Benchmarks snap six-day winning streak; Nifty breaches 8,150 mark

Snapping six days winning streak, Indian equity benchmarks ended the session in the red terrain on Thursday as investors opted to book profit at higher levels. After a cautious opening, the domestic bourses never looked in recovery mood and ended the trade with a cut of over half a percent, breaching their crucial 8,150 (Nifty) and 26,850 (Sensex) levels. Selling was both brutal and wide-based as, barring consumer durables and metal; none of sectoral indices on BSE could manage a green close. Counters which featured in the list of worst performers included FMCG, healthcare and oil and gas.

Sentiments remained downbeat after a Crisil Research report said that for the fifth consecutive quarter, India Inc is expected to report single-digit growth in revenues. This is mainly because of fragile consumption demand, especially in the rural areas, weakness in investment-linked sectors, and the meltdown in global commodity prices. Traders also remained concerned after IMF said that China’s slowdown has repercussions on the global economy, but the impact will be greater in countries that have greater trade exposures with the world’s second-largest economy.

On the global front, the European markets made a soft start on reports that German exports declined the most since the height of the 2009 recession in a sign that Europe's largest economy is vulnerable to risks from weakening global trade. Foreign sales declined 5.2 percent in August from the previous month. Asian markets ended mostly in red on profit taking after rising for the last six days, though the Chinese market surged by around three percent coming after a long weekend.

Back home, depreciation in Indian rupee too dampened the sentiments. Rupee was trading at 65.10 per dollar at the time of equity markets closing compared with its previous close of 64.95. Sentiments were also weighed down on report that foreign investors sold shares worth Rs 50.60 crore on Wednesday as per provisional data. Selling in defensive sectors like FMCG and Pharma too dampened sentiments on account of profit-booking after witnessing decent buying demand recently. The banking stocks too remained under pressure and witnessed profit taking, as the simultaneously released Global Financial Stability Report (GFSR) noted the downturn in India's credit cycle and the rise in stressed loans.

The NSE’s 50-share broadly followed index Nifty declined by around fifty points to end below the psychological 8,150 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex declined by over one hundred and ninety points to end below its crucial 26,900 mark. Broader markets too struggled to get any traction during the trade and ended the session with a cut of around half a percent. The market breadth remained in favor of decliners, as there were 1,267 shares on the gaining side against 1,479 shares on the losing side while 114 shares remain unchanged.

Finally, the BSE Sensex declined by 190.04 points or 0.70% to 26845.81, while the CNX Nifty lost 48.05 points or 0.59% to 8129.35.

The BSE Sensex touched a high and a low 27120.11 and 26762.36, respectively. The BSE Mid cap index was down by 1.01%, while Small cap index was down by 0.15%.

The top gaining sectoral indices on the BSE were Metal up by 0.32% and Consumer Durables up by 0.24%, while FMCG down by 1.04%, Healthcare down by 1.00%, Oil & Gas down by 0.85%, Bankex down by 0.77% and Capital Goods down by 0.56% were the losing indices on BSE.

The top gainers on the Sensex were Vedanta up by 2.37%, Tata Steel up by 1.56%, Hero MotoCorp up by 0.82%, BHEL up by 0.57% and Tata Motors up by 0.48%. On the flip side, Reliance Industries down by 2.70%, GAIL India down by 2.52%, ITC down by 2.06%, ICICI Bank down by 1.57% and NTPC down by 1.41% were the top losers.

Meanwhile, the International Monetary Fund (IMF), though has said that India remains one of the fastest growing economies in the world, it has marginally lowered India’s growth rate to 7.3 percent this year from the previous estimation of 7.5 percent in the July 2015 World Economic Outlook (WEO) Update, stating the reason of external environment. IMF elaborating further stated that the external demand has weakened hence Indian exports tends to suffer, which is the negative force pushing down the growth forecast for India.

However, IMF has noted that some of the external factors such as worldwide decline in commodity prices have been beneficial and favorable for commodity importing countries like India. This has resulted in faster-than-expected decline in inflation of the country and has created space for interest-rate reductions. Hence the domestic demand component of growth in India looks resilient and strong. It also expect India’s fiscal situation to improve steadily over the next five years though the country's overall government deficit will still be substantially higher than peers. The 'Fiscal Monitor' released ahead of the Fund's annual meeting shows India's total fiscal deficit, which would include that of the states as well, gliding down to 6.1 per cent of GDP from expected 7.2 per cent of GDP in the current financial year.

Earlier, the fund had cut its global growth forecasts for a second time this year, citing weak commodity prices and a slowdown in China and warned that policies aimed at increasing demand were needed. IMF has forecast that the world economy would grow at 3.1 percent this year and by 3.6 percent in 2016.

The CNX Nifty touched a high and low 8196.75 and 8105.85 respectively.

The top gainers on Nifty were Ultratech Cement up by 2.77%, Adani Ports &Special up by 2.15%, Vedanta up by 2.09%, Tata Steel up by 1.65% and Asian Paint up by 1.14%. On the flip side, GAIL India down by 2.83%, Reliance Industries down by 2.34%, ITC down by 2.13%, Kotak Bank down by 1.59% and ICICI Bank down by 1.41% were the top losers.

European Markets were trading in the green; France’s CAC was up by 0.06%, Germany’s DAX was up by 0.26% and UK's FTSE was up by 0.44%.

The Asian equity markets ended mixed on Thursday, ahead of the release of minutes from the Federal Reserve’s latest policy meeting, with Shanghai stocks closing on firm note after Chinese markets reopened today following an extended holiday. China’s sovereign rating can withstand slower growth and greater volatility going forward. Moody’s currently rates China ‘Aa3’ with a stable outlook, and is forecasting GDP growth at 6.8 percent in 2015 and 6.3 percent in 2016. This is in line with forecasts from the International Monetary Fund. Japan’s Core Machinery Orders fell to -5.7% compared to -3.6% in the preceding month. Japan’s Economy Watchers Current Index fell to a seasonally adjusted 47.5, from 49.3 in the preceding month. South Korea’s foreign exchange bank deposits fell for a fifth straight month in September to their lowest level in over a year as yuan deposits continued to decline. Foreign exchange bank deposits stood at $59.19 billion as of end-September, down $0.50 billion from August. This was the lowest level since end-June last year. Hong Kong’s home prices rose for a fifth consecutive month to hit a record high in August, overcoming concerns an expected interest rate hike in the United States may dampen demand in one of the world’s most expensive property markets. An official index of overall private home prices for August edged up 1.1 percentage points month-on-month to 305 points. That’s 16.8 per cent higher than the year before and a fifth straight monthly gain.