Benchmarks end a volatile session with modest cut; broader markets outclass

It was a lackadaisical show from the benchmark indices on Tuesday, as they failed to snap the session in the green territory and settled marginally below the neutral line. The session was characterized by extreme volatility as the frontline indices went through a rollercoaster ride amid lack of direction and a pandemonium across global equity markets. On the domestic front, sentiments got undermined after Consumer Price Index (CPI) for May 2016 rose to 5.76%, for a second straight month, compared with 5.39% in April, weakening prospects of a rate hike by RBI in August 2016.  The central bank closely watches the CPI figures to set the interest rate policy. In its June monetary policy review, RBI had said the possibility of another rate cut later this year would arise if monsoon rains dampen upward pressure on food prices. However, investors got some confidence with Union Finance Minister Arun Jaitely’s statement that the Goods and Services Tax (GST), which aims to bring the country under a unified tax regime and has been stalled by a stalemate for years, has finally earned the support of virtually all states except Tamil Nadu. The union minister met finance ministers of 22 states and representatives from seven others in Kolkata in hopes of fostering a consensus on the contentious Bill. Post his meeting, Jaitley said that he is hoping to roll out GST by April 1, 2017. The news came as a string of hope for Indian market, which helped the indices to recover from day’s low. Some support also came in from reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 212.24 crore on June 13, 2016.

Globally, Asian marked ended mostly in red, while the European stock markets got off to a gap down beginning trading with nasty cuts of over a percent, as risk-averse investors grew increasingly concerned the UK might vote to leave the European Union, and ahead of rate announcements from the Federal Reserve, the Bank of England and the bank of Japan later this week. The flight for safety across global markets has taken Germany’s 10-year sovereign bonds past an important milestone, with the yield on the debt entering negative territory, meaning investors are willing to actually pay to hold German government debt rather than receive any return.

Earlier on Dalal Street, the benchmark got off to a flat start with a positive bias shrugging weak cues from the Asian markets, where sentiments largely remained influenced by Wall Street which fell for a third straight session on Monday, with the S&P 500 and the Dow Jones Industrial Average finishing at their lowest close since May 24. Thereafter, the indices traded in an extremely narrow range until the WPI inflation data was released, post the May inflation figure announcement, the indices drifted to lower levels as investors took to across the board risk aversion. However, the frontline gauges managed to pare the losses and rise above the neutral line in the dying hours of trade and settled in close proximity with previous closing levels. Finally the NSE’s 50-share broadly followed index Nifty, settled with single digit cut above the crucial 8,100 support level, while Bombay Stock Exchange’s Sensitive Index Sense declined by merely one point and closed below the psychological 26,400 mark. However, the broader markets showed some resilience and settled on a positive note, outperforming their larger peers by quite a margin. On the BSE sectoral space, Oil & Gas and IT pockets remained among top laggards in the space as they got lacerated by 0.52% and 0.42% respectively. On the flip side, Realty, PSU and Metal pocket managed to go home with moderate gains of around half a percent. The market breadth remained optimistic as there were 1533 shares on the gaining side against 1069 shares on the losing side while 156 shares remained unchanged.

Finally, the BSE Sensex ended lower by 1.06 points to 26395.71, while the CNX Nifty dropped 1.75 points or 0.02% to 8,108.85. 

The BSE Sensex touched a high and a low 26485.45 and 26264.81, respectively. The broader indices made a positive closing; the BSE Mid cap index ended up by 0.50%, while Small cap index was higher by 0.45%.

The top gaining sectoral indices on the BSE were Realty up by 0.84%, PSU up by 0.49%, Metal up by 0.48%, Consumer Durables up by 0.42% and Bankex up by 0.41%, while Oil & Gas down by 0.52%, IT down by 0.42% and TECK down by 0.37% were the top losing indices on BSE.

The top gainers on the Sensex were Cipla up by 2.77%, Adani Ports &Special up by 2.67%, SBI up by 2.65%, ITC up by 0.96% and Tata Motors up by 0.93%. On the flip side, Bajaj Auto down by 1.00%, Maruti Suzuki down by 0.93%, Hero MotoCorp down by 0.91%, Asian Paints down by 0.89% and Hindustan Unilever down by 0.85% were the top losers.

