Post Session: Quick Review

Indian markets in a very disappointing day of trade slumped again on Thursday with the rally of last session proving just a dead cat bounce. The major benchmarks after reclaiming their crucial levels of 27000 (Sensex) and 8150 (Nifty) in early trade were dragged considerably on profit taking, losing more than they had gathered in last session. Both Sensex and Nifty down by around two percent ended at their lowest closing levels since October 2014. A faltering monsoon making marginal progress after a late onset weighed on the sentiment. Due to the recent cyclonic storm Ashobaa in the Arabian Sea, the pre-Monsoon activity which should have become active by now has also not picked up.

In the global markets after a good show of the US markets overnight, the Asian pack too ended mostly in green on some bargain hunting after recent weakness and as higher commodity prices lifted resource stocks. While the European markets made a positive start as the Greek Prime Minister Alexis Tsipras heads into a new round of talks with his country’s creditors. Tsipras promised Germany and France that he will step up efforts to find a package of reforms and budget fixes to release financial aid.

In the early part of the trade some incremental buying was seen after the current account deficit (CAD) narrowed sharply to $1.3 billion or 0.2 per cent of GDP, in the fourth quarter and also by a World Bank report that leading the growth chart of major economies, India with an expected growth rate of 7.5 percent this year is set to surpass China. However, the joy was short lived and profit booking started in very wee hours of trade, dragging the major indices lower, amid monsoon worries and uncertainty about upcoming macro data of IIP for April and CPI for May slated to be announced tomorrow. Markets once after losing the momentum never showed any sign of resistance and kept grinding lower only to stop with the closing bell, the brutal sell-off dragged the Sensex below the crucial 26400 and Nifty below 8000 levels respectively. The broader markets suffered similar magnitude of cuts, while none of the sectoral indices showed any recovery attempt and ended with considerable losses, led by banking, auto, power, consumer durables and realty. IT and tech gauges too lost heavily, despite the weakness in rupee. Sugar stocks which came into limelight in last session after the government approved an interest free loan of Rs 6000 to sugar mills to pay cane growers arrears, too gave up their gains after Indian Sugar Mills Association said the move did not address the basic problem of surplus sugar and depressed prices. Bajaj Hindusthan, Shree Renuka, Balrampur Chini and Dhampur Sugars all lost anywhere between 3-6 percent for the day. 

The BSE Sensex ended at 26370.98, down by 469.52 points or 1.75% after trading in a range of 26348.93 and 27000.14. There were just 2 stocks on gainers side against 28 stocks on decliners side on the index.(Provisional)

The broader indices too ended with deep cuts; the BSE Mid cap index lost 1.78%, while Small cap index was down by 1.55%.(Provisional)

The top losing sectoral indices on the BSE were Bankex down by 2.37%, Auto down by 2.37%, Power down by 2.31%, Consumer Durables down by 2.03% and Realty down by 1.96%.(Provisional)

The two gainers on the Sensex were Vedanta up by 1.43% and GAIL India up by 0.18%. On the flip side, Tata Power down by 4.95%, Tata Motors down by 3.46%, Axis Bank down by 3.25%, Cipla down by 3.11% and Reliance Industries down by 3.08% were the top losers.(Provisional)

Meanwhile, in a positive sign for the economy, current account deficit (CAD), the excess of spending overseas than earnings, narrowed to $1.3 billion or 0.2 percent of the GDP in the March quarter from $8.3 billion or 1.6 percent of GDP in the previous quarter, due to the slide in crude oil and commodity prices. On year-on-year basis, CAD in the fourth quarter was a shade higher than $ 1.2 billion or 0.2 percent of GDP in the same quarter of financial year 2013-14. The CAD has narrowed for the second straight quarter now.

For the full fiscal 2014-15, the CAD shrank to $ 27.5 billion, or 1.3 percent of GDP, from $ 32.4 billion or 1.7 percent of GDP a year ago. The Reserve Bank of India data further showed that the country’s balance of payments recorded a quarterly surplus of $30.1 billion, helped by robust capital inflows and the narrow CAD.

RBI stated that lower CAD, on the back of contraction in trade deficit and marginal improvement in the net invisible earnings, along with a sizable increase in net financial flows enabled a large build-up of reserves. The central bank also said that it added a whopping $ 61.4 billion to the foreign exchange reserves in 2014-15 compared to $ 15.5 billion in the previous fiscal.

Merchandise trade deficit for the January-March period stood at $27 billion, much lower than around $40 billion in the previous three-month period. However, a fall in exports is worrisome. However, in year-over-year terms, the trade deficit in the fourth quarter widened marginally as exports registered a larger decline of 15.4 percent than imports of 10.4 percent.

The CNX Nifty ended at 7965.35, down by 159.10 points or 1.96% after trading in a range of 7958.25 and 8163.05. There were 2 stocks in green against 48 stocks in red on the index.(Provisional)

The gainers on Nifty were Vedanta up by 1.62% and Tech Mahindra up by 0.22%. On the flip side, Tata Power down by 5.21%, Idea Cellular down by 4.56%, Asian Paints down by 4.16%, Kotak Mahindra Bank down by 4.02% and Bosch down by 3.84% were the top losers.(Provisional)

European Markets made a positive start, UK’s FTSE 100 gained 30.79 points or 0.45% to 6,861.06, France’s CAC was up by 37.61 points or 0.76% to 4,972.52 and Germany’s DAX was higher by 95.28 points or 0.85% to 11,360.67.

Asian markets closed mostly in green on Thursday, following a strong lead from Wall Street. China’s Premier Li Keqiang stated that the economy faces relatively large downward pressure, as the global recovery remains unsteady. The Premier added that the world’s second-largest economy needed a new driving force to maintain steady growth. China’s fixed-asset investment grew at its slowest rate in nearly 15 years in May, missing expectations even as growth in retail sales and factory output steadied, arguing for Beijing to increase policy support to avert a deeper downturn. Fixed-asset investment, a crucial driver of the world’s second-largest economy, rose 11.4% in the first five months of this year from the year-earlier period. Chinese Industrial Production rose to 6.1%, from 5.9% in the preceding month while Chinese Retail Sales rose to an annual rate of 10.1%, from 10.0% in the preceding month.

South Korea’s central bank lowered its key interest rate to a historic low, responding to a slump in exports and the prospect that the outbreak of the deadly MERS virus could slow the economy. Bank of Korea policymakers cut the policy rate by a quarter of a percentage point to 1.5%, the second rate cut this year. In March, the bank lowered the key rate and downgraded its growth forecast for Asia’s fourth-largest economy as exports continued to slump. Malaysian Industrial Production fell to a seasonally adjusted annual rate of 4.0%, from 6.9% in the preceding month.