Benchmarks end a volatile day with over a quarter percent cut

Indian stocks markets turned volte-face on the first day of a new trading week, as what started on an optimistic note ended as a gloomy show. The optimism in domestic markets petered out completely by the end of trade and the benchmarks even drifted in to the negative territory for second consecutive session despite getting off to a gap-up opening. Investors remained cautious over the monsoon session of Parliament which started today with key economic bills including the long pending GST Bill lined up to be passed. According to reports, the Opposition is likely to take aim at the government on several issues, including the recent Supreme Court verdict on Arunachal Pradesh, the recent developments regarding the Uniform Civil Code and India's unsuccessful bid to gain membership in the Nuclear Suppliers Group. However, investors got some comfort with the report that planting of crops has jumped 38 per cent in the past one week as monsoon rains have significantly increased since the end of June and have covered almost the entire country, raising hopes of much higher farm production than last year and moderate prices of pulses and rice. Water levels in reservoirs have also filled up to the average level, which is good for post-monsoon irrigation and hydropower generation. Some support also came with the industry chamber CII’s report indicating that Indian industry remained upbeat about the business environment in the first quarter ended June owing to salary hikes recommended by the Seventh Pay Commission, progress of monsoons and the government's proactive reforms agenda. The CII Business Confidence Index (BCI) has improved to 57.2 in April-June 2016, from 54.1 in the previous quarter.

On the global front, Asian markets ended mostly in green on Monday as energy and financial companies gained ahead of a relatively data-light week in the region. However, the geopolitical developments in Turkey weighed on investor sentiments. Turkey has arrested 6,000 people after a failed coup attempt, with President Erdogan vowing to purge state bodies of the ‘virus’ that caused the revolt. Besides, Chinese stocks dipped weighed down by property and financial shares after data showed gains in home prices were slowing. Meanwhile, after making a positive start, European markets entered into negative terrain in early deals with DAX and CAC trading with a cut of around one third of a percent.

Back home, the benchmark got off to a rollicking opening as investors rejoiced the report that exports snapped18-month downward spiral and rose by 1.27% in June 2016. Thereafter, the indices in no time climbed to intraday highs and traded around the psychological 28,000 (Sensex) and 8,550 (Nifty) levels through the morning trades. But the optimism started showing signs of easing in late hours of trade with profit booking in few sectors and drifting European markets weighed down the local bourses by the end of session. Finally the NSE’s 50-share broadly followed index Nifty, took a cut of over quarter a percent, slightly protecting the crucial 8,500 support level, while Bombay Stock Exchange’s Sensitive Index, Sensex slipped by around ninety points and closed below the psychological 27,750 mark. On the BSE sectoral space, barring the Auto and information technology (IT) counters, all the gauges closed in the negative territory with indices like Oil & Gas, PSU and Realty suffering lacerations of over a percent. Though there were no other sectoral gainers, there were some individual gainers like Bajaj Auto, Axis Bank, Bharti Infratel and Infosys.

The market breadth remained pessimistic as there were 1092 shares on the gaining side against 1640 shares on the losing side, while 181 shares remained unchanged.

Finally, the BSE Sensex ended lower by 89.84 points or 0.32% to 27746.66, while the CNX Nifty dropped 32.70 points or 0.38% to 8,508.70. 

The BSE Sensex touched a high and a low 28013.50 and 27697.69, respectively. The broader indices made a negative closing; the BSE Mid cap index ended down by 0.62%, while Small cap index was down by 0.48%.

The top gaining sectoral indices on the BSE were Auto up by 0.35% and IT up by 0.30%, while Oil & Gas down by 1.61%, PSU down by 1.49%, Realty down by 1.32%, Metal down by 1.04% and Consumer Durables down by 0.96% were the top losing indices on BSE.

The top gainers on the Sensex were Bajaj Auto up by 2.51%, Axis Bank up by 0.94%, Infosys up by 0.88%, Sun Pharma Inds. up by 0.81% and Coal India up by 0.59%. On the flip side, ONGC down by 4.97%, Bharti Airtel down by 3.98%, Hindustan Unilever down by 2.04%, Tata Steel down by 1.94% and Cipla down by 1.56% were the top losers.

Meanwhile, showing the upbeat mood of the Indian Inc., the Confederation of Indian Industry’s (CII) Business Confidence Index (BCI), improved by 5.73% to 57.2 in April-June 2016 from 54.1 in the previous quarter. The industry body said that business environment was good in the first quarter ended June due to salary hikes recommended by the Seventh Pay Commission, progress of monsoons and the government's proactive reforms agenda.

In the CII’s survey where 200 firms participated in the exercise, more than 60 per cent of the total respondents were expecting the real GDP growth to range between 7-8 per cent this financial year. Business conditions are also expected to improve as 61 per cent of the firms expect an increase in sales in April-June 2016 compared with only 42 per cent in January-March. Whereas a large proportion of the firms about 40 per cent feel that a turnaround in the global economy is required to jumpstart the private investment cycle. Firm’s top three concerns were domestic demand, fragile global economic recovery and lack of political consensus on economic reforms.

The survey stated that a rise in business expectations sends an early signal that industry is anticipating an upturn in demand propelled by factors such as implementation of the Seventh Pay Commission, progress of a favorable monsoon and pro-active reforms agenda of the government. Report also added, optimism in business sentiment this quarter has been backed by strong expectations of economic growth for 2016-17.

The CNX Nifty traded in a range of 8,587.10 and 8,494.35. There were 17 stocks advancing against 34 decliners on the index.

The top gainers on Nifty were Bajaj Auto up by 2.21%, Kotak Mahindra Bank up by 1.02%, Sun Pharmaceuticals Industries up by 0.95%, Bharti Infratel up by 0.92% and Axis Bank up by 0.87%. On the flip side, Idea Cellular down by 5.76%, ONGC down by 5.17%, Bharti Airtel down by 4.32%, Bank of Baroda down by 3.44% and Hindustan Unilever down by 3.24% were the top losers.

European markets were trading mostly in red; Germany’s DAX decreased 26.82 points or 0.27% to 10,040.08 and France’s CAC was down by 16.51 points or 0.38% to 4,356.00, while UK’s FTSE 100 was up by 12.52 points or 0.19% to 6,681.76.

Asian markets ended higher on Monday, although trading volumes remained thin in the wake of lackluster cues from Wall Street, a failed coup attempt in Turkey and a public holiday in Japan for Marine Day. Turkey has arrested 6,000 people after a failed coup attempt, with President Erdogan vowing to purge state bodies of the ‘virus’ that caused the revolt. The Turkish government moved swiftly to ‘clean up the army’ and re-establish control, with the country's central bank promising unlimited liquidity to banks and its deputy prime minister posting on Twitter that there's ‘no need to worry’. Chinese shares bucked the regional uptrend to end slightly lower after data showed average housing prices in China rose at a slower pace in June from the previous month.