Sell-off in dying hour of trade rattles D-Street

Monday’s turned out to be a disappointing session of trade for the Indian equity markets as market participants booked all their initial gains in dying hour of trade. The domestic benchmarks traded graciously for most part of the trades in tight band, but a sharp wave of selling, which emerged in last lag of trade, dragged the key gauges in red. Earlier, markets recaptured their crucial 8,600 (Nifty) and 28,400 (Sensex) as further fall in crude oil prices boosted sentiment. Some support also came with a survey report of CII ASCON, which has said that the economy is showing signs of a turnaround, albeit moderately, on the back of continued policy actions, implementation and enhanced business and consumer confidence.

Sentiments took U-turn and entered into red terrain as traders remained concerned about the political logjam in the parliament, as both the houses were adjourned once again and it was announced that Joint committee report on Land Bill will be tabled in winter session of Parliament with Just four more working days left in the ongoing monsoon session of Parliament. Investors also remained cautious ahead of key macroeconomic numbers due to be released later in the week. The government will release inflation based on the Consumer Price Index (CPI) data and industrial production data for June 2015 on August 12 and inflation based on the Wholesale Price Index for July 2015 on August 14. Sentiments also remained dampened on report that foreign direct investment (FDI) in services sector, which includes banking, insurance, outsourcing, R&D, courier and technology testing, has dipped 15% to $488 million during April-May 2015 as compared to $574 million during same period of last year.

On the global front, European markets were exhibiting mixed trend in early deals, led by decline in banks and energy shares, as US payrolls data fueled bets the Federal Reserve will raise rates this year. Asian markets ended mostly in red as sentiments remained dampened after China’s exports in July dropped 8.3%, the highest decline in four months.

Back home, sentiments remained down-beat on reports that foreign portfolio investors (FPIs) sold shares worth a net Rs 93.74 crore on August 7, 2015, as per provisional data released by the stock exchanges. Depreciation in Indian rupee against dollar too weighed down sentiments. The rupee was trading at 63.88 at the time of equity markets closing versus its previous close of 63.81. Selling in metal counter too dampened the sentiments on the back of weak economic data in China. On the other hand, shares of software companies edged higher on the back of strong US job data. The job data is closely monitored by the traders as it reflects the economic growth of the country since strong numbers give room to the Fed for interest rate hike.

The NSE’s 50-share broadly followed index Nifty declined by around forty points to end below the psychological 8,550 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex declined by over one hundred and thirty points but managed to hold its crucial 28,100 mark. Broader markets too struggled to get any traction during the trade and ended the session in red. The market breadth remained in favor of decliners, as there were 1,424 shares on the gaining side against 1,529 shares on the losing side while 115 shares remain unchanged.

Finally, the BSE Sensex declined by 134.67 points or 0.48% to 28101.72, while the CNX Nifty lost 39.00 points or 0.46% to 8525.60.

The BSE Sensex touched a high and a low 28417.59 and 28017.85, respectively. The BSE Mid cap index was down by 0.02%, while Small cap index was down by 0.41%.

The only gaining sectoral index on the BSE were Realty up by 0.83%, while Infrastructure down by 1.08%, Metal down by 1.04%, Oil & Gas down by 0.94%, Consumer Durables down by 0.92% and PSU down by 0.88% were the losing indices on BSE.

The top gainers on the Sensex were BHEL up by 2.01%, Hero MotoCorp up by 1.67%, Maruti Suzuki up by 1.03%, GAIL India up by 0.79% and TCS up by 0.75%. On the flip side, ONGC down by 2.55%, Mahindra & Mahindra down by 1.96%, NTPC down by 1.91%, Tata Motors down by 1.71% and Coal India down by 1.59% were the top losers.

Meanwhile, Foreign Direct Investment (FDI) in services sector, which includes banking, insurance, outsourcing, R&D, courier and technology testing, has dipped 15% to $488 million during April-May 2015 as compared to $574 miilion during same period of last year, as per latest data released by Department of Industrial Policy and Promotion (DIPP). Services sector contributes over 60% to the India’s Gross Domestic Product. Sectors including construction development, telecommunication and pharmaceuticals recorded decline in FDI during the same period.

FDI in services sector is expected to increase in future as government has relaxed FDI norms in insurance sector and has also focused to improve ease of doing business in India. Also the introduction of composite cap would attract more investors to the sectors. During 2013-14, FDI in the sector increased to $3.25 billion from $2.22 billion in 2012-13.

In the same period (April- May) of current financial year, the total FDI soared 40% to $7.45 billion Year-On-Year due to higher investment in trading, automobile and power sectors. Foreign investments which are considered crucial for the country needs around $1 trillion over five years to overhaul its infrastructure sector such as ports, airports and highways in order to boost growth.The CNX Nifty touched a high and low 8621.55 and 8497.80 respectively.

The top gainers on Nifty were BHEL up by 2.12%, Hero MotoCorp up by 1.43%, Maruti Suzuki up by 1.06%, TCS up by 0.90% and Bajaj Auto up by 0.85%. On the flip side, ONGC down by 2.99%, Tata Motors down by 2.64%, Mahindra & Mahindra down by 2.61%, Hindalco down by 2.33% and Cairn down by 2.28% were the top losers.

European Markets were mostly trading in the green; France’s CAC was down by 0.42%, Germany’s DAX was up by 0.33% while UK's FTSE was down by 0.73%.

The Asian markets closed mostly in red on Monday, while Shanghai Composite closed in green on expectations Beijing will maintain its market support by buying shares. Producer prices in China fell to a near six-year low in July while consumer inflation remained subdued, signaling the world’s second-largest economy was still facing deflationary pressures and that Beijing has room to further support the sluggish economy. The producer price index (PPI) fell 5.4 percent from a year earlier, compared with an expected 5.0 percent decline. It was the worst reading since October 2009 and the 40th straight month of price falls. Chinese CPI rose to an annual rate of 1.6%, from 1.4% in the preceding month. Chinese Trade Balance fell to 43.03B, from 46.54B in the preceding month. Japan’s Bank Lending rose to a seasonally adjusted annual rate of 2.6%, from 2.5% in the preceding quarter. Japan’s Current Account rose to a seasonally adjusted 1.30T, from 1.64T in the preceding month.