Indian equities declines for the third straight session; Sensex slips below 28000 mark

Indian the benchmark indices once again showed a lackadaisical performance on Tuesday, as they failed to snap the session in the green territory and settled marginally below the neutral line.  Investors' concerns mounted over the health of global economy after US crude slipped below $40 per barrel for the first time since April, on heightened worries of a crude glut despite peak summer fuel demand.  Besides, Weak trend in global markets coupled with depreciation in rupee value against the US dollar too weighed down sentiments. However, the downside risks for the frontline indices was limited by two sets of data, which were released on Monday, suggesting that India's manufacturing and infrastructure sectors are on a recovery path. While a private survey showed manufacturing activity grew at its fastest pace in four months in July, government data on eight core industries revealed a 5.2% expansion in June, compared with 2.8% in May and 3.1% in the year-earlier month. The seasonally adjusted Nikkei India Manufacturing Purchasing Managers Index edged higher in July, to 51.8 from 51.7 in June, led by higher sales, new orders for consumer goods and exports encouraged by the rupee's depreciation.

Meanwhile, FMCG majors like ITC and HUL gained on renewed buying interest ahead of the GST Bill and expectations that rural volume growth may pick up pace on the back of above normal monsoon forecast. Auto majors like Maruti Suzuki continued their uptrend for the second consecutive day after registering strong growth in domestic sales in July on improved consumer sentiment. On the other hand, Sugar stocks like Shree Renuka Sugars and Balrampur Chini Mills came under selling pressure, besides, other commodity stocks also declined on weak global leads.

On the global front, Asian markets ended mostly lower on Tuesday as low oil prices dented sentiment and investors awaited Japanese Prime Minister Shinzo Abe's announcement on details of the government's massive stimulus programme. Japanese shares declined as the yen held on to its recent gains and banks succumbed to selling pressure after recording big gains in the previous two sessions. However, Chinese shares ended higher as real estate shares jumped on encouraging price reports, while small-caps bounced on signs of foreign interest. Meanwhile, European stocks were lower in early trade, dragged down by banking shares as worries about the health of the region's lenders continued to weigh on sentiment.

Back home, the benchmarks got off to a positive start after sentiments got buttressed by a pick-up in infrastructure sector in June coupled with rising hopes of GST Bill passage this week. The frontline indices soon gathered momentum and touched intraday highs in early hours but the optimism fizzled out sooner and the indices see-sawed around the neutral line though the afternoon session. Eventually the NSE’s 50-share broadly followed index Nifty, took a cut of around two tens of a percent to settle below the crucial 4,650 support level, while Bombay Stock Exchange’s Sensitive Index, Sensex slipped by twenty one points and closed below the psychological 28,000 mark. The broader markets went on to underperform their larger peers by quite a margin with BSE’s midcap shaving off 0.62% and BSE’s smallcap shelving  0.83%. The market breadth remained pessimistic, as there were 976 shares on the gaining side against 1767 shares on the losing side, while 136 shares remained unchanged.

Finally, the BSE Sensex ended lower by 21.41 points or 0.08% to 27981.71, while the CNX Nifty dropped 13.65 points or 0.16% to 8,622.90. 

The BSE Sensex touched a high and a low 28175.22 and 27943.91, respectively. The broader indices made a negative closing; the BSE Mid cap index ended down by 0.62%, while Small cap index was lower by 0.83%.

The two gaining sectoral indices on the BSE were FMCG up by 1.68% and IT up by 0.06%, while Metal down by 1.78%, Realty down by 1.18%, Power down by 0.84%, Auto down by 0.49% and Capital Goods down by 0.36% were the top losing indices on BSE.

The top gainers on the Sensex were ITC up by 3.73%, Maruti Suzuki up by 2.49%, Hero MotoCorp up by 1.26%, ONGC up by 1.01% and Power Grid Corpn. up by 0.79%. On the flip side, Tata Motors down by 2.80%, HDFC down by 2.37%, Adani Ports &Special down by 1.62%, ICICI Bank down by 1.54% and Bharti Airtel down by 1.54% were the top losers.

