Global tremors drags local benchmarks; Nifty ends below 8150 mark

A session after showcasing a vivacious rally of over a percent, Indian equity indices faltered and failed to extend the winning momentum on Thursday as investors turned edgy after Bank of Japan maintained status quo and refrained from adding fresh stimulus. Besides, cautious policy stance by the US Fed on global growth worries and Brexit fears sparked panic selling at the local markets. Domestic sentiments remained dampened with the report that India's monsoon deficit widened to 25% since the beginning of this month as rainfall in the past day was less than half of the normal level, increasing the anxiety of farmers. Weather scientists say total rainfall is well below average, primarily because the monsoon hit peninsular India a week late and has not progressed smoothly after that. Moreover, investors also remained anxious over report that India’s merchandise exports maintained its stubborn trend for the eighteenth straight month in May, although the rate of fall was lowest since November 2014. Exports contracted 0.79 per cent to $22.17 billion in May, against $ 22.34 billion in May 2015. However, market participants got some confidence with Minister of State for Finance Jayant Sinha’s statement that the government is keeping a watch on the global risk factors to the economy including Brexit, turmoil in the Middle East and spike in oil prices in the international market. Some support also came with a report that India with a low leverage score looks promising among emerging Asian countries, which can deliver a solid growth rate and where the potential for a significant expansion is maximum.

On the global front, Asian stock markets ended lower on Thursday after Federal Reserve boss Janet Yellen sounded a warning over a possible British exit from the EU, while the yen soared to a 22-month dollar high as the Bank of Japan refused to pump up its stimulus. The Fed on Wednesday lowered its growth forecasts for this year and the following two, and flagged interest rates rises to be lower and slower, highlighting increasing concern about the US and global economic outlook. Concerns over Brexit have dominated markets this week and in combination with dimmed expectations on global growth have driven investors towards safe-haven assets such as German bunds and gold and out of oil and stocks. Furthermore, European stocks declined in early trade, with regional equity indexes dropping towards their lowest level in nearly four months as concerns lingered over Britain's vote next week on its European Union membership.

Back home, the local benchmark indices got off to a pessimistic start following the Asian peers as sentiments got pressured by cautious policy stance by the US Fed on global growth worries. US central bank signaled that there may be two rate increases this year, saying it expects the US job market to strengthen after a recent slowdown. Thereafter, the key benchmarks 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 selling 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 over half a percent to settle below the crucial 8,150 support level, while Bombay Stock Exchange’s Sensitive Index, Sensex slipped by over two hundred points and closed above the psychological 26,500 mark. On the BSE sectoral space, Banking, Capital Goods and Auto counters did the maximum damage as they went home with huge losses. However, sectors like Metal and PSU pocket managed to go home with moderate gains. The market breadth remained pessimistic as there were 966 shares on the gaining side against 1632 shares on the losing side, while 168 shares remained unchanged.

Finally, the BSE Sensex ended lower by 200.88 points or 0.75% to 26525.46, while the CNX Nifty dropped 65.85 points or 0.80% to 8,140.75. 

The BSE Sensex touched a high and a low 26686.03 and 26314.91, respectively. The broader indices made a negative closing; the BSE Mid cap index ended down by 0.37%, while Small cap index was lower by 0.55%.

The only gaining sectoral index on the BSE were Metal up by 0.41% and PSU up by 0.01%, while Bankex down by 1.38%, Capital Goods down by 1.02%, Auto down by 0.92%, Realty down by 0.67% and TECK down by 0.54% were the top losing indices on BSE.

The top gainers on the Sensex were Asian Paints up by 1.13%, GAIL India up by 1.08%, Wipro up by 0.59%, Hindustan Unilever up by 0.56% and Tata Motors up by 0.40%. On the flip side, ICICI Bank down by 3.52%, Maruti Suzuki down by 2.93%, Bharti Airtel down by 1.65%, NTPC down by 1.53% and Hero MotoCorp down by 1.39% were the top losers.

