Post Session: Quick Review

There was no respite for the markets and they extended their plunge on Wednesday under relentless selling pressure, making a hat-trick of sharp fall, with major benchmarks losing their crucial psychological levels of 27500 (Sensex) and 8350 (Nifty) intraday and ending near them. Bulls were never in picture, while the bears looked in absolute command throughout the day. Traders may have got an excuse of selling and offloading positions, in China devaluing yuan, but the major concern was back at home, with little likelihood for passage of the goods and services tax bill in the remaining two days of the monsoon session. Traders are of view that if the GST Bill is not cleared in the monsoon session then market could fall further. Traders also remained cautious ahead of the government’s announcement of IIP data for the month of June and consumer inflation for month of July later in the day.

On the global front, there was yet another day of gloom and after the plunge in the US markets, the Asian markets followed the trend, extending their fall with some of the indices witnessing cut of over 2 percent. China’s decision to devalue the yuan has sparked concern that the world’s second-largest economy is faltering. Later the European markets too made a weak start amid concerns that financial-market volatility sparked by China’s currency devaluation will crimp global growth.

Back home, though it was free-fall but markets showed some consolidation towards the noon session, coming off the intraday low levels on the back of buying in blue-chip stocks like Infosys, TCS and Sun Pharma, and were also supported by a news report that the government is planning to raise import duty on base metals including iron and steel by 2.5% to protect the domestic industry from Chinese deluge. Also the Finance Ministry said a steady 37 per cent growth in indirect tax collections in four months to July reflects that underlying momentum in the economy is improving. Chief Economic Advisor Arvind Subramanian too said that these collections indicate that the underlying momentum in the economy continues to improve across all sectors. Back on street, marketmen overlooked any of the positive news and kept on losing strength to end near the day's low. Though all the sectoral indices barring IT, tech and to some extent healthcare, ended with deep cut, the rate sensitive realty, banking along with oil & gas suffered the most. Metal stocks too remained under pressure for the second successive session, losing over 4% and Hindalco, NMDC, Jindal Steel, Vedanta, JSW Steel, SAIL and Hindustan Zinc were among the prominent losers from the space. Selling pressure was visible across the board barring IT, tech and few pharma stocks. Technology stocks gained as rupee fell to near two-year low, helping them in garnering higher revenues as they depend a lot on exports.

The BSE Sensex ended at 27517.61, down by 348.48 points or 1.25% after trading in a range of 27479.43 and 27883.33. There were 7 stocks in green against 23 stocks in red on the index.(Provisional)

The broader indices too suffered severe cuts; the BSE Mid cap index plunged by 2.46%, while Small cap index lost 2.11%.(Provisional)

The gaining sectoral indices on the BSE were IT up by 2.43%, TECK up by 1.60%, Consumer Durables up by 0.81%, while Realty down by 5.31%, Metal down by 4.28%, Oil & Gas down by 3.38%, PSU down by 3.33%, Bankex down by 2.84% were the major losing indices on BSE. (Provisional)

The top gainers on the Sensex were Sun Pharma Inds. up by 3.11%, Infosys up by 2.96%, TCS up by 2.23%, Wipro up by 1.37% and Lupin up by 1.29%. On the flip side, Vedanta down by 7.63%, Hindalco down by 7.31%, Coal India down by 5.26%, SBI down by 4.75% and Tata Motors down by 3.73% were the top losers. (Provisional)

Meanwhile, National Statistical Commission (NSC) chairman Pronab Sen, clearing the air over the much debated calculation of the new GDP numbers has said that Central Statistics Office (CSO) is following the correct methodology for computing national accounts and is on the right track. He said that 'As far as calculation of the GDP numbers is concerned, the CSO is on the right track.'

Dismissing the criticism about the method adopted by the CSO in calculating growth numbers, Sen said that 'They have implemented the procedure and methodology approved by the Commission and followed its instruction for calculating the GDP numbers.”

The commission led by Sen is examining the new growth numbers arrived at by the CSO and is in the process of finalising a report on new GDP numbers and methodology used to calculate it. He however said that, we have not looked into the implication of the new GDP numbers so far. We would soon look at this aspect also and after that we will finalise our report on GDP numbers.

CSO updated the base year used for marking trends in the economy and switched to a market-price calculation of gross domestic product, by which the economy grew by 6.9% in the year that ended last March (2013-14). Using the previous methodology, GDP expansion that year was 4.7%. Since January 2010, the base year for India’s statisticians had been the 12 months that ended in March 2005, but now it was changed to the year that ended March 2012. CSO has estimated economic growth at 7.3 percent for 2014-15, slightly lower than its earlier advance estimate of 7.4 percent. After the changes, various economic experts raised doubts about the accuracy of the new series. Even the Parliamentary Standing Committee on Finance was not convinced about the new growth projections.

The CNX Nifty ended at 8353.95, down by 108.40 points or 1.28% after trading in a range of 8337.95 and 8446.95. There were 12 stocks on gainers side against 38 stocks on the losers side on the index. (Provisional)

The top gainers on Nifty were HCL Tech. up by 3.36%, Tech Mahindra up by 3.31%, Sun Pharma Inds. up by 3.01%, Infosys up by 2.87% and TCS up by 2.42%. On the flip side, Vedanta down by 7.12%, Hindalco down by 7.07%, BPCL down by 6.19%, Coal India down by 5.14% and Cairn India down by 5.05% were the top losers.(Provisional)

European markets were trading considerably lower, Germany’s DAX declined by 271.98 points or 2.41% to 11,021.67, France’s CAC lost 140.07 points or 2.75% to 4,958.96 and UK’s FTSE 100 was down by 91.81 points or 1.38% to 6,572.73.

The Asian markets closed in red on Wednesday after Chinese authorities yesterday devalued its currency in a move that sparked fears of a global currency war and accusations that Beijing was unfairly supporting its struggling exporters. However, International Monetary Fund (IMF) stated that China’s new mechanism for determining the central parity of its currency appears a welcome step as it should allow market forces to have a greater role in determining the exchange rate. The global financial institution also asserted that China should aim to achieve an effectively floating exchange rate system within two to three years. Chinese Industrial Production fell to 6.0%, from 6.8% in the preceding month. Chinese Retail Sales fell to an annual rate of 10.5%, from 10.6% in the preceding month. Chinese Fixed Asset Investment fell to a seasonally adjusted 11.2%, from 11.4% in the preceding month. Japanese tertiary industry activity index rose to a seasonally adjusted 0.3%, from -0.7% in the preceding month. Japan’s industrial production rose to a seasonally adjusted 0.8%. South Korean Unemployment Rate fell to a seasonally adjusted annual rate of 3.7%, from 3.9% in the preceding month.