Post Session: Quick Review

Indian markets could not hold up to the upward thrust of final hours and just managed a flat closing on Thursday. There were no supportive cues amid lingering concerns from Greece that kept the mood cautious and markets in a tight range for most part of the day. There was a sharp drop in second half followed a by a smart recovery but markets extended their declining streak and ended with a negative bias. Meanwhile, Reserve Bank of India (RBI) governor Raghuram Rajan has defended Tuesday’s interest rate cut, saying there is no contradiction between the decision to cut the benchmark repurchase rate and the upward revision of the inflation projection, adding that investment on the ground remained weak. Traders also were concerned about the weakness in rupee which breached the 64 mark against the dollar in early trade on sustained capital outflows by foreign funds amid appreciation of the American currency overseas. Traders were unable to get any respite with agriculture minister Radha Mohan Singh’s statement that contingency plans were ready for 580-odd vulnerable districts across the country and the government was adequately prepared to contain losses of farm production. The India Meteorological Department (IMD) confirmation that the much-awaited southwest monsoon is likely to set over Kerala in the next 48 hours, too failed to lift the mood.

The global markets showed a somber trend and the Asian markets that cited some strength in early deals on hopes that Greece will reach a deal in its negotiation, ended mostly in red. Chinese markets making a smart comeback ended with gains of around a percent after witnessing a fall of over 5% on news a brokerage suspended margin financing for investors in smaller companies.  European stocks fell to the lowest level in almost a month as the region’s bonds extended a drop and another round of talks failed to end a Greek debt stalemate. Investors were also watching US economic reports as worse-than-forecast data has stoked concern the recovery may not withstand a Federal Reserve rate increase expected this year.

Back home, the domestic markets sensed some relief in the final hours when benchmarks bounced back in green, although they could not hold and once again slipped in red on profit booking at higher levels. Traders got some support with Coal Secretery announcing third round of coal block auction for 10 mines, with bidding starting from June 8 for the unregulated sectors. Auctions will be conducted between August 11-17 and will be completed by August 31. He also said that the government expects to open 60 new mines to achieve coal production target of 1 Bn tone. Power sector stocks that swayed along with the market trend in early deals made a good recovery, as the coal and power minister said that his ministeries were ready with a contingency plan to ensure that there are no power shortages in the country in case of a below normal monsoon. On sectoral front the metal stocks suffered sharp cuts with growing pressure on the commodities in global markets on growth concern, while healthcare and consumer durables too witnessed considerable selling pressure. FMCG pack was once again in red solely due to Nestle.

The BSE Sensex ended at 26813.42, down by 23.78 points or 0.09% after trading in a range of 26551.97 and 26948.84. There were 10 stocks on gainers side against 20 stocks on the losers’ side on the index. (Provisional)

The broader indices made a mixed closing; the BSE Mid cap index was up by 0.17%, while Small cap index ended down by 0.04%.(Provisional)

The top gaining sectoral indices on the BSE were Realty up by 0.82%, Capital Goods up by 0.59%, Oil & Gas up by 0.53%, IT up by 0.20%, TECK up by 0.20%, while Metal down by 1.11%, Consumer Durables down by 0.75%, Auto down by 0.70%, PSU down by 0.36%, FMCG down by 0.33% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were Reliance Industries up by 2.01%, HDFC up by 1.95%, Wipro up by 1.75%, Larsen & Toubro up by 1.26% and HDFC Bank up by 1.18%. On the flip side, Tata Steel down by 2.78%, Vedanta down by 2.16%, ONGC down by 2.06%, ICICI Bank down by 2.03% and Bajaj Auto down by 1.37% were the top losers. (Provisional)

Meanwhile, a survey of RBI-sponsored Professional Forecasters on Macroeconomic Indicators, coming much in line with the cautiousness raised by the RBI governor during the Second Bi-monthly Monetary Policy Statement, 2015-16, has said that the economy is expected to grow at a rate of 7.8 percent in the current fiscal, a shade lower than earlier forecast of 7.9 percent.

