Late hour sell-off drag markets lower for fourth straight session

Friday’s trading session turned out to be a disappointing for the Indian equity markets as market participants booked all their initial gains hurt by selling in rate sensitive counters. It proved to be roller-coaster ride for Indian markets where frontline gauges after a negative opening gained momentum and entered into green terrain to recapture their crucial 27,000 (Sensex) and 8,150 (Nifty) bastions as sentiments turned up-beat after private forecasters bet on Indian Ocean to turnaround monsoon current. Some support also came with Finance Minister Arun Jaitley’s statement, who allaying concerns over the forecast of a rain deficient monsoon said that the effect won’t be as dire as the plummeting stock markets seemed to indicate. Later the Agriculture Minister Radha Mohan Singh said that the central government will give subsidy on power, diesel and seeds in case of deficient monsoon.

However, sharp wave of selling, which emerged in last leg of trade, dragged the key gauges tad below their neutral lines to end markets lower for fourth straight session. Investors remained cautious ahead of a key meeting of the Organization of the Petroleum Exporting Countries (OPEC) cartel, which is expected to maintain its current production levels despite an oversupplied global market. Investors also awaiting slew of macro-economic data like industrial production (IIP) and consumer price index (CPI) due in the coming week.

Global cues too remained sluggish with European markets were trading in red on Friday, setting a key regional index on course for its steepest weekly fall so far this year, after Greece delayed a key debt payment and as caution prevailed ahead of US employment data. Asian markets ended mostly in the red as investors braced for the outcome of oil cartel OPEC’s Vienna meeting and the US nonfarm payrolls data due out later in the day.

Back home, investors’ sentiments remained weak on report that 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. Selling in rate sensitive counters like, Banking, realty and auto mainly played the spoil sport for the markets. On the flip side, shares related to coal, cement and steel sectors edged higher, as the government has said that it will auction 10 coal mines in the third tranche with reserves of 858.19 million tonnes for steel, cement as well as captive power plants and the process will be completed by August end. Additionally, public sector Oil marketing companies (OMCs) like HPCL and IOC edged higher as crude oil prices extended losses.

The NSE’s 50-share broadly followed index Nifty dipped by around twenty points to end below its psychological 8,150 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex declined by over forty points to finish below the psychological 26,800 mark. Broader markets, however, outperformed benchmarks and ended the session with a gain of around quarter of a percent. The market breadth remained in favour of advances, as there were 1378 shares on the gaining side against 1293 shares on the losing side while 121 shares remain unchanged.

Finally, the BSE Sensex dropped by 44.93 points or 0.17% to 26768.49, while the CNX Nifty declined by 15.95 points or 0.20% to 8,114.70.

The BSE Sensex touched a high and a low of 27014.42 and 26718.44, respectively. The BSE Mid cap index was up by 0.06%, while Small cap index up by 0.26%.

The gaining sectoral indices on the BSE were Metal up by 1.78%, PSU up by 1.35%, FMCG up by 1.05%, INFRA up by 0.93% and Capital Goods up by 0.80% while, Realty down by 1.44%, Bankex down by 0.93%, IT down by 0.80%, Auto down by 0.60% and TECK down by 0.46% were the losing indices on BSE.

The top gainers on the Sensex were Coal India up by 4.44%, GAIL India up by 3.42%, NTPC up by 2.52%, ONGC up by 2.32% and Sun Pharma up by 1.97%. On the flip side, ICICI Bank down by 2.18%, Tata Motors down by 2.11%, HDFC down by 1.62%, Axis Bank down by 1.38% and TCS down by 1.30% were the top losers.

Meanwhile, undeterred by the recent slide in the stock markets that wiped of over 1000 points from Sensex in just two days, the Finance Minister Arun Jaitley has said that the government’s PSU disinvestment programme will continue as planned.  Government has set a target of Rs 69,500 crore from PSU disinvestment for the current fiscal. Of this, Rs 41,000 crore is to come from minority share sale in PSUs and Rs 28,500 crore from strategic stake sale.

Jaitley said that 'I don't read too much on daily movements as far as markets are concerned. By and large with the health of economy recovering, I see much greater stability as far as markets are concerned. And therefore, the disinvestment programme of the government will continue as it has been planned.'

There has been sharp sell-off in the equity markets on worries about the health of the economy after predictions of deficient monsoon and on concerns the central bank would no longer cut interest rates this year.

In the last fiscal the government’s disinvestment proceeds fell well short of the initially targeted amount of Rs.63,425 crore. This fiscal, though the disinvestment department has got approval from Cabinet for selling minority stakes worth about Rs 50,000 crore in a host of PSUs, but it has only been able to divest stake in one company -- REC -- so far this fiscal. The Cabinet has approved sale of 5 percent stakes in ONGC, BHEL and NTPC as well as 10 percent each in IOC, NALCO and NMDC.

The CNX Nifty touched a high and low of 8,191.00 and 8,100.15 respectively.

The top gainers on Nifty were Coal India up by 4.27%, Zee Entertainment Enterprises up by 3.03%, NMDC up by 2.94%, GAIL (India) up by 2.90% and Idea Cellular up by 2.56%. On the flip side, Ambuja Cements down by 3.06%, ACC down by 2.11%, Tata Motors down by 2.03%, IndusInd Bank down by 1.94% and ICICI Bank down by 1.93% were the top losers.

European Markets were trading in the red; Germany's DAX was down by 1.41%, UK's FTSE was down by 0.90% and France's CAC down by 1.65%.

Asian markets closed mostly in red on Friday, with traders nervously watching events in Europe after Greece tied up a deal to delay its latest debt repayments. A deluge of Chinese data due next week may show some signs of steadying in the world’s second-largest economy thanks to stimulus measures, but the street expects more support to counter headwinds from a property downturn and patchy exports. Indonesia’s foreign exchange reserves were $110.77 billion at the end of May, falling slightly from $110.87 billion at the end of April. Philippine inflation eased to its lowest in nine years due to declines in commodities, giving the central bank scope to cut interest rates as the economy loses momentum due to low government spending and sluggish exports. The consumer price index rose 1.6% in May from a year earlier, the lowest rate since at least 2006 based on comparable data, while prices on a month-on-month basis fell 0.1% compared with April’s 0.2% rise. Japan’s index of leading economic indicators rose to a seasonally adjusted 107.2, from 106.0 in the preceding month. Taiwanese CPI rose to a seasonally adjusted annual rate of -0.73%, from -0.80% in the preceding quarter.