Markets make dismal start on weak global cues

Pressurized by weak global cues, Indian equity markets have made a dismal opening on Monday with key gauges breaching their crucial 26,400 (Sensex) and 8,100 (Nifty) levels. Sentiments remained dampened with weak industrial production data, as the IIP contracted by 0.8% in April, the first decline in three months, on the back of sharp fall in capital goods production and manufacturing activity. Traders also remained on sidelines ahead of key macroeconomic data i.e. consumer price index (CPI) to be released later in the day and inflation based on the wholesale price index (WPI) for May to be released on Tuesday.

Global cues remained feeble as traders across the world remained worried about Britain’s exit from European Union, with some terming it as a biggest crisis for the financial markets since the collapse of Lehman Brothers. Asian markets were reeling under pressure ahead of the US Fed meet due to begin tomorrow and BOJ meet later during this week amid jitters over the forthcoming referendum on whether the UK would remain in the European Union scheduled on June 23.

Back home, selling was both brutal and wide-based as none of sectoral indices on BSE was spared. Counters, which featured in the list of worst performers, include banking, auto and capital goods. The broader indices too were reeling under pressure, while the market breadth on the BSE was negative; there were 571 shares on the gaining side against 1,224 shares on the losing side, while 78 shares remained unchanged.

The BSE Sensex is currently trading at 26338.19, down by 297.56 points or 1.12% after trading in a range of 26337.18 and 26468.27. 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 0.90%, while Small cap index down by 0.85%.

The top losing sectoral indices on the BSE were Bankex down by 1.49%, Auto down by 1.18%, Capital Goods down by 1.13%, Realty down by 1.04% and Power down by 1.04%, while there were no gainers on the index.

The top gainers on the Sensex were Lupin up by 0.65%, Dr. Reddys Lab up by 0.55%, Cipla up by 0.39%, Coal India up by 0.33% and Sun Pharma Inds. up by 0.05%. On the flip side, ICICI Bank down by 3.03%, Axis Bank down by 2.45%, SBI down by 2.13%, Tata Motors down by 2.12% and Tata Steel down by 2.02% were the top losers.

Meanwhile, in order to enable investors to co-invest in the National Investment and Infrastructure Fund (NIIF), the government may tweak the investment norms in this sovereign wealth fund, as well as in the individual projects. Economic Affairs Secretary Shaktikanta Das has said that the norms would be tweaked within the broad framework of the investment to take into account suggestions from the domestic and overseas investors.

Das said that the government was earlier considering NIIF to be the mother fund under which there would be several sub-funds, but after interaction with investors from within and abroad we realised that there is equal amount of interest, perhaps greater interest to co-invest in individual projects. He further added that “we found that the investment pattern of NIIF, which we had in mind originally, required some amount of tweaking within the broad framework.”

The Economic Affairs Secretary also stated that the government is now in discussion with various investors and they will co invest in individual infrastructure projects and also invest in the mother fund. He further said that while co-investment in individual projects is important, it is also important that the investors come into the mother fund because there government equity will be only 49 per cent.

The CNX Nifty is currently trading at 8091.40, down by 78.65 points or 0.96% after trading in a range of 8086.05 and 8111.60. There were 8 stocks advancing against 43 stocks declining on the index.

The top gainers on Nifty were BPCL up by 0.89%, Lupin up by 0.52%, Dr. Reddys Lab up by 0.48%, Coal India up by 0.47% and HCL Tech up by 0.32%. On the flip side, ICICI Bank down by 2.93%, Axis Bank down by 2.48%, Bank of Baroda down by 2.36%, Idea Cellular down by 2.32% and Hindalco down by 2.21% were the top losers.

Asian markets were trading in red; Hang Seng tumbled 523.84 points or 2.49% to 20,518.80, Nikkei 225 declined 461.13 points or 2.78% to 16,140.23, Taiwan Weighted dropped 155.66 points or 1.79% to 8,559.82, KOSPI Index fell 36.98 points or 1.83% to 1,980.65, Shanghai Composite decreased 22.93 points or 0.78% to 2,904.23, Jakarta Composite shed 17.5 points or 0.36% to 4,830.56 and FTSE Bursa Malaysia KLCI was down by 9.58 points or 0.58% to 1,631.64.