Benchmarks witness bloodbath; Nifty breaches 8,000 mark

Thursday turned out to be a disappointing session for the Indian equity indices which got pounded by around two percentage points, as selling by foreign investors continued amid worries that a likely weak monsoon may delay key reforms and further cuts in borrowing costs. Domestic gauges, soon after a positive start, entered into red terrain and traded dreadfully throughout the session to end at their lowest closing levels since October 2014, breaching their crucial support levels of 26,400 (Sensex) and 8,000 (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 auto, banking and power. Sentiments remained down-beat as investors remained on sidelines ahead of Index of Industrial Production (IIP) data for April and Consumer Price Index (CPI) data for May scheduled to be released tomorrow.

Traders failed to draw any sense of relief from report that indirect tax collection surged by 37.3 per cent in May, while the collections during the first two months (April-May) of the current financial year increased to Rs 96,128 crore, from Rs 69,069 crore during the same period in 2014-15, up by 39.2 per cent. Market men also overlooked the positive economic data of CAD narrowing to $1.3 billion or 0.2% of the GDP in the March quarter, as the Reserve Bank of India (RBI) showed that the CAD was actually a shade higher than $1.2 billion that was recorded in the fourth quarter of 2013-14, on year-on-year basis.

On the global front, European counters were trading in green 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. Asian markets ended mostly in the green amid optimism Greece will forge a debt deal, while Japanese debt paced a retreat in Treasuries.

Back home, sentiments remained dampened on reports that foreign portfolio investors (FPIs) sold shares worth a net Rs 482.11 crore on June 10, 2015, as per provisional data by the stock exchanges. Selling in banking sector mainly played the spoil sport for the Indian equity markets on the back of profit booking after the Reserve Bank of India (RBI) allowed banks to take control of debt-laden companies by converting loans into equity. Software and technology counters too hit rock bottom, despite the weakness in rupee. Additionally, 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.

The NSE’s 50-share broadly followed index Nifty declined by around one hundred and sixty points to end below the psychological 8,000 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex declined by around four hundred and seventy points to end below its crucial 26,400 mark. Broader markets too struggled to get any traction during the trade and ended the session with a cut of over one and a half percent. The market breadth remained in favor of decliners, as there were 781 shares on the gaining side against 1,858 shares on the losing side while 110 shares remain unchanged.

Finally, the BSE Sensex plunged by 469.52 points or 1.75% to 26370.98, while the CNX Nifty dropped by 159.10 points or 1.96% to 7,965.35.

The BSE Sensex touched a high and a low of 27000.14 and 26348.93, respectively. The BSE Mid cap index was down by 1.78%, while Small cap index down by 1.55%.

The 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%, while there were no gainers.

The only gainer on the Sensex was Vedanta up by 1.54%. On the flip side, Tata Power down by 4.88%, Tata Motors down by 3.61%, BHEL down by 3.24%, Reliance Industries down by 3.17% and Axis Bank down by 3.10% were the top losers.

Meanwhile, indirect tax collection surged by 37.3 per cent in May, while the collections during the first two months (April-May) of the current financial year increased to Rs 96,128 crore, from Rs 69,069 crore during the same period in 2014-15, up by 39.2 per cent.  Finance Minister Arun Jaitley said that the collection of indirect taxes in all three categories - customs, central excise and service tax - has shown rising trend in the current financial year, 2015-16.

Jaitley further added that the increase in excise collection was reflective of pick up in manufacturing sector and that the 16.9 percent growth in indirect taxes after excluding the revenue generated from additional excise duties levied this fiscal, “is a fairly healthy growth”.Though, the absolute numbers of tax collections were not shared but the sharp surge in April was largely due to a 100-plus per cent rise in excise duty collection, fuelled mainly by the increase in rates on petroleum. And, the good indirect collections for May were on account of the additional cess on diesel and petrol, as well as the clean energy cess.

Jaitley added that even if the impact of this additional sector is excluded, in May the increase would be 16.9 per cent and cumulatively the increase would be 12.6 per cent for the two months.The CNX Nifty touched a high and low of 8,163.05 and 7,958.25 respectively.

The top gainers on Nifty were Vedanta up by 1.38%, Tech Mahindra up by 0.25%, Zee Entertainment Enterprises up by 0.04% and Bharat Petroleum Corporation up by 0.01%. On the flip side, Tata Power Company down by 5.08%, Idea Cellular down by 4.90%, Kotak Mahindra Bank down by 4.62%, Bosch down by 4.22% and Asian Paints down by 4.08% were the top losers.

European Markets were trading in the green; Germany's DAX was up by 0.70%, UK's FTSE was up by 0.40% and France's CAC up by 0.67%.

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.