Benchmarks end choppy trade in red; Nifty slips below 8,350 mark

Indian equity benchmarks ended the choppy day of trade in red with a cut of around half a percent on Thursday, as investors remained on sidelines ahead of the corporate results season, which will be starting from today. The first quarter corporate results season will kick off today with Tata Consultancy Services (TCS) announcing its Q1 results. Traders also eyed macro economic data i.e. consumer price inflation (CPI) and index of industrial production (IIP) to be released tomorrow.

Earlier, markets traded in narrow range with Sensex and Nifty swinging between negative and positive territory but, sudden fall in last leg of trade dragged frontline gauges below their crucial 28,600 (Sensex) and 8,350 (Nifty) levels as investors failed to draw any sense of relief with Union Minister of State for Commerce and Industry Nirmala Sitharaman’s statement that the government was closely monitoring the Greek crisis and prepared to face any situation in view of its 'comfortable' foreign exchange reserves. Traders also overlooked the reports of global agencies Standard & Poor’s and OECD who said that India’s confidence level continues to grow and the country is seeing “stable growth momentum.

Marketmen also shrugged off firm global cues with European counters were trading in green in early deals on hopes that creditors would work out with Greece to avoid Grexit after Athens presented fresh proposals on Wednesday. Asian markets ended mostly in positive terrain with Chinese benchmark rebounding around 6% on Thursday, as Beijing's attempts to stop a massive sell-off that has roiled global financial markets appeared to have yielded some results.

Back home, sentiments remained dampened on reports that foreign portfolio investors (FPIs) sold shares worth a net Rs 354.32 crore yesterday, as per provisional data by the stock exchanges. Shares of information technology (IT) companies remained under pressure ahead of TCS’ April-June quarter results today. Auto space too ended in red, despite Society of Indian Automobile Manufacturers’ (SIAM) report that domestic passenger car sales rose 1.53 percent to 1,62,677 units in June from 1,60,232 units in the year-ago month, while Motorcycle sales last month rose marginally to 8,77,696 units from 8,77,289 units a year earlier. Additionally public sector oil marketing companies (OMCs) suffered some profit taking after the crude oil prices bounced on strong economic data from Japan and Germany, and as Chinese stocks picked up after the government launched new steps to halt a rout in its share markets.

The NSE’s 50-share broadly followed index Nifty declined by over thirty points to end below the psychological 8,350 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex declined by over one hundred and ten points to end below its crucial 27,600 mark. Broader markets too struggled to get traction during the trade and ended the session with a cut of one third of a percent. The market breadth remained in favor of advances, as there were 1,532 shares on the gaining side against 1,284 shares on the losing side while 114 shares remain unchanged.

Finally, the BSE Sensex declined by 114.06 points or 0.41% to 27573.66, while the CNX Nifty lost 34.50 points or 0.41% to 8328.55.

The BSE Sensex touched a high and a low 27798.13 and 27540.60, respectively. The BSE Mid cap index was down by 0.30%, while Small cap index down by 0.33%.

The top gaining sectoral indices on the BSE were Capital Goods up by 1.92%, Power up by 0.48%, Healthcare up by 0.14%,  Bankex up by 0.10% and Consumer Durables up by 0.09%, while Oil & Gas down by 2.01%, IT down by 1.91%, TECK down by 1.54%, FMCG down by 0.58% and Auto down by 0.57% were the losing indices on BSE.

The top gainers on the Sensex were BHEL up by 3.59%, Larsen & Toubro up by 2.39%, Hindalco up by 2.21%, Hero MotoCorp up by 2.05% and Bharti Airtel up by 0.83%. On the flip side, Vedanta down by 4.86%, TCS down by 2.80%, Bajaj Auto down by 2.33%, Infosys down by 2.04% and Tata Motors down by 1.73% were the top losers.

