Benchmarks extend losing streak to fifth straight session

Extending their southward journey to fifth straight session, Indian equity benchmarks ended the Monday’s trade with a cut of around a percentage point. After a cautious start, the domestic bourses never looked in recovery mood and ended the trade near four and a half week lows, breaching their crucial support levels of 26,600 (Sensex) and 8,050 (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 consumer durables, metal and oil and gas.

Sentiments remained dampened with industry body, Assocham’s  latest assessment that in the face of slow global demand for merchandise, India’s exports in the current financial year are likely to stay flat or may even move backward of $ 310 billion, the figure achieved in 2014-15. Also, global credit rating agency Moody’s said that below-normal rains would be credit negative for India’s ratings as it would lower farm output and stoke food prices. Fears of selling by foreign funds on expectation of a rate hike by the US Fed amid strong jobs data dampened market sentiment. Moreover, traders looked cautious ahead of some of the key macro data scheduled to be announced later in the week, while the Reserve Bank of India (RBI) is scheduled to announce current account deficit (CAD) data for the fourth quarter of 2014-15 after the market hours.

Sentiment was also hurt by weak global cues as slowing Chinese imports increased concerns about the world’s second largest economy, while strong US jobs data was seen raising the chance for an earlier US interest rate hike this year. European markets too were trading in red in early deals, weighed down by a drop in agrochemicals group Syngenta although Deutsche Bank outperformed to surge higher after boardroom changes.

Back home, depreciation in Indian rupee also weighed on sentiments. Rupee was trading at 64.08 per dollar at the time of equity markets closing compared with its previous close of 63.75 per dollar. Sentiments also remained dampened on reports that foreign institutional investors were net sellers to the tune of Rs 550 crore on Friday.

Meanwhile, steel stocks remained in somber mood during the trade with global ratings agency Moody’s stating that steel prices in India are expected to remain under pressure in the current fiscal, but the demand is expected to pick up with an uptick in commercial vehicle sales. Additionally, public sector oil marketing companies (OMCs) edged lower as crude oil prices gained in previous session and rupee weakened against the dollar. On the flip side, stocks related to Hotel sector remained on buyers’ radar after foreign tourist arrivals grew by 9.2% in May 2015 over May 2014.

NSE’s 50-share broadly followed index, Nifty declined by over seventy points to end below the psychological 8,050 support level, while Bombay Stock Exchange’s Sensitive Index - Sensex slipped by over two hundred and forty points to end below its psychological 26,600 mark. Broader markets too witnessed selling during the trade and ended the session with a cut of around one and a half percent. The market breadth remained in favour of decliners, as there were 786 shares on the gaining side against 1,852 shares on the losing side while 128 shares remain unchanged.

Finally, the BSE Sensex plunged by 245.40 points or 0.92% to 26523.09, while the CNX Nifty dropped by 70.55 points or 0.87% to 8,044.15.

The BSE Sensex touched a high and a low of 26827.06 and 26472.87, respectively. The BSE Mid cap index was down by 1.54%, while Small cap index down by 1.42%.

The losing sectoral indices on the BSE were Consumer Durables down by 1.94%, Metal down by 1.73%, Oil & Gas down by 1.55%, FMCG down by 1.52%, Healthcare down by 1.17 %, while there were no gainers.

The top gainers on the Sensex were Tata Power up by 1.13%, Axis Bank up by 0.92%, Bajaj Auto up by 0.76%, TCS up by 0.24% and Mahindra & Mahindra up by 0.15%. On the flip side, Vedanta down by 3.12%, Tata Steel down by 2.64%, Reliance Industries down by 2.30%, Hero MotoCorp down by 2.24% and Sun Pharma down by 2.21% were the top losers.

Meanwhile, Industry body the Associated Chambers of Commerce & Industry of India (Assocham) in its latest assessment has said that in the face of slow global demand for merchandise, India’s exports in the current financial year are likely to stay flat or may even move backward of $ 310 billion, the figure achieved in 2014-15, which itself was lower against a target of $ 340 billion for 2014-15 fiscal.

The industry body has further noted that, while it has been a weak trend since July 2014, exports have been witnessing contractions since January this year right through April. Engineering products, gems and jewellery and petroleum products are the biggest contributors to the overall export basket in terms of value. In the previous fiscal, while engineering goods registered a modest increase, the other two segments have been witnessing sharp drop. It further stated that the trend is likely to continue at least for gems and jewellery, while the situation may somewhat stabilize for the petroleum segment since after seeing a sharp fall, the crude oil prices have stopped seeing much of drop. Petroleum exports are related to the prices of crude oil.

Assocham’s paper has also said that going forward, the merchandise exports are likely to average around $22-25 billion a month till the end of second quarter of the current fiscal. The shipments would improve thereafter, but the upside remains limited, the paper noted with concern. However, the impact of the flat or some drop in exports would not have major impact on the trade balance since imports too would remain in muted form because of the poor consumption demand in the domestic Indian economy. Imports too would remain between $440-450 billion in the current fiscal ---more or less in sync with the previous year.

The CNX Nifty touched a high and low of 8,131.00 and 8,030.55 respectively.

The top gainers on Nifty were Tata Power Company up by 1.42%, NMDC up by 1.21%, Bajaj Auto up by 1.07%, UltraTech Cement up by 0.85% and Axis Bank up by 0.79%. On the flip side, PNB down by 3.79%, Cairn India down by 3.66%, Bank of Baroda down by 3.59%, Bosch down by 3.54% and Tata Steel down by 3.02% were the top losers.

European Markets were trading in the red; Germany's DAX was down by 0.55%, UK's FTSE was down by 0.07% and France's CAC down by 0.55%.

Asian markets closed mostly in red on Monday, while Shanghai Composite clinched fresh seven-year peaks after more weak Chinese trade figures fuelled expectations of fresh stimulus measures. China’s exports in May fell less than expected but a double-digit drop in imports will likely keep the pressure on Beijing for more stimulus to avert a sharper economic slowdown. China’s exporters have been struggling to cope with weak overseas demand, rising labor and currency costs, exacerbating downward pressure on the world’s second-largest economy. Exports in May fell 2.5% from a year earlier and imports slid 17.6%. That, left the country with a near record trade surplus of $59.49 billion for the month. Japan’s economy expanded at an annualized pace of 3.9% in the first three months of this year, revised up from an initial estimate of 2.4% growth. On a quarter-on-quarter basis, gross domestic product rose a revised 1% in January-March, compared with a preliminary reading of a 0.6% increase. Japan’s Bank Lending remained unchanged at a seasonally adjusted annual rate of 2.6%, compared to the preceding quarter. Japan’s Economy Watchers Current Index fell to a seasonally adjusted 53.3, from 53.6 in the preceding month. Taiwanese Trade Balance rose to a seasonally adjusted annual rate of 5.42B, from 4.76B in the preceding month.