Benchmarks witness bloodbath; Sensex slips below 26,800 mark

Indian markets after witnessing consolidation in the previous session, succumbed to intensified selling pressure on Thursday that dragged the benchmarks down by around a percent. Sentiments remained down-beat with the report that the World Bank lowered India’s growth projections by 0.2% to 7.6% for 2016-17 and 7.7% in 2017-18, citing the drag by exports on economic activity. Besides, concern over rising crude oil prices, which are hovering near their one year highs, too weighed down sentiments. Rise in crude oil prices will adversely impact India's fiscal deficit situation and will increase fuel price inflation, as India imports about 80% of its crude requirements. Further, some market participants remained on the sidelines and refrained from any buying activity ahead of industrial production data for April which is scheduled to be released on Friday. Investors failed to get any sense of relief with Prime Minister Narendra Modi’s statement that his dream was to economically empower every Indian by 2022, the 75th anniversary of India's Independence Day. Meanwhile, Auto stocks came under selling pressure on report that domestic passenger car sales dipped by 0.86% to 158,996 units in May from 1,60,371 units in the year-ago month. However, metal & mining stocks showed some realization as copper prices rose in global commodity markets. Infra stocks too gained, as the governing council of National Investment and Infrastructure Fund chaired by finance minister Arun Jaitley reviewed progress of operationalising India’s maiden sovereign wealth fund NIIF, including the selection of its CEO and projects shortlisted for making initial investments. The government has proposed a corpus of Rs 40,000 crore for NIIF, which will invest in infrastructure projects. 

On the global front, Asian markets ended mostly lower on Thursday as a weaker dollar negatively impacted Japanese stocks and investors weighed risks given the Federal Reserve's cautious stance about tightening rates. Investors around the world remained cautious over the pace of the US economic recovery and ahead of looming major political events, such as a British referendum over whether or not to remain in the European Union. Further, European shares opened lower with major indices such as CAC-40, DAX and FTSE-100 declined by over half a percent in early trade.

Back home, the local benchmark indices started the session on a somber note, as investors were largely influenced by the daunting sentiments prevailing in Asian markets. Thereafter, the key indices failed to show any kind of fervor due to lack of encouraging leads. The key gauges suffered a setback in afternoon trades as sudden bouts of profit booking emerged in the local markets immediately after a somber European market opening. Though, the bourses recovered from the lows of the day but could not succeed in minimizing the huge losses by the end of trading session. Finally the NSE’s 50-share broadly followed index Nifty, took a cut of about a percent to settle just above the crucial 8,2000 support level, while Bombay Stock Exchange’s Sensitive Index, Sensex slipped by over two hundred and fifty points and closed above the psychological 26,750 mark. On the BSE sectoral space, Information Technology (IT), FMCG and Capital Goods counters did the maximum damage as they went home with huge losses. However, sectors like Metal, Oil & Gas and PSU pocket managed to go home with moderate gains of over a percent. The market breadth remained pessimistic as there were 1233 shares on the gaining side against 1336 shares on the losing side, while 187 shares remained unchanged.

Finally, the BSE Sensex ended lower by 257.20 points or 0.95% to 26763.46, while the CNX Nifty dropped 69.45 points or 0.84% to 8,203.60. 

The BSE Sensex touched a high and a low 26994.91 and 26692.35, respectively. The broader indices made a mixed closing; the BSE Mid cap index ended down by 0.47%, while Small cap index up by 0.04%.

The top gaining sectoral indices on the BSE were Metal up by 1.59%, Oil & Gas up by 1.19%, PSU up by 1.10%, Consumer Durables up by 0.35% and Power up by 0.34%, while IT down by 2.17%, TECK down by 1.81%, FMCG down by 1.60%, Capital Goods down by 0.81% and Auto down by 0.62% were the top losing indices on BSE.

The top gainers on the Sensex were Coal India up by 2.13%, ONGC up by 1.99%, Reliance Industries up by 1.81%, NTPC up by 1.66% and Cipla up by 1.51%. On the flip side, Infosys down by 4.27%, Hero MotoCorp down by 2.75%, ITC down by 2.29%, Hindustan Unilever down by 2.28% and Dr. Reddys Lab down by 1.95% were the top losers.

Meanwhile, expressing his confidence about the Indian growth story, Reserve Bank of India (RBI) Governor Raghuram Rajan has said that India's growth is picking up further with 'more animal spirit' and good monsoon and public investment picking up pace, but also said that there will be need for more private investment. He added that Indian economy is capable of growing at a faster pace and is on the right direction though 'true numbers' of GDP could be 1 per cent up or down.

Stressing on the need for private investment to pick up for faster economic growth, Rajan said even though the economy is moving in right direction there is more work to be done before celebrating, which can be done only if we see private investment strongly back on track and I think we are capable of much stronger growth that we have right now.

Commenting of the controversy surrounding the GDP numbers based on new calculations, he said the change has been broadly in the positive direction and the statisticians have done as good a job as they can and economic growth is significantly high as costs have come down.  Recent GDP numbers pegged India's growth for 2015-16 at 7.6 per cent the fastest among the world's major economies.

The CNX Nifty traded in a range of 8,273.35 and 8,184.60. There were 21 stocks advancing against 30 stocks decliners on the index.

The top gainers on Nifty were Coal India up by 2.38%, ONGC up by 2.20%, NTPC up by 1.99%, BPCL up by 1.74% and Reliance Industries up by 1.67%. On the flip side, Aurobindo Pharma down by 3.45%, Infosys down by 3.01%, Hero MotoCorp down by 2.93%, Ambuja Cement down by 2.60% and Hindustan Unilever down by 2.48% were the top losers.

European markets were trading in red; Germany’s DAX declined 113.25 points or 1.11% to 10,103.78, UK’s FTSE 100 decreased 48.23 points or 0.77% to 6,253.29 and France’s CAC was down by 37.43 points or 0.84% to 4,411.30.

Asian equity markets ended lower on Thursday as weak data from both China and Japan added to global growth concerns, despite gains on Wall Street overnight and steadier oil and metal prices. The National Bureau of Statistics said that China's consumer price inflation rose an annual 2.0 percent in May, coming in below forecasts for a 2.3 percent rise and heading further below the government's target zone. Also, deflationary pressures in China eased further in the month, giving policymakers more room to keep fiscal and monetary policies supportive in coming months. The producer price index declined 2.8 percent in May from a year earlier, compared with a 3.4 percent fall in April. Japanese shares fell, weighed down by a stronger yen and worse than expected machinery orders data. Japan's core machinery orders tumbled 11 percent in April from the previous month, the most in two years, owing to earthquakes that hit the southern manufacturing hub, a government report showed. Markets in China, Hong Kong and Taiwan were closed for the Dragon Boat Festival.