Meanwhile, Government has permitted seven PSUs to raise Rs 40,000 crore in the current fiscal through tax free bonds for development of infrastructure. A notification issued by the Central Board of Direct Taxes (CBDT) said that National Highways Authority of India (NHAI) has been permitted to raise Rs 24,000 crore, Indian Railways Finance Corporation (IRFC) will raise Rs 6,000 crore, Housing and Urban Development Corporation (HUDC) is permitted to raise Rs 5,000 crore. Besides, Indian Renewable Energy Development Agency Rs 2,000 crore, NTPC Rs 1,000 crore, Rural Electrification Corporation Rs 1,000 crore and Power Finance Corporation Rs 1,000 crore.

The ceiling coupon rate for 'AAA' rated issuer of tax free bonds has been fixed 55 basis points below the government bond yields for retail investors and for other investors 80 basis points. The coupon rate for below 'AAA' rated bonds could go up to 20 basis points above the rates offered for the bonds with highest rating .If the coupon rate of 10-year government paper is 7.72%, that would mean the coupon rate for tax free bonds of the same tenure would be 7.17% (it could be around 7.5%-8% for 15-year and 20-year tax free bonds depending on issuer's rating).

The companies have to raise 70% of the issue through public offer, out of which 40%have to be reserved for retail investors and the remaining can be offered through private placement route. Retail investors which include HUFs and NRIs can invest up to Rs 10 lakh in such bonds. The investors who invest high amount will be classified as high net worth individuals (HNIs). Besides, retail individual investors (RIIs), qualified institutional buyers, corporate, trusts, partnership firms, limited liability partnerships, co-operative banks, regional rural banks and other legal entities and high networth individuals (HNIs) would be eligible to subscribe the bonds.

An investor can earn as high as 7.3-7.5 % as of now by subscribing to these bonds with 10-15-20 year maturities and the interest rates are to be decided with reference to the rates of government securities. The minimum denomination for these bonds can vary from Rs 1,000 to Rs 5,000.

The CNX Nifty touched a high and low 8,400.30 and 8,323.00 respectively.

The top gainers on Nifty were BHEL up by 3.40%, Larsen & Toubro up by 2.39%, Hindalco up by 2.31%, Hero MotoCorp up by 2.23%, and ACC up by 1.79%. On the flip side, BPCL down by 5.15%, Vedanta down by 4.63%, TCS down by 2.53%, Cairn down by 1.82% and Infosys down by 1.80% were the top losers.

European Markets were trading in the green; UK's FTSE was up by 0.89%, Germany’s DAX was up by 1.52% and France’s CAC was up by 1.66%.

Asian markets closed mostly in green on Thursday, with Chinese shares making their biggest daily gain in six years, restoring confidence in Beijing’s suite of attempts to rescue its struggling stock market. The People’s Bank of China provided liquidity to China Securities Finance Corporation (CSFC) via relending at its request. The PBOC will also let the CSFC issue financial bonds, including short-term commercial paper in the interbank market, and pledged to continue to provide liquidity support to CSFC via various channels. CSFC is the government-owned margin lender and has been serving as the main vehicle for Beijing to intervene in the stock market. Chinese CPI rose to an annual rate of 1.4%, from 1.2% in the preceding month while Chinese PPI fell to an annual rate of -4.8%, from -4.6% in the preceding month.

Japanese Economics Minister Akira Amari stated that economic and monetary policy is not aimed at triggering a decline in the yen. He added that the central bank is pursuing monetary easing to restore Japan’s economic health and escape from deflation. Japan’s Core Machinery Orders fell to 0.6%, from 3.8% in the preceding month. Japan’s M2 Money Stock fell to a seasonally adjusted 3.8%, from 4.1% in the preceding month whose figure was revised up from 4.0%.

South Korea’s central bank cut the country’s economic growth forecast but kept interest rates steady at a record low, signaling that consumption and exports remained weak. The central bank governor’s cautious remarks about the recovery and downgrades for growth this year and next, appear to leave the door open to more easing if needed. The Bank of Korea’s monetary policy committee left the base rate at 1.50%, a decision that was unanimous and widely expected. The BOK’s 2015 growth forecast was downgraded to 2.8% from the previous 3.1% mainly due to a sharp slowing in economic activity during the April-June period and growth would pick up to exceed 3% next year.