Benchmarks end a lackluster session with modest cut

Indian benchmarks showed a lackadaisical performance on Wednesday as they failed to snap the session in the green territory and settled marginally below the neutral line amid weak global cues. Investor’s sentiments turned subdued in the very beginning with a top US official’s statement that India needs to modernise and reform its economic governance to expand trade and attract the kind of foreign direct investment it needs to build infrastructure. Confidence was further hit by the repot that foreign portfolio investors (FPIs) sold shares worth a net Rs 224.97 crore on May 17, 2016.  Besides, depreciation in the rupee against dollar, which fell for the fifth day, also weighed on the sentiment. Indian rupee depreciated by eight paise to trade at 66.95 against the US dollar at the time of equity markets closing, due to fresh buying of the American currency by banks and importers. However, market participants got some support with the private repot that indicate the growth recovery in Indian economy is becoming more 'broad-based' with rise in public sector capital expenditure and foreign direct investment. Also, going forward the consumption growth is expected to pick up further. Also, Indian consumers were the most confident in the world in terms of job prospects, personal finances and concerns in the first quarter of 2016 with their confidence index touching a nine-year high during the period, according to a study by global performance management company, Nielsen. The Consumer Confidence Index score for India increased three index points in the first quarter to a score of 134, the highest for the country since 2007 and comes after three consecutive quarters at 131.

On the global front, European shares declined on Wednesday, tracking losses on Asian and US stock markets that were caused by renewed expectations that the US Federal Reserve could raise rates later this year. Further, Japanese shares came under pressure as investors weighed the impact of stronger-than-expected economic growth on the government’s decision on future stimulus and a planned sales tax hike. Japan’s economy grew at an annualized 1.7 percent last quarter, beating estimates for 0.3 percent growth, and averting a recession. Stock markets in Hong Kong and China fell amid concerns that signs of recovery in its economy may be short-lived and worries that policymakers are growing more cautious about providing additional stimulus as bad debts mount.

Back home, the benchmark got a gap down beginning after investors largely remained influenced by gloomy global developments as strong US inflation data rekindled prospects of the central bank raising rates later this year. Thereafter, the key indices failed to show any kind of aggressive move as they oscillated around the lower levels for most part of morning trades and drifted deeper into the red terrain in noon session. Although the indices tried hard to touch neutral line in late afternoon trades, some profit booking in the dying moments of trade forced the bourses to snap the session below the neutral line. Finally the NSE’s 50-share broadly followed index Nifty, suffered over quarter percent cut to settle above the crucial 7,850 support level, while Bombay Stock Exchange’s Sensitive Index, Sensex slipped by around seventy points and closed below the psychological 25,750 mark. On the BSE sectoral space, the rate sensitive Auto counter languished at the bottom of the table as it got clobbered by 1.28 percent, while sectors like Power, TECK and Consumer Durables too got pounded heavily in the session. On the flipside, Realty, Capital Goods and Metal pockets managed to go home with the moderate gains. The market breadth remained pessimistic as there were 1228 shares on the gaining side against 1319 shares on the losing side, while 190 shares remained unchanged.

Finally, the BSE Sensex ended lower by 69 points or 0.27% to 25704.61, while the CNX Nifty dropped 20.60 points or 0.26% to 7,870.15. 

The BSE Sensex touched a high and a low 25747.00 and 25503.40, respectively. The broader indices made a mixed closing; the BSE Mid cap index ended tad lower by 0.01%, while Small cap index was higher by 0.22%.

The top gaining sectoral indices on the BSE were Realty up by 2.11%, Capital Goods up by 0.64%, Metal up by 0.61%, PSU up by 0.55% and FMCG up by 0.06%, while Auto down by 1.28%, Power down by 0.33%, TECK down by 0.31%, Consumer Durables down by 0.28% and IT down by 0.14% were the top losing indices on BSE.

The top gainers on the Sensex were ONGC up by 1.83%, SBI up by 1.78%, Larsen & Toubro up by 1.24%, Lupin up by 1.18% and ITC up by 0.76%. On the flip side, Bajaj Auto down by 1.85%, Mahindra & Mahindra down by 1.59%, Hero MotoCorp down by 1.47%, Tata Motors down by 1.26% and BHEL down by 1.16% were the top losers.

Meanwhile, the Minister of State for labour and Employment Bandaru Dattatreya has proposed a 15-fold increase in the rehabilitation cost of bonded labourers to up to Rs 3,00,000 in order to restore the government's pro-labour image. The government is revising the rehabilitation of bonded labour scheme and increasing the quantum of financial assistance from Rs 20 thousand to one lakh rupees. The scheme proposes to increase the budget provision from Rs 5 crore to about Rs 47 crore per annum.

Under the revised scheme, male bonded labourer would get a financial assistance of Rs 1 lakh, while a child or woman would of get Rs 2 lakh. This would go up to Rs 3 lakh in case of a differently-abled or physically challenged bonded labourer.

The minister said that under this new scheme the money will remain in an annuity account, controlled by the District Magistrate and a monthly earning will flow to the beneficiary account for his/her comfortable living. Furthermore, the new scheme aims to address new forms of bondage such as organised begging rings, forced prostitution and child labour for which females, disabled and transgenders are mercilessly used by the powerful elements.

In the year 1978, the government had launched a centrally-sponsored scheme for rehabilitation of bonded labourers. Under the scheme, an assistance of up to Rs 4,000 per bonded labour was provided initially. This was raised to Rs 6,250 in 1986 and to Rs 10,000 in 1995, before fixing it at Rs 20,000 in 1999.

The CNX Nifty traded in a range of 7,882.05 and 7,810.75. There were 21 stocks advancing against 30 stocks decliners on the index.

The top gainers on Nifty were ONGC up by 1.90%, SBI up by 1.75%, Lupin up by 1.56%, Larsen & Toubro up by 1.45% and HCL Tech. up by 1.36%. On the flip side, Bosch down by 2.55%, Zee Entertainment down by 2.12%, Hero MotoCorp down by 1.84%, Bajaj Auto down by 1.79% and BPCL down by 1.29% were the top losers.

European markets were trading in red; Germany’s DAX decreased 27.83 points or 0.28% to 9,862.36, UK’s FTSE 100 shed 24.47 points or 0.4% to 6,143.30 and France’s CAC was down by 11.04 points or 0.26% to 4,286.53.

Asian equity markets ended mostly lower on Wednesday as hawkish comments from Fed officials and upbeat data pointing to a US rate hike this year dampened investor sentiment. Chinese shares ended lower as positive home price data dashed hopes for more fiscal and monetary stimulus. Japanese stocks ended the day almost flat after the yen see-sawed against the US dollar, rising and falling in strength as investors digested Japan's stronger than expected GDP data and US inflation. Reports showed that the world's third-largest economy grew 0.4 percent sequentially in the first quarter of 2016. That topped forecasts for an increase of 0.1 percent, following the downwardly revised 0.4 percent contraction in the previous three months. On a yearly basis, GDP surged 1.7 percent.