Late hour buying helps benchmarks to end flat

Indian equity benchmarks staged a smart recovery in last leg of trade on Thursday to end flat, pairing almost all of their early losses, supported by short-covering in beaten down but fundamentally strong stocks. Sentiment remained down-beat after a Reserve Bank of India (RBI) sponsored survey stated 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. Sentiments also remained dampened on report that FDI in India declined by sharp 40 per cent year-on-year to $2.11 billion in March 2015, compared to $3.53 billion in March 2014. Earlier, after a cautious start markets extended their downfall to touch intraday lows. The indices even went on to test important psychological 26,600 (Sensex) and 8,050 (Nifty) levels, but the key gauges got solid support around those intraday low levels as they convalesced from thereon to end tab below their neutral lines.

Moreover, some respite came 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. Some support also came 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.

On the global front, European counters have made a weak start and were trading in red terrain in early deals on Thursday as a pick-up in bond yields weighed on utility stocks, whose large levels of debt make them particularly sensitive to credit market jitters. Asian markets ended mostly in the 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.

Back home, depreciation in Indian rupee too weighed on the sentiments. Rupee was trading at 64.04 per dollar at the time of equity markets closing compared with its previous close of 63.90 per dollar. Sentiments also remained dampened on reports that foreign portfolio investors sold shares worth a net Rs 727.61 crore June 3, 2015, as per provisional data. Selling in Auto stocks too dampened the sentiments as broking firms have started lowering earnings estimates on concerns that weak monsoon could hurt volume growth. Moreover, the fears of drought and its impact on the rural economy continued to pressurize FMCG stocks. On the flip side, stocks related to information technology sector edged higher on the back of depreciation in rupee.

The NSE’s 50-share broadly followed index Nifty dipped marginally but managed to hold its psychological 8.100 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex slipped by over twenty points to finish below the psychological 26,850 mark. Broader markets too struggled to gay any traction during the trade and ended the session mixed. The market breadth remained in favour of decliners, as there were 1,273 shares on the gaining side against 1,382 shares on the losing side while 119 shares remain unchanged.

Finally, the BSE Sensex declined by 23.78 points or 0.09% to 26813.42, while the CNX Nifty lost 4.45 points or 0.05% to 8,130.65.

The BSE Sensex touched a high and a low of 26948.84 and 26551.97, respectively. The BSE Mid cap index was up by 0.17%, while Small cap index down by 0.04%.

The 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% and TECK up by 0.20% while, Metal down by 1.11%, Healthcare down by 0.77%, Consumer Durables down by 0.75%, Auto down by 0.70% and PSU down by 0.36% were the losing indices on BSE.

The top gainers on the Sensex were Reliance Industries up by 1.85%, Wipro up by 1.75%, HDFC up by 1.18%, HDFC Bank up by 1.05% and Axis Bank up by 0.98%. On the flip side, Tata Steel down by 2.58%, ONGC down by 2.16%, Vedanta down by 1.89%, ICICI Bank down by 1.74% and Bajaj Auto down by 1.37% were the top losers.

Meanwhile, Foreign direct investment (FDI) in India declined by sharp 40 per cent year-on-year to $2.11 billion in March 2015 compared to $3.53 billion in March 2014. The FDI numbers were at the lowest in the last four months of 2014-15 fiscal. According to the data of Department of Industrial Policy and Promotion (DIPP), during the 2014-15 financial year, foreign fund inflows grew 27 per cent, year-on-year, to $30.93 billion as against $24.29 billion in 2013-14.Sectorwise, services received the maximum FDI of $3.25 billion in 2014-15, followed by telecommunication at $2.89 billion, automobiles worth $ 2.57 billion, computer software and hardware at $2.20 billion and pharmaceuticals $1.52 billion.

Geographically, for the entire financial year, India received the maximum FDI from Mauritius worth $ 9.03 billion, followed by Singapore $6.74 billion, the Netherlands $3.43 billion, Japan $2.08 billion and the US worth $1.82 billion.

In a related development, the Commerce and Industry Ministry has notified the FDI policy relaxations for NRIs, now non-repatriable investments by NRIs, OCIs and PIOs will be treated as domestic investments and will not be subject to foreign direct investment caps.

The CNX Nifty touched a high and low of 8,160.05 and 8,056.75 respectively.

The top gainers on Nifty were BPCL up by 3.59%, Reliance Industries up by 2.17%, Bosch up by 2.15%, Tech Mahindra up by 2.11% and Wipro up by 1.94%. On the flip side, NMDC down by 4.44%, PNB down by 3.60%, Tata Steel down by 2.88%, Lupin down by 2.62% and Vedanta down by 2.28% were the top losers.

European Markets were trading in the red; Germany's DAX was down by 1.31%, UK's FTSE was down by 1.64% and France's CAC down by 1.22%.

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.