. The market breadth remained in favor of decliners, as there were 804 shares on the gaining side against 1,875 shares on the losing side while 104 shares remain unchanged.

Finally, the BSE Sensex plunged by 660.61 points or 2.37% to 27188.38, while the CNX Nifty declined by 196.95 points or 2.34% to 8,236.45.

The BSE Sensex touched a high and a low of 27902.53 and 27146.68, respectively. The BSE Mid cap index was down by 2.22%, while Small cap index down by 2.06%.

The top gainers on the Sensex were Bharti Airtel up by 0.40%. On the flip side, SBI down by 4.28%, Axis Bank down by 4.20%, Hindalco down by 3.97%, ITC down by 3.95% and Hero MotoCorp down by 3.76% were the top losers.

The 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% and Auto down by 2.08%. While, there were no gaining sectoral indices on the BSE.

Meanwhile, the firming up oil prices has led to another rate hike in aviation turbine fuel (ATF) prices by the oil companies. Jet fuel prices have been hiked by a steep 7.5 per cent, in Delhi it was raised by Rs 3,744.08 per kilolitre (kl) or 7.54 per cent, to Rs 53,353.92. Rates of non-subsidised cooking gas (LPG), too has been hiked by Rs 10.50 per cylinder to Rs 626.50 per 14.2-kg cylinder in Delhi from Rs 616 previously.

Earlier, the oil companies had marginally hiked the ATF prices by Rs 272 per kl or 0.5 per cent to Rs 49,609.84. Following global trends, the price of non-subsidised or market-priced domestic cooking gas was hiked following a Rs 5 per 14.2-kg hike in rates effected from May 1. ATF price had been cut by Rs 23,648.73 or 33 per cent in seven reductions since August 2014, while in the seven monthly reductions, non-domestic LPG rates had been slashed by Rs 317.50 per cylinder.

Households are entitled to 12 cylinders of 14.2-kg each or 34 bottles of 5-kg each. 14.2-kg cylinder will now cost Rs 626.50, while the 5-kg pack will cost Rs 318.50 in Delhi. Following similar trends, rates of market-priced 19 kg LPG cylinder has been hiked to Rs 1,151 per bottle from Rs 1,134.

Government owned oil marketing companies IOC, BPCL and HPCL revise jet fuel and non-subsidised LPG prices on the first of every month based on average imported cost and rupee-dollar exchange rate.

The CNX Nifty touched a high and low of 8,445.35 and 8,226.05 respectively.

The top gainers on Nifty were Zee Entertainment Enterprises up by 2.58%, Lupin up by 0.69% and Bharti Airtel up by 0.22%. On the flip side, Axis Bank down by 4.44%, IndusInd Bank down by 4.32%, State Bank of India down by 4.21%, Asian Paints down by 4.20% and ITC down by 4.08% were the top losers.

Most of European Markets were trading in the red; Germany's DAX was down by 0.23% and UK's FTSE was down by 0.47% while, France's CAC up by 0.07%.

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.