Twenty seven professional forecasters who participated in the latest survey round (Round 34) conducted in May 2015, expect real Gross Value Added at basic price (GVA) to increase by 7.8 percent in 2015-16, and ‘Agriculture and Allied Activities’ and ‘Services’ to grow by 2.2 percent and 10 percent, respectively.” The survey released in April had projected the GVA to increase by 7.9 percent in 2015-16. The professionals in the latest survey viewed that the 'industry' would grow by 6.2 percent in the current fiscal.

As per the survey, Central Government’s gross fiscal deficit (GFD) is projected at 3.9 per cent of GDP in 2015-16 and is expected to moderate to 3.5 per cent of GDP in 2016-17. The combined GFD of Central and State Governments is projected at 6.5 per cent of GDP in 2015-16 and is expected to improve to 6.2 per cent of GDP in 2016-17.

The forecasters expects that the private final consumption expenditure at current prices to increase by 12.7 per cent in 2015-16 and further by 13.1 per cent in 2016-17, while the Gross Saving rate is projected at 30.8 per cent of Gross National Disposable Income (GNDI) in 2015-16 and 31.0 per cent of GNDI in 2016-17. The forecasters expect Gross Fixed Capital Formation rate at 28.8 per cent of GDP in 2015-16, which is expected to improve to 29.4 per cent of GDP in 2016-17.

Regarding inflation, the forecasters expect core CPI (excluding food and fuel) to remain above 5.0 per cent from Q3:2015-16. CPI (Combined) headline inflation forecast has been cut between 20 bps to 40 bps in the current round from the previous round. Headline inflation is expected to increase from 5.0 per cent in Q1:2015-16 to 5.5 per cent in Q1:2016-17. Forecasters assigned maximum probability of 70 per cent (based on average of individual forecasts) that CPI headline inflation will be in the range 5.0-5.9 per cent in March 2016. Based on this probability distribution, the implicit CPI inflation rate for March 2016 is expected at 5.6 per cent.

The CNX Nifty ended at 8130.65, down by 4.45 points or 0.05% after trading in a range of 8056.75 and 8160.05. There were 22 stocks advancing against 28 declining stocks on the index. (Provisional)

The top gainers on Nifty were BPCL up by 3.28%, Bosch up by 2.17%, Reliance Industries up by 1.82%, Tech Mahindra up by 1.81% and Ambuja Cement up by 1.42%. On the flip side, NMDC down by 4.48%, PNB down by 3.34%, Tata Steel down by 2.59%, Lupin down by 2.52% and Vedanta down by 2.18% were the top losers. (Provisional)

Most of European Markets were trading in the red; Germany’s DAX was down by 175.53 points or 1.51% to 11,247.62, UK’s FTSE 100 lost 98.38 points or 1.42% to 6,851.82 and France’s CAC was lower by 95.22 points or 1.90% to 4,938.47.

Asian markets closed mostly in red on Thursday, brushing off a positive lead from Wall Street. Bank of Japan’s new board member Yutaka Harada stated that the recent declines in the yen mean the currency is in a pretty good place. He added that overall, the benefits of a weak yen outweigh the demerits because this increases corporate earnings, exports and helps create jobs. Indonesia’s central bank stated that it stood ready to intervene in the foreign exchange and bond markets to ensure stability, as the rupiah neared a 17-year low against the dollar. Global risk from a possible US interest rate hike combined with Indonesia’s slowing economic growth and high inflation have put pressure on the rupiah. The South Korean economy remains weak overall as a slump in exports weighs down on its growth. The Korea Development Institute stated that private consumption has improved at a moderate pace, but a drop in outbound shipments and predictions of a weaker global economy are hindering growth. South Korean GDP rose to a seasonally adjusted 0.8%. The economy expanded due to increased investment in construction. On a year-on-year basis, South Korea’s economy grew 2.5% in Q1, lower than the 2.7% expansion posted in Q1 2014.