F&O expiry session ends flat; April series too concludes on a dull note

The April series futures and options contract expiry day turned out to be a lackluster session for the Indian benchmark indices as the session lacked the flavor of high volatility, which typically surfaces on F&O settlement day. After registering their first negative close since November 2011 in the March series, the frontline indices resumed gaining streak in April series but could only negotiate slight gains.

In the session, the frontline equity indices traded in an extremely tight range hardly budging from the psychological 5,200 (Nifty) and 17,150 (Sensex) levels. The benchmarks exhibited sideways kind of movement since the start of trade and closed with a negative bias amid uncertain market conditions.

Market participants chose to consolidate their positions around previous closing levels a day after rating agencies like S&P’s and Moody’s voiced their concerns over India’s economic outlook, citing problems like policy paralysis, slow progress on its fiscal situation, as well as deteriorating economic indicators.

On the global front though, the overnight US markets rallied on the back of unexpectedly strong quarterly earnings announcement from Apple Inc and US Federal Reserve’s FOMC meeting outcome. Asian markets showcased feeble trends after Fed statement highlighted that the world’s largest economy is likely to expand at a slightly higher rate than forecasted in January while the Fed also remained entirely prepared to take further quantitative easing steps if the US economic recovery falters.

The European markets too failed to give any direction to local markets as they traded on a mixed note ahead of a slew of quarterly earnings announcement from European majors like Deutsche Bank, Barclays and Bayer.

Market participants chose to play it safe and added positions in the defensive FMCG counter while they were also seen covering short positions in the badly beaten down IT and TECk counters which closed among gainers and supported the frontline gauges by capping their losses.

However, the Power pocket remained the top laggards in the space with around one and half a percent cut after ministry of environment and forests said that promoters of a thermal power plant will have to wait till the linked mine gets a stage 1 forest clearance. The rate sensitive Automobile, Realty and Bankex pockets too were among the prominent losers in the sectoral space, which capped the upside chances for domestic bourses.

Back home, the NSE’s 50-share broadly followed index Nifty, eased by a quarter percent to settle just below the psychological 5,200 support level while Bombay Stock Exchange’s Sensitive Index - Sensex shed twenty points to finish below the crucial 17,150 mark. Moreover, the broader markets too slipped lower with the Small Cap index underperforming all its larger peers.

The markets fell expectedly on strong volumes of over Rs 2.39 lakh crore while the turnover for NSE F&O segment remained on the higher side as compared to that on Wednesday at over Rs 1.9 lakh crore. The market breadth remained pessimistic as there were 1,103 shares on the gaining side against 1,333 shares on the losing side while 413 shares remained unchanged.

On the F&O front, April series Nifty and Sensex went into the consolidation mode and snapped the series on an absolutely flat note with marginal gains of less than half a percent. Besides, the broader markets too snapped the series on a weak note with the mid cap index underperforming not only its larger peers but also the Small Cap index. The Technology and Software counters remained among the prominent laggards in the series, which was countered by the sharp gains in rate sensitive Automobile counter.

From the expiry perspective, market wide rollover of 61.63% was observed in the series which was marginally higher than the three month average of 61.03% while Nifty rollovers were at 60.28%, higher than 3 month average of 57.37%. Sectorally, the Finance, Capital Goods, Power, Metal and Sugar counters witnessed high rollovers while sectors like technology, FMCG, banking, Cement and Telecom observed relatively low rolls.

Among individual stocks, vast rollovers were witnessed in heavyweights including DLF (78%), Tata Steel (78%), HDFC (77%), Maruti (75%) and ACC (74%) while low rollovers were seen in stocks like Hero MotoCorp (50%), HCL Tech (54%), PNB (55%), Wipro (55%) and Sesa Goa (56%).

Finally, the BSE Sensex lost 20.62 points or 0.12% to settle at 17,130.67, while the S&P CNX Nifty declined by 13.00 points or 0.25% to close at 5,189.00.

The BSE Sensex touched a high and a low of 17,193.25 and 17,084.05 respectively. The BSE Mid cap and Small cap index were down by 0.31% and 0.41% respectively.

The major gainers on the Sensex were Coal India up by 2.79%, Jindal Steel up by 2.04%, TCS up by 1.68%, Reliance up by 1.24%, and ITC up by 1.02% while Gail India down by 3.62%, Hero MotoCorp down by 3.16%, Hindalco down by 2.96%, Tata Power down by 2.74% and Bajaj Auto down by 2.67% were the major losers on the index.

The major gainers on the BSE sectoral space were IT up by 0.41%, FMCG up by 0.25%, TECk up by 0.22% and Metal up by 0.05%, while Power down by 1.46%, Realty down by 0.89%, Auto down by 0.84%, PSU down by 0