Benchmarks continue weak trade; Metal, Realty drag

Indian equity markets continued their weak trade in late afternoon session on account of selling in frontline blue chip counters. The sentiments were under pressure after rating agency Moody's Investors Service scaled down its projections for India’s economic growth for 2015-16 to 7% from an earlier estimate of 7.5% on deficient monsoon. Traders were seen piling position in IT, TECK and Capital Goods stocks while selling was witnessed in Metal, Realty and Infra sector stocks. In scrip specific development, Tata Coffee was trading firm on news that the government may consider 100% FDI in coffee plantation in India. Bank of Baroda was trading in red on profit booking after gaining in prior three trading sessions. On the global front, the Asian markets traded mostly in red, while the European markets were trading on pessimistic note. Back home, the NSE Nifty and BSE Sensex were trading below the psychological 8,500 and 27,900 levels respectively. The market breadth on BSE was positive in the ratio of 1460:1228 while 123 scrips remained unchanged.

The BSE Sensex is currently trading at 27837.24, down by 41.03 points or 0.15% after trading in a range of 27747.40 and 28040.73. There were 9 stocks advancing against 21 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.48%, while Small cap index up by 0.54%.

The gaining sectoral indices on the BSE were IT up by 1.53%, TECK up by 0.97%, Capital Goods up by 0.75%, Consumer Durables up by 0.63% and Auto up by 0.46%, while Metal down by 2.15%, Realty down by 1.17%, INFRA down by 0.42%, Bankex down by 0.42% and Power down by 0.31% were the losing indices on BSE.

The top gainers on the Sensex were SBI up by 2.06%, Infosys up by 1.98%, TCS up by 1.82%, Larsen & Toubro up by 1.11% and Tata Steel up by 0.99%.

On the flip side, GAIL India down by 3.98%, Coal India down by 3.89%, Cipla down by 2.53%, Lupin down by 1.97% and Hindalco down by 1.93% were the top losers.

Meanwhile, Bank of America Merill Lynch (BofAML) has said that it sees a recovery in consumption equivalent to 1 percentage point of India’s GDP in the coming months giving the reasons of rate cuts where banks have cut rates by 0.30% in last few months, a likely hike in salaries by government as per the revised guidelines (up to 0.5 % of GDP), savings of 0.4 % of GDP from lower oil prices and a boost in rural demand on the back of a hike in support prices

Lower oil prices are providing savings on the household front, which ultimately gets diverted to consumption. While talking about the rate cuts, BofA Merill Lynch said that the discretionary spends generally react to actions in up to two quarters and cited the case of motor vehicles. Over two years this one percentage point cut in call money market rates can result in a 3% growth in sales of two wheeler and passenger vehicles, 6% in the LCV segment and 9.5% in that of commercial vehicles.

A surge in consumption, especially in rural India, was a big contributor which led to the recovery in the post-2008 financial crisis years. Further there is an estimation for next three years that there will be a $100 billion boost to discretionary spends due to aforementioned factors, which is 40 % of the total $230 billion spending of 2014-15.

The CNX Nifty is currently trading at 8459.80, down by 17.50 points or 0.21% after trading in a range of 8433.60 and 8525.75. There were 19 stocks advancing against 31 stocks declining on the index.

The top gainers on Nifty were BPCL up by 3.13%, Infosys up by 1.96%, TCS up by 1.90%, SBI up by 1.61% and Tech Mahindra up by 1.38%.

On the flip side, Coal India down by 4.04%, GAIL India down by 3.85%, NMDC down by 3.28%, Cairn India down by 2.95% and Cipla down by 2.33% were the top losers.

The Asian markets were trading mostly in red; Hang Seng decreased 339.68 points or 1.43% to 23,474.97, Shanghai Composite decreased 245.5 points or 6.15% to 3,748.16, Jakarta Composite decreased 78.66 points or 1.72% to 4,506.73, Nikkei 225 decreased 65.79 points or 0.32% to 20,554.47, Taiwan Weighted decreased 36.2 points or 0.44% to 8,177.22, KOSPI Index decreased 12.26 points or 0.62% to 1,956.26 and Straits Times decreased 10.52 points or 0.34% to 3,056.83.

On the other hand, FTSE Bursa Malaysia KLCI increased 10.99 points or 0.7% to 1,583.53.

The European markets were trading in red; UK’s FTSE 100 decreased 28.02 points or 0.43% to 6,522.28, Germany’s DAX decreased 26.76 points or 0.24% to 10,913.57 and France’s CAC decreased 21.67 points or 0.43% to 4,963.16.