Benchmarks end a lackluster session with marginal cut; broader markets outclass

Indian benchmark indices started the new month on a disappointing note, as they showcased an unenthusiastic performance on Monday and settled with moderate cuts of over half a percent amid weak cues from Japan and after disappointing earnings from major corporates. Sentiment was hit by a report that exports of 17 sectors, over half of the 30 sectors including petroleum products, textiles, man-made yarn and fabrics, engineering and leather, closely monitored by the Commerce Ministry were in the negative zone in March due to a fall in global commodity prices amid tepid demand.  However, losses remained capped with the report that growth in India's manufacturing sector slowed sharply in April as demand weakened, reinforcing views that the central bank will have to cut interest rates again in coming months. The Nikkei/Markit Manufacturing Purchasing Managers' Index fell to a four-month low of 50.5 in April from 52.4 of March, nearing the 50 mark that separates growth from contraction and the lowest reading of the year. Some support also came with Standard Chartered’s report that India's GDP is likely to grow 7.4% during the current fiscal on the back of increased consumer spending, supported by pay commission awards and lagged impact of a good monsoon.

On the global front,  Asia markets snapped the first day of the month on a lower note with the Japanese key index Nikkei giving away as much as 3.5%, as investors registered their disappointment over the lack of fresh stimulus from Japan's central bank. The surge in the Japanese yen and bleak readings from a monthly factory managers' survey did little to lighten the gloom. Investors remained cautious with a survey that showed that activity in China’s manufacturing sector expanded for the second month in a row in April but only marginally, raising doubts about the sustainability of a recent pick-up in the economy. Besides, drop in oil prices also weighed on the sentiment. Oil prices dipped in early Asian trade as rising production in West Asia outweighed falling US output and the recent slide in the dollar, which has been supporting crude. Meanwhile, European stocks were marginally inj green on Monday, as investors eyed a speech by European Central Bank President Mario Draghi scheduled later in the day.

Back home, the investors largely remained influenced by the daunting sentiments prevailing in Asian markets. The frontline indices kept losing steam thereafter and even drifted to the lowest point in the session in late morning trades. Afterward, the key indices oscillated in an extremely tight range through the session as market participants remained on the sidelines lacking conviction. However, late short covering in blue-chip stocks and supportive leads from European markets ensured that local bourses snap the session with relatively small losses. Finally the NSE’s 50-share broadly followed index - Nifty plunged by over half a percent to settle above the crucial 7,800 support level, while Bombay Stock Exchange’s Sensitive Index - Sensex took a triple digit cut and closed below the psychological 25,450 mark. Moreover, broader markets showed some resilience by outclassing their larger peers by a big margin as investors carried forward their value hunting in beaten down shares from the midcap and small cap space. On the BSE sectoral space, the high beta - Banking pocket remained among top laggards in the space as they got lacerated by over a percent while sectors like information technology (IT), TECK and Realty too got pounded heavily in the session. On the flipside, Consumer Durables, Metal and Oil & Gas pockets managed to go home with the moderate gains. The market breadth remained pessimistic as there were 1283 shares on the gaining side against 1327 shares on the losing side while 118 shares remained unchanged.

Finally, the BSE Sensex declined by 169.65 points or 0.66% to 25436.97, while the CNX Nifty dropped 43.90  points or 0.56% to 7,805.90. 

The BSE Sensex touched a high and a low 25565.44 and 25341.14, respectively. The broader indices made a positive closing, outperforming the benchmarks; the BSE Mid cap index ended up by 1.10%, while Small cap index was higher by 0.39%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 1.07%, Metal up by 1.02%, Oil & Gas up by 0.25%, Auto up by 0.16% and Power up by 0.05%, while Bankex down by 1.34%, IT down by 0.65%, TECK down by 0.65%, Realty down by 0.59% and PSU down by 0.21% were the top losing indices on BSE.

The top gainers on the Sensex were BHEL up by 1.91%, GAIL India up by 1.89%, Hero MotoCorp up by 0.99%, Maruti Suzuki up by 0.91% and Lupin up by 0.58%. On the flip side, ICICI Bank down by 4.08%, Dr. Reddys Lab down by 2.66%, Adani Ports &Special down by 1.93%, Bharti Airtel down by 1.64% and HDFC Bank down by 1.37% were the top losers.

Meanwhile, with an aim to step up engagement in hydrocarbon sector with Iran, India has conveyed to the Persian Gulf nation that it is ready to clear nearly $6.5 billion oil import dues at the earliest, provided there is clarity on the payment channel. There has been a series of discussions at various levels, both in Iran and India, and both sides are confident of resolving the matter soon. Refiners like Essar Oil and Mangalore Refinery and Petrochemicals (MPRL) owe nearly $6.5 billion in dues to Iran.

Following lifting of sanctions against it in January under a historic nuclear deal, Iran had terminated a three-year-old system with India of getting paid for half of the oil dues in rupees and has been insisting on being paid in Euros for the oil it sells to Indian refiners. Though Western sanctions against Iran were lifted, problems persist in banking channels due to which regular transactions were not possible yet.

Since February 2013, Indian refiners like Essar Oil and MRPL have been paying 45 per cent of their import bill in rupees to UCO Bank account of Iranian Oil Company. The remaining has been accumulating, pending finalisation of a payment mechanism.

Recently, in order to make up for the foreign exchange losses incurred, Iran had asked Indian refiners like Essar Oil and MRPL to pay interest rate of Libor-plus 0.75 per cent (London Inter-Bank Offered Rate) on the $6.5 billion they owe it in past oil dues.

The CNX Nifty traded in a range of 7,829.80 and 7,777.30. There were 20 stocks advancing against 30 stocks decliners on the index.

The top gainers on Nifty were GAIL India up by 2.10%, Hindalco up by 1.97%, BHEL up by 1.87%, Aurobindo Pharma up by 1.70% and Ambuja Cement up by 1.15%. On the flip side, ICICI Bank down by 4.14%, Dr. Reddys Lab down by 2.56%, Adani Ports & Special down by 2.20%, Tech Mahindra down by 1.79% and SBI down by 1.61% were the top losers. (Provisional)

European markets were trading in green; France’s CAC increased 14.94 points or 0.34% to 4,443.90 and Germany’s DAX was up by 81.9 points or 0.82% to 10,120.87.

Asian equity markets ended lower on Monday, with downbeat US data, falling commodity prices and a surging yen weighing on markets in a holiday-affected trading session. Chinese manufacturing data for April also cast doubt over strength of a pick-up in the world's second-largest economy. Activity in China's manufacturing sector expanded for the second month in a row in April but at a slower pace. The PMI fell to 50.1 from 50.2 in March. The PMI for the non-manufacturing sector stood at 53.5 in April, down from 53.8 in March. Japanese shares tumbled as the dollar notched a fresh 18-month low against the yen, fetching 106.14 yen at one time compared with 106.40-50 yen in New York Friday, after the Bank of Japan opted to hold off on further monetary easing. Markets in China, Hong Kong, Taiwan, Singapore and Malaysia were closed for observance of Labor Day.