Meanwhile, India’s merchandise exports extended its declining trend for the eighteenth month in row, though it declined marginally in dollar terms and posted a small increase in rupee terms in May 2016. After months of fall, India’s exports looked to be stabilizing, which suggested that the worst can be over. Exports fell marginally by 0.79 percent to $22.17 billion compared to the same month last year, hit by low global demand and falling commodity prices. On the other side, Imports declined by 13.16 per cent to $28.44 billion during the month, bringing down trade deficit to $6.27 billion compared to $10.40 billion in May 2015. The trade deficit for April-May, 2016-17 was estimated at $11117.77 million which was lower than the deficit of $21398.54 million during April-May, 2015-16.

As per the data released by the Commerce Ministry, exports during May, 2016 were valued at $22170.62 million which was 0.79 per cent lower in Dollar terms than the level of $22346.75 million and in rupee terms stood at Rs 148336.31 crore, 4.04 per cent higher compared to Rs 142572.92 crore during May, 2015.Cumulative value of exports for the period April-May 2016-17 was $42739.47 million, as against $44401.47 million, while in rupee term it stood at  Rs 285056.42 crore compared to Rs 280973.36 crore, registering a negative growth of 3.74 per cent in Dollar terms and 1.45 per cent in Rupee terms over the same period last year.

Meanwhile, Imports during May, 2016 were valued at $28443.52 million in dollar terms, 13.16 per cent lower over the level of imports valued at $32752.99 million in same period last year. In rupee terms imports were valued at Rs 190306.19 crore, 8.93 per cent lower than Rs 208965.06 crore during May 2015. Cumulative value of imports for the period April- May 2016-17 in Dollar terms was $53857.24 million, as against $65800.01 million, registering a negative growth of 18.15 per cent in Dollar terms. In rupee terms the imports for the period April-May 2016-17 stood at Rs 359229.90 crore, down by 13.72 per cent compared to Rs 416345.69 crore in the same period last year.

Oil imports which accounts for 31 percent of the total imports, dropped by 30.45 per cent during May, 2016 at $5938.59 million than oil imports valued at $8538.67 million in the corresponding period last year. Oil imports during April- May, 2016-17 were valued at $11594.51 million which was 27.45 per cent lower than the oil imports of $15981.59 million in the corresponding period last year. Non-oil imports during May, 2016 were estimated at $22504.93 million which was 7.06 per cent lower than non-oil imports of $24214.32 million in May, 2015. Non-oil imports during April- May 2016-17 were valued at $42262.73 million which was 15.17 per cent lower than the level of such imports valued at $49818.42million  in April- May, 2015-16.

The CNX Nifty traded in a range of 8,180.65 and 8,074.45. There were 12 stocks advancing against 39 stocks decliners on the index.

The top gainers on Nifty were Hindalco up by 2.85%, GAIL India up by 1.35%, Eicher Motors up by 1.02%, Asian Paints up by 0.82% and Adani Ports & Special up by 0.72%. On the flip side, Bharti Infratel down by 4.63%, ICICI Bank down by 3.59%, Maruti Suzuki down by 2.98%, Ultratech Cement down by 2.43% and Indusind Bank down by 2.07% were the top losers.

European markets were trading in red; Germany’s DAX decreased 73.18 points or 0.76% to 9,533.53, UK’s FTSE 100 declined 36.34 points or 0.61% to 5,930.46 and France’s CAC was down by 30.31 points or 0.73% to 4,141.27.

Asian equity markets ended lower on Thursday as oil extended losses and the Bank of Japan held off on additional easing measures to arrest the strengthening yen in the wake of concerns surrounding next week's British referendum. The yen rose sharply to hit multi-month highs against rival currencies as BOJ officials opted to wait until after the results of a British referendum next week that could send shockwaves through the global economy. Chinese shares fell as concerns about slowing economic growth and fears of further weakness in the yuan overshadowed encouraging bank lending data. China's bank lending increased more than expected in May following a sharp fall in April. Banks extended CNY 985.5 billion in new yuan loans in the month, which was above the expected level of CNY 750 billion. China's yuan held steady against the dollar, after briefly hitting a more than five-year low on expectations of a dovish statement from the Federal Reserve. Fed officials held rates steady last night, as was widely expected, while scaling down their tightening projections and growth forecasts for 2016 and 2017, citing slow jobs gains, tepid growth, low inflation and the impending vote on Brexit, scheduled for June 23. Hong Kong shares dropped after the Bank of Japan disappointed those hoping for more stimulus measures.