Feeble global cues, disappointing Q1 earnings drag benchmarks lower

Friday turned out to be a disappointing session for the Indian equity indices which got pounded by around a percentage point as investors sold stocks across sectors amid weakness among the global peers coupled with disappointing Q1 earning. After a negative opening, the domestic bourses never looked in recovery mood and ended the trade near intraday lows, breaching their crucial support levels of 28,200 (Sensex) and 8,550 (Nifty). Selling was both brutal and wide-based as, barring FMGC and Consumer Durables; none of sectoral indices on BSE could manage a green close. Counters which featured in the list of worst performers included capital goods, realty and metal.

Sentiments remained down-beat since beginning with report that India’s southwest monsoon has been 26% below normal so far in July. India Meteorological Department (IMD) said the shortfall in rains during the week ended July 8 was 50%, while the deficit was 12% for the July 16-22 week. Lack of any progress in reforms such as GST in the present Monsoon session of Parliament too dampened the sentiments. Sentiments also remained dampened after a private poll report stated that India's economic prospects have dimmed since April due to the government's inability to pass much-needed reforms. Growth forecasts too were nudged down from April owing to concerns the government still faces substantial challenges in kick-starting a reform-driven growth cycle.

On the global front, European counters, after making cautious start, entered into green terrain but gains remained capped as market participants remained on sidelines as a firm US jobs data released yesterday raised fears of a rate hike by the Fed. Asian markets stumbled after a survey showed China’s manufacturing activity crumbled to 15-month lows, rekindling concerns for the region’s exports as the world’s second-largest economy struggles to arrest a broad downturn.

Back home, depreciation in Indian rupee too dampened the sentiments. The rupee was at 63.98 per dollar at the time of equity markets closing as compared to 63.76 per dollar level on Thursday. Disappointing quarterly earnings from some blue-chip companies too weighed on the sentiments. GAIL reported a 32% slump in net profit for the quarter ended June 2015 on lower production and price realization. Lupin reported a 16 per cent year-on-year drop in its consolidated net profit for the quarter ended June. Total income of the company has decreased by 4.27% at Rs 3225.81 crore for quarter under review as compared to Rs 3369.73 crore for the quarter ended June 30, 2014.

The NSE’s 50-share broadly followed index Nifty declined by around seventy points to end below the psychological 8,550 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex declined by around two hundred and sixty points to end below its crucial 28,200 mark. Broader markets too struggled to get any traction during the trade and ended the session with a cut of over half a percent. The market breadth remained in favor of decliners, as there were 1,276 shares on the gaining side against 1,582 shares on the losing side while 105 shares remain unchanged.

Finally, the BSE Sensex plunged by 258.53 points or 0.91% to 28112.31, while the CNX Nifty declined by 68.25 points or 0.79% to 8521.55.

The BSE Sensex touched a high and a low 28402.64 and 28083.76, respectively. The BSE Mid cap index was down by 0.61%, while Small cap index was down by 0.58%.

The top gaining sectoral indices on the BSE were FMCG up by 0.12% and Consumer Durables up by 0.06%, while Capital Goods down by 1.57%, Realty down by 1.32%, Metal down by 1.27%, Bankex down by 1.20% and Auto down by 1.13% were the losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 0.99%, Hero MotoCorp up by 0.88%, Cipla up by 0.68%, TCS up by 0.64% and Hindalco up by 0.46%. On the flip side, ICICI Bank down by 3.96%, Wipro down by 3.73%, Lupin down by 3.27%, Tata Motors down by 2.54% and GAIL India down by 2.34% were the top losers.

Meanwhile, the government will put 10 more coal mines up for auction in the third phase in next month. The Power and Coal Minister Piyush Goyal replying to query in the parliament has said that the government has issued an order for auction of 10 coal mines with 858.19 million tonnes of geological reserves and 356.26 million tonnes of extractable reserves in the third tranche.

These 10 coal mines are earmarked for the non regulated sector - cement, iron and steel, captive power plants and the e-auction of these mines is proposed to be held from August 11-17, 2015, the process of allocation is scheduled to be completed by September 2015. Of the 10 blocks, most have requisite approvals. Five of these blocks were offered to private companies in the first two rounds of auction, but were later withdrawn as they received less than three bids. The government had issued the tenders inviting technical and financial bids for the mines from June 8 and the last date for submission of the documents was July 21.

The government has so far auctioned 67 coal blocks in two tranches to private companies and garnered over Rs 4 lakh crore. Tweaking the rules of auction - two phases of which saw 40 coal mines being awarded, the government has ruled out multiple bids. The Supreme Court had cancelled allocation of 204 coal mines to companies without auction terming the same as arbitrary and illegal.

The CNX Nifty touched a high and low 8,589.15 and 8,513.50 respectively.

The top gainers on Nifty were Tech Mahindra up by 2.29%, Bank of Baroda up by 1.31%, Sun Pharma up by 0.98%, Cipla up by 0.83% and TCS up by 0.74%. On the flip side, ICICI Bank down by 3.68%, Wipro down by 3.64%, Tata Motors down by 2.92%, Lupin down by 2.79%, and Vedanta down by 2.51% were the top losers.

European Markets were trading in the green; UK's FTSE was up by 0.18%, Germany’s DAX was up by 0.03% and France’s CAC was up by 0.39%.

Asian markets closed in red on Friday, as tumbling commodities prices and weak Chinese manufacturing data aggravate worries about the global economy. Japan’s factory output and household spending probably grew at a tepid rate in June, raising some concerns about a possible economic contraction in the second quarter as exports slumped and consumers tightened purse strings. Annual core consumer inflation was seen grinding to a halt in June, reflecting cheaper oil prices, and keeping the Bank of Japan under pressure as to meet it 2 percent inflation target. China’s factory sector contracted by the most in 15 months in July as shrinking orders depressed output, a preliminary private survey showed, a worse-than-expected result that comes on the heels of a stock market crash which began in June. The flash Caixin/Markit China Manufacturing Purchasing Managers’ Index (PMI) dropped to 48.2, the lowest reading since April last year and a fifth straight month below 50, the level which separates contraction from expansion. South Korean Consumer Confidence rose to 100, from 99 in the preceding month. Singaporean Industrial Production fell to an annual rate of -4.4%, from -1.7% in the preceding month whose figure was revised up from -2.3%.