Benchmarks end with marginal cut; Nifty holds 8,500 mark

Tuesday turned out to be a disappointing session for the Indian equity indices which ended the trade with marginal losses. Earlier, markets made a positive opening and traded in the green for most part of the day’s trade as sentiments remained up-beat after government dismissed the possibility of any material impact on the Indian economy from the developments in Greece, but it anticipates some impact on the rupee from investors pulling out in fear. Ongoing economic developments, progress of monsoons and a possibility of a rate cut too aided the sentiments. A further decline in crude oil prices and a strong rupee have also buoyed the trading sentiments.

However, sentiments took U-turn and entered in red in last hour of trade as investors turned cautious ahead of the first quarter earnings season, which will kick off with Tata Consultancy Services (TCS) announcing it April-June results on July 9. Also, Index of Industrial Production (IIP) data for the month of May is scheduled to be released on July 10. Some cautiousness came with CRISIL Research’s report stating that India Inc is set to post disappointing quarter results for quarter ended June 30, on the back of soft commodity prices, weak growth in investment linked sectors and subdued rural earnings. Meanwhile, all eyes would be in Brussels where Greek Prime Minister Alexis Tsipras would present a set of new proposals to an emergency euro zone summit in a last bid to stay in the euro zone.

Weak opening in European counters too dampened the sentiments with CAC, DAX and FTSE were trading with a cut of around half a percent. Asian markets ended mostly in red as Chinese equity markets went into a fresh tailspin, fraying investor nerves already strained by uncertainty hanging over the future of Greece and the European currency union.

Back home, depreciation in Indian rupee dampened the sentiments. Rupee was trading at 63.47 per dollar at the time of equity markets closing compared with its previous close of 63.40 per dollar. Selling in auto sector too weighed on sentiments post their June sales numbers. However, losses remained capped on reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 149.37 crore yesterday, July 6, 2015, as per provisional data released by the stock exchanges.

The banking shares remained on buyers’ radar on hopes of a rate cut by the RBI on the back of above-normal monsoons and a pickup in the economy. Shares of airlines companies too edged higher for a second straight day on hopes that the public sector undertaking (PSU) oil marketing companies (OMCs) may cut aviation turbine fuel prices if the current fall in crude oil prices continues. Additionally, Tyre stocks remained in limelight as lower rubber prices will boost profitability of tyre makers.

The NSE’s 50-share broadly followed index Nifty declined by ten points but managed to hold its psychological 8,500 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex dropped by around forty points to end below its crucial 28,200 mark. Broader markets, however, outperformed benchmarks and ended the session with a gain of over half a percent. The market breadth remained in favor of decliners, as there were 1,675 shares on the gaining side against 1,147 shares on the losing side while 124 shares remain unchanged.

Finally, the BSE Sensex declined by 37.07 points or 0.13% to 28171.69, while the CNX Nifty lost 11.35 points or 0.13% to 8510.80.

The BSE Sensex touched a high and a low 28335.23 and 28084.36, respectively. The BSE Mid cap index was up by 0.52%, while Small cap index up by 0.62%.

The top gaining sectoral indices on the BSE were Realty up by 0.89%, Consumer Durables up by 0.70%, Healthcare up by 0.28%, PSU up by 0.12% and Capital Goods up by 0.09%, while TECK down by 0.48%, IT down by 0.38%, Power down by 0.31%, Auto down by 0.30% and Oil & Gas down by 0.24% were the losing indices on BSE.

 The top gainers on the Sensex were Coal India up by 2.06%, HDFC up by 1.47%, SBI up by 0.66%, Wipro up by 0.66% and Sun Pharma up by 0.63%. On the flip side, Vedanta down by 2.76%, NTPC down by 2.61%, Hero MotoCorp down by 1.91%, Hindalco down by 1.65% and Reliance Industries down by 1.17% were the top losers.

Meanwhile, commerce and Industry Minister Nirmala Sitharaman has called for fresh round of stakeholder consultations with industry representatives, both from e-commerce and brick-and-mortar retail companies for opening up the e-commerce sector and will be meeting the industry, including representatives from industry bodies Confederation of All India Traders (CII) and Federation of Indian Chambers of Commerce and Industry (FICCI), on July 10 to discuss the issue.

The meeting which is likely to be attended by both Indian and foreign e-commerce companies, seems to have been necessitated with pressure mounting from potential free-trade partner countries to open up the e-commerce sector. In the meeting the minister may discuss the pros and cons of opening up the sector to foreign players and the safeguards that might be required if foreign direct investment (FDI) is allowed in the sector. Later the Commerce and Industry Minister is scheduled to meet chief ministers on July 15 to get their views on the matter.

The first round of the meeting which was held in May remained inconclusive as traders’ organisations like the CII had opposed the move, while the Retailers Association of India representing large brick-and-mortar retail companies had boycotted the meeting. Ficci had said that FDI should be allowed in B2C e-commerce but with a focus on sourcing from Indian manufacturers and in a phased manner. At present, India allows 100 percent FDI in business-to-business or B2B e-commerce, but not in B2C companies that sell directly to consumers.

The CNX Nifty touched a high and low 8,561.35 and 8,483.85 respectively.

The top gainers on Nifty were Asian Paints up by 5.55%, Coal India up by 2.49%, Ultratech Cement up by 1.74%, Tech Mahindra up by 1.74% and  HDFC up by 1.64%. On the flip side, HCL Tech down by 3.27%, Vedanta down by 2.97%, NTPC down by 2.57%, Hindalco down by 1.97% and Hero MotoCorp down by 1.90% were the top losers.

European Markets were trading in the red; UK's FTSE was down by 0.13%, Germany’s DAX was down by 0.43% and France’s CAC was down by 0.54%.

Asian markets closed mostly in red on Tuesday with Shanghai closing down as analysts warned that government measures to staunch a recent rout will likely not be enough. China’s economy is showing some positive changes as recent government measures gradually gain traction. The National Bureau of Statistics stated that China’s economic performance remained within a reasonable range and economic growth was basically stable. The government is due to release second-quarter gross domestic product data on July 15 and many economists expect growth to dip below 7 percent, which would be the weakest performance since the global financial crisis. South Korea’s central bank is expected to keep interest rates on hold in July after it cut them to a record low the previous month, and the full-year growth forecast could see a modest downgrade. All 28 economists surveyed said the Bank of Korea (BOK) would keep the base rate at 1.50 per cent at its policy meeting on July 9. Taiwanese CPI rose to a seasonally adjusted annual rate of -0.56%, from -0.73% in the preceding quarter.