Benchmarks witness bloodbath; Nifty breaches 8,400 mark

Wednesday’s trading session turned out to be a daunting one for stock markets in India and benchmarks ended below their crucial 27,700 (Sensex) and 8,400 (Nifty) levels. Sentiments remained down-beat since beginning of the trade on the back of collapse in the Chinese equities amid the ongoing Greece crisis. Though, some support came in last leg of trade after the Greek Prime Minister Alexis Tsipras told the European Parliament that Greece will submit a detailed reform proposal to its international creditors in the next few days. The recovery proved short-lived and markets ended the session with a cut of over one and a half percent.

There was no support from any corner and traders looked cautious not only with the global development but also about the corporate profit growth, as the first quarter earnings kick starts tomorrow with TCS numbers. Meanwhile, global rating agency CRISIL said India Inc results for the quarter ended June 2015, to disappoint as soft commodity prices, weak growth in investment-linked sectors and subdued rural demand restrict earnings. Investors remained on sidelines ahead of Index of Industrial Production data (IIP) scheduled to be released on Friday.

Asian markets ended in red as the plunge in Chinese markets and Greece’s debt crisis continue. Chinese stocks dived around six percent after the securities regulator said the tumbling stock market in the world's second-biggest economy was in the grip of ‘panic sentiment’ as investors ignored a battery of support measures from Beijing. However, the European markets have stabilized in Wednesday’s session, with the FTSE, CAC and DAX trading higher by around half a percent.

Back home, selling was both brutal and wide-based as none of sectoral indices on BSE were spared. Counters, which featured in the list of worst performers, include metal, auto and realty. Depreciation in Indian rupee too dampened the sentiments. Rupee was trading at 63.56 per dollar at the time of equity markets closing compared with its previous close of 63.46.

Meanwhile, metal counter fell around four percent tracking stock market crash in China and in wake of the fact that LMEX, a gauge of six metals traded on the London Metal Exchange (LME) dipped by 4% on Tuesday. The base metal prices crashed on Tuesday as the dollar became stronger following Greece cues. Investors rushed out of commodity markets in response, cutting back holdings of energy, metals and grains.

The NSE’s 50-share broadly followed index Nifty declined by around one hundred and fifty points to end below the psychological 8,400 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex dropped by over four hundred and eighty points to finish below the psychological 27,700 mark. Broader markets too witnessed massacre and ended the session with a cut of around one and a half percentage points. The market breadth remained in favour of decliners, as there were 953 shares on the gaining side against 1,793 shares on the losing side while 112 shares remain unchanged.

Finally, the BSE Sensex plunged by 483.97 points or 1.72% to 27687.72, while the CNX Nifty declined by 147.75 points or 1.74% to 8363.05.

The BSE Sensex touched a high and a low 28031.45 and 27635.72, respectively. The BSE Mid cap index was down by 1.30%, while Small cap index down by 1.28%.

The top losing sectoral indices on the BSE were Metal down by 3.89%, Auto down by 2.24%, Realty down by 1.78%, Bankex down by 1.69% and Infrastructure down by 1.65%, while there were no gainers on the BSE sectoral indices.

The lone gainer on the Sensex were Hindustan Unilever up by 0.04%. On the flip side, Vedanta down by 7.85%, Tata Motors down by 6.17%, Hindalco down by 5.13%, Tata Steel down by 4.72% and HDFC down by 3.54% were the top losers.

Meanwhile, with an aim to ensure social security for workers in old age, the government is planning to put a cap on premature withdrawal of provident fund (PF) money. The Employees' Provident Fund Organisation (EPFO) has proposed that an employee be allowed to withdraw only 75 percent of the overall kitty till the age of 58, instead of 100 percent as allowed under the present Employees' Provident Funds Scheme, 1952, in case of resignation from a job or utilizing it for some other purposes before retirement.

Central Provident Fund Commissioner K K Jalan stated that purpose of this proposal is to retain the worker in the PF net and ensure that the money saved under the PF account as social security for old age is used only in case of dire need and not as a savings bank account. Presently, employees tend to withdraw PF money in their job days or for purposes such as buying house, paying medical bills, children's higher education and weddings.

Currently, of the 13 million annual claims pending with the EPFO, over 6.5 million claims are for 100 percent withdrawal. The proposal by EPFO is presently pending with labour ministry and once it receives approval, it will be implemented by a simple executive order outlining changes in the EPF scheme. If the proposal is implemented, it could bring down the number of claims annually to just 5 million.

The CNX Nifty touched a high and low 8,457.50 and 8,341.40 respectively.

The top losers on Nifty were Vedanta down by 8.77%, Yes Bank down by 7.77%, Tata Motors down by 6.31%, Tata Steel down by 5.43% and Hindalco down by 5.18% were the top losers, while there were no gainers on Nifty.

European Markets were trading in the green; UK's FTSE was up by 0.61%, Germany’s DAX was up by 0.21% and France’s CAC was up by 0.55%.

Asian markets closed in red on Wednesday led by a massive sell-off in Chinese and Hong Kong markets, despite further efforts from Beijing to stave off the relentless fall in Chinese share prices. Authorities in China unveiled a raft of new measures to try and contain the losses on the markets, including allowing increased exposure to equities among insurance companies and extending government buying of stocks beyond blue-chip companies and into smaller and medium-size companies. Hong Kong’s home prices hit a record high in May, supported by strong demand and ample liquidity in one of the world’s most expensive property markets, despite a series of tightening measures. An official index of overall private home prices for May edged up 1.1 percentage points year-on-year to 298.4 points. That’s 20 per cent higher than the year before and a second straight monthly gain.

Bank of Japan's Takahide Kiuchi stated that a slowdown in China’s economic growth may hurt Japan’s economy for the time being. Kiuchi added that policymakers must be more mindful of the demerits of a weak yen, such as rising prices of daily necessities that may hurt private consumption. Kiuchi has been a lone dissenter to maintaining the BOJ’s massive stimulus that was expanded in October last year, arguing that the costs were beginning to exceed the merits. Japan’s Economy Watchers Current Index fell to a seasonally adjusted 51.0, from 53.3 in the preceding month while Japan’s Current Account rose to a seasonally adjusted 1.64T, from 1.27T in the preceding month. Taiwanese CPI rose to a seasonally adjusted annual rate of -0.56%, from -0.73% in the preceding quarter.