Post Session: Quick Review

Thursday turned out to be a disappointing session of trade for Indian equity benchmarks where frontline gauges ended the session with colossal loss of over a percentage point, breaching their crucial 25,400 (Sensex) and 7,800 (Nifty) levels after likelihood of an interest rate hike by the US Federal Reserve in the month of June resurfaced. The Bharatiya Janata Party’s (BJP) win in Assam election failed to uplift the mood on the street after a downfall in the global equities amid decline in the crude oil prices weighed down sentiments. Markets after a negative start extended their southward journey and the ferocious selling pressure which was witnessed in the last leg of the trade mainly dragged the benchmark equity indices at day’s low by the close of trade.

Markets participants failed to get any sense of relief with Moody’s Investors Service projecting an economic growth rate of close to 7.5 per cent in 2016 and 2017 for India. Traders also failed to get any solace with global rating agency Standard and Poor’s (S&P) statement that India is likely to remain insulated from the developments in the Chinese economy provided the government carries out structural reforms to take the economy to an eight per cent growth path.

Fall in the crude oil prices and weakness in the Asian peers after Federal Open Market Committee (FOMC) meeting minutes raised hopes of an interest rate hike in the near future has also dampened the sentiments. European counters too have made a weak opening with CAC, DAX and FTSE were trading with a cut of around a percent in early deals with weaker oil and metal prices putting pressure on commodity stocks.

Back on the home turf, freefall of Indian currency acted as the main mood dampener for the Dalal Street. The rupee plummeted 34 paise against the US dollar to 67.32 at the time of equity markets closing, its weakest level since March due to appreciation of the American currency overseas amid foreign fund outflows. On the sectoral front, power counter witnessed selling despite government approving three foreign direct investment proposals, all related to the pharmaceutical sector, worth Rs. 60.73 crore. Oil and gas counter too faced selling pressure despite Minister of State for Petroleum and Natural Gas, Dharmendra Pradhan stating that natural gas from coal bed methane is likely to contribute to five per cent of national gas production by 2017.

The NSE’s 50-share broadly followed index -- Nifty -- declined by around ninety points to end below the psychological 7,900 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex -- dropped by over three hundred to finish below the psychological 25,400 mark. Broader markets too traded under pressure and ended the session with a cut of around a percent.

The market breadth remained in the favour off decliners, as there were 917 shares on the gaining side against 1,632 shares on the losing side while 167 shares remain unchanged. (Provisional)

The BSE Sensex ended at 25399.72, down by 304.89 points or 1.19% after trading in a range of 25351.99 and 25714.56. There were 4 stocks advancing against 26 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index was down by 1.12%, while Small cap index down by 1.01%. (Provisional)

The top losing sectoral indices on the BSE were Capital Goods down by 2.38%, FMCG down by 1.74%, Metal down by 1.61%, Industrials down by 1.62% and PSU down by 1.55%, while there are no losers on the index. (Provisional)

The top gainers on the Sensex were Lupin up by 0.59%, Wipro up by 0.58%, Hero MotoCorp up by 0.21% and TCS up by 0.18%. On the flip side, Adani Ports &Special down by 6.61%, SBI down by 4.27%, Larsen & Toubro down by 3.69%, HDFC down by 2.75% and GAIL India down by 2.71% were the top losers. (Provisional)

Meanwhile, the government’s proposal to allow foreigners to retail food products has been caught in interministerial differences on whether conditions need to be imposed for such investments and market access. Finance minister Arun Jaitley had in the budget for the current fiscal announced that 100% FDI would be allowed through the approval route in marketing of food products produced and manufactured in India which will benefit farmers, give momentum to food processing industry and also create vast employment opportunities. The government wants to open up retail of food products to boost the farming and rural economy.

Department of Industrial Policy and Promotion (DIPP) and the finance ministry are not keen on sectoral conditions, which are difficult to monitor and often act as a deterrent. A formal note has been moved by the DIPP that will be taken up by the Cabinet once these differences are resolved.

The food ministry is however keen on imposing conditions on the lines of those for multi-brand retail as it faces various conditions including mandatory 30% sourcing from local micro, small and medium industries. Further, the multi-brand retail sector, which is open for up to 49% FDI, has  conditions including opening up of retail outlets only in cities with a  population of more than 10 lakh as per 2011Census, 50% of total FDI be brought in the first tranche with a minimum capital of $100 million and mandatory sourcing.

The CNX Nifty ended at 7783.40, down by 86.75 points or 1.10% after trading in a range of 7766.80 and 7876.20. There were 11 stocks advancing against 40 stocks declining on the index. (Provisional)

The top gainers on Nifty were BPCL up by 1.09%, Lupin up by 1.06%, Power Grid up by 0.94%, Wipro up by 0.63% and Zee Entertainment up by 0.55%. On the flip side, Adani Ports &Special down by 6.36%, SBI down by 4.03%, Bank of Baroda down by 3.65%, Larsen & Toubro down by 3.34% and Eicher Motors down by 2.77% were the top losers. (Provisional)

European markets were trading in red; Germany’s DAX decreased 157.2 points or 1.58% to 9,786.03, UK’s FTSE 100 declined 83.34 points or 1.35% to 6,082.46 and France’s CAC was down by 38.91 points or 0.9% to 4,280.39.

Asian equity markets ended mostly lower on Thursday, with risk sentiment hurt by falling commodity prices and a surging dollar, after the Federal Reserve's April meeting minutes revealed ‘most’ members have a strong bias for raising rates as early as June, based on how the economy evolves. Chinese shares ended flat in thin trading after a State Council executive meeting chaired by Premier Li Keqiang urged state-owned enterprises to boost their competitiveness. Japanese shares ended little changed on Thursday, moving in and out of positive territory as general caution offset some gains from Federal Reserve minutes that boosted the dollar and weakened the yen. Some investors stayed on the sidelines ahead of Group of Seven meetings to be held this week in Japan.