Meanwhile, India's core sector expanding at its fastest rate in last two months showed a growth of 5.2 per cent in June, compared with a 2.8 per cent rise in May and 3.1 per cent in the year ago period, riding on double digit growth in the cement, coal sector and a huge jump in output of electricity. The eight core industries which comprise nearly 38 percent of the weightage in the Index of Industrial Production (IIP) showed a cumulative growth of 5.4 cent during April to June, 2016-17.

As per the data of Ministry of Commerce & Industry, the combined Index of Eight Core Industries stood at 180.4 in June, 2016, 5.2 per cent higher compared to the index of 171.4 in June, 2015.

Among the eight sectors that make up the core sector, Coal production having weight of 4.38 per cent,  increased by 12.0 per cent in June, 2016 over June, 2015. Its cumulative index during April to June, 2016-17 increased by 5.4 per cent over corresponding period of previous year. Cement production having weight of 2.41 per cent, increased by 10.3 per cent in June, 2016 over June, 2015. Its cumulative index during April to June, 2016-17 increased by 5.7 per cent over the corresponding period of previous year. Electricity generation having weight of 10.32 per cent, increased by 8.1 per cent in June, 2016 over June, 2015. Its cumulative index during April to June, 2016-17 increased by 9.0 per cent over the corresponding period of previous year. Steel production having weight of 6.68 per cent, increased by 2.4 per cent in June, 2016 over June, 2015. Its cumulative index during April to June, 2016-17 increased by 3.8 per cent over the corresponding period of previous year. Petroleum Refinery production having weight of 5.94 per cent, increased by 3.5 per cent in June, 2016 over June, 2015, while its cumulative index during April to June, 2016-17 increased by 7.1 per cent over the corresponding period of previous year.

On the other hand, Crude Oil production having weight of 5.22 per cent, decreased by 4.3 per cent in June, 2016 over June, 2015. Its cumulative index during April to June, 2016-17 decreased by 3.3 per cent over the corresponding period of previous year. The Natural Gas production having weight of 1.71 per cent, declined by 4.5 per cent in June, 2016 over June, 2015. Its cumulative index during April to June, 2016-17 declined by 6.1 per cent over the corresponding period of previous year.

The CNX Nifty traded in a range of 8,687.20 and 8,611.40. There were 20 stocks advancing against 31 decliners on the index.

The top gainers on Nifty were ITC up by 4.07%, HCL Tech up by 2.60%, Bank of Baroda up by 2.47%, Maruti Suzuki up by 2.46% and Tech Mahindra up by 1.85%. On the flip side, Aurobindo Pharma down by 3.05%, Tata Motors down by 2.94%, Ambuja Cement down by 2.64%, BPCL down by 2.56% and HDFC down by 2.34% were the top losers.

The European markets were trading mostly in red; Germany’s DAX declined by 139.31 points or 1.35% to 10,191.21, France’s CAC slipped 60.54 points or 1.37% to 4,348.63 and UK’s FTSE 100 was down by 26.32 points or 0.39% to 6,667.63

Asian equity markets ended mostly lower in a cautious trade on Tuesday, with recent yen strength, the continued downturn in oil prices and lackluster US data weighing on markets. Japanese Prime Minister Shinzo Abe's cabinet approved a 28 trillion yen ($274 billion) stimulus package late in the day in a bid to lift growth and inflation. The package includes 7.5 trillion yen in new, direct spending by the national and local governments. Japanese shares fell as the yen held on to its recent gains and banks succumbed to selling pressure after recording big gains in the previous two sessions. Trading in Hong Kong was suspended for the day after a typhoon warning. However, Chinese shares ended higher as real estate shares jumped on encouraging price reports, while small-caps bounced on signs of foreign interest.