Meanwhile, India’s main inflation gauge based on monthly wholesale price index (WPI) increased for the second straight month in May 2016 after witnessing 17 straight months of fall. The wholesale price index (WPI) for May rose to 0.79 per cent from 0.34 per cent in April, largely attributed by higher food prices. Food articles inflation came in at 7.88 percent in May compared to 4.23 per cent in April. Meanwhile, the buildup inflation rate in the financial year so far was 2.34 percent compared to a build up rate of 1.08 percent in the corresponding period of the previous year.

As per the data released by the government, the WPI for ‘All Commodities’ (Base: 2004-05=100) for the month of May, 2016 rose by 1.4 percent to 179.4 (provisional) from 177.0 (provisional) for the previous month. For the month of March, 2016, the final Wholesale Price Index for ‘All Commodities’ (Base: 2004-05=100) stood at 175.3 as compared to 174.6 (provisional) and annual rate of inflation based on final index was revised to -0.45 percent as compared to -0.85 percent (provisional).

Component wise, inflation in primary articles having weight of 20.12 percent by 2.4 percent to 255.3 (provisional) from 249.3 (provisional) for the previous month. In the primary article index, the 'Food Articles' group rose by 2.8 percent to 271.1 (provisional) from 263.8 (provisional) for the previous month. 'Non-Food Articles' group rose by 0.4 percent to 226.4 (provisional) from 225.6 (provisional) for the previous month. The index for 'Minerals' group rose by 3.7 percent to 186.2 (provisional) from 179.5 (provisional) for the previous month. Fuel & Power index having weight of 14.91% rose by 2.8 percent to 180.3 (provisional) from 175.4 (provisional) for the previous month.

Manufactured Products constituting the major portion of the index with weightage of 64.97 percent rose by 0.5 percent to 155.7 (provisional) from 155.0 (provisional) for the previous month. Among the manufactured products, the index for 'Food Products' group rose by 1.0 percent to 185.3 (provisional) from 183.4 (provisional) for the previous month. The index for 'Beverages, Tobacco & Tobacco Products' group rose by 1.3 percent to 219.0 (provisional) from 216.2 (provisional) for the previous month. The index for 'Textiles' group rose by 0.5 percent to 140.6 (provisional) from 139.9 (provisional) for the previous month.

The index for 'Rubber & Plastic Products' group rose by 0.2 percent to 146.0 (provisional) from 145.7 (provisional) for the previous month. The index for 'Chemicals & Chemical Products' group rose by 0.1 percent to 150.1 (provisional) from 149.9 (provisional) for the previous month. The index for 'Basic Metals, Alloys & Metal Products' group rose by 0.6 percent to 154.9 (provisional) from 153.9 (provisional) for the previous month. The index for 'Machinery & Machine Tools' group rose by 0.4 percent to 135.5 (provisional) from 135.0 (provisional) for the previous month. The index for 'Transport, Equipment & Parts' group rose by 0.1 percent to 139.3 (provisional) from 139.1 (provisional) for the previous month.

However, the index for 'Wood & Wood Products' group declined by 0.5 percent to 197.0 (provisional) from 198.0 (provisional) for the previous month. The index for 'Non-Metallic Mineral Products' group declined by 0.3 percent to 178.7 (provisional) from 179.3 (provisional) for the previous month.

The CNX Nifty traded in a range of 8,134.95 and 8,069.50. There were 23 stocks advancing against 28 stocks decliners on the index.

The top gainers on Nifty were Cipla up by 2.99%, Adani Ports &Special up by 2.96%, SBI up by 2.92%, Bank of Baroda up by 1.85% and Eicher Motors up by 1.66%. On the flip side, Ultratech Cement down by 2.24%, Zee Entertainment down by 1.77%, BPCL down by 1.73%, Ambuja Cement down by 1.45% and Hero MotoCorp down by 1.01% were the top losers.

European markets were trading in red; Germany’s DAX decreased 110.48 points or 1.14% to 9,546.96, UK’s FTSE 100 declined 78.34 points or 1.3% to 5,966.63 and France’s CAC was down by 59.7 points or 1.41% to 4,167.32.

Asian equity markets ended mostly lower on Tuesday, as falling oil prices on worries about global growth and renewed strength in the yen added to the impending uncertainty over the outcome of the UK's EU referendum. Japanese shares hit nine-week lows as falling government bond yields and a strengthening yen kept financials and exporters under pressure. Hong Kong shares fell on Tuesday, with market sentiment curbed by worries about China's economy and uncertainty around this week's Federal Reserve meeting and next week's British referendum on whether to leave the European Union. However, Chinese shares eked out modest gains ahead of MSCI's decision on whether to add Chinese A-shares to its Emerging Markets Index.