Markets magnify losses in noon deals; Nifty breaches 7,800 level

Indian barometer gauges have magnified their losses and are trading near day’s low with bank shares leading the decline after rise in consumer price inflation dashed hopes of a rate cut by the Reserve Bank of India. Key gauges were trading with a cut of around one and a half percent, breaching their crucial 7,800 (Nifty) and 25,500 (Sensex) levels. Sentiments remained dampened since morning with industrial production plunging to 0.1 per cent in March and retail inflation jumping to 5.39 per cent in April. Depreciation in Indian rupee too weighed down sentiments. The rupee depreciated by 14 paise to 66.76 against the US dollar in noon deals due to increased demand for the American currency from importers. Weakness in Asian counters, tracking overnight losses in the US and European markets, too weighed down domestic sentiments.

Back home, selling was both brutal and wide-based as none of sectoral indices on BSE were spared. Counters, which featured in the list of worst performers, include metal, realty and banking. Sectors like telecom, finance, auto, capital goods and consumer durables too were trading with huge losses. FMCG majors were trading mixed on concerns that rise in consumer inflation is likely to hurt spending leading to lower volume growth going forward. Meanwhile, the broader indices too were reeling under pressure, while the market breadth on the BSE was negative; there were 890 shares on the gaining side against 1,339 shares on the losing side while 159 shares remain unchanged.

The BSE Sensex is currently trading at 25432.86, down by 357.36 points or 1.39% after trading in a range of 25400.27 and 25743.69. There were 3 stocks advancing against 27 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.28%, while Small cap index down by 0.13%.

The top losing sectoral indices on the BSE were Metal down by 1.81%, Realty down by 1.53%, Bankex down by 1.50%, Telecom down by 1.44% and Finance down by 1.43%, while there were no gainers on the sectoral front.

The top gainers on the Sensex were Asian Paints up by 1.21%, Adani Ports & Special up by 1.20%, Tata Motors up by 0.70% and ITC up by 0.00%. On the flip side, Hindustan Unilever down by 3.15%, ICICI Bank down by 2.89%, HDFC down by 2.38%, Tata Steel down by 2.36% and BHEL down by 2.34% were the top losers.

Meanwhile, despite delays in domestic policy reforms, United Nations in its report named World Economic Situation and Prospect has said that the India's economy is slowly gaining momentum and is projected to grow by 7.3 percent this year. The report said that despite some delays in reforms and enduring fragilities in the banking system the investment demand is supported by the monetary easing cycle, rising FDI, and government efforts towards infrastructure investments and public-private partnerships.

The growth estimates for India in the mid-year update are in line with projections made in January this year, when the 2016 World Economic Situation and Prospect report had said that India will be the world’s fastest growing large economy at 7.3 per cent in 2016, improving further to 7.5 per cent in the following year.

Furthermore, the report highlighted that the economic prospects of the South Asian region will be 'contingent' on the growth trajectory of India and Iran. It added that despite the protracted instabilities and general weakness of the global economy, South Asia's economic outlook remains favourable, with most countries benefiting from low oil prices. Inflation in the South Asian region is projected to remain relatively tame, reflecting subdued commodity prices and lower pressures from supply-side bottlenecks. India's economy, which accounts for over 70 per cent of South Asia's GDP, had grown by about 7.2 per cent in 2015.

The CNX Nifty is currently trading at 7797.00, down by 103.40 points or 1.31% after trading in a range of 7784.20 and 7881.00. There were 7 stocks advancing against 44 stocks declining on the index.

The top gainers on Nifty were Adani Ports &Special up by 1.43%, Idea Cellular up by 1.03%, Asian Paints up by 0.99%, Tata Motors up by 0.93% and HCL Tech up by 0.91%. On the flip side, Eicher Motors down by 3.81%, Hindustan Unilever down by 3.22%, Hindalco down by 3.05%, ICICI Bank down by 2.89% and GAIL India down by 2.48% were the top losers.

Asian markets were trading in red; Hang Seng decreased 258.68 points or 1.3% to 19,656.78, Nikkei 225 declined 234.13 points or 1.41% to 16,412.21, Taiwan Weighted shed 54.36 points or 0.67% to 8,053.69, Jakarta Composite fell 30.84 points or 0.64% to 4,772.48, FTSE Bursa Malaysia KLCI dropped 24.63 points or 1.49% to 1,624.35, KOSPI Index slipped 10.5 points or 0.53% to 1,966.99 and Shanghai Composite was down by 10.15 points or 0.36% to 2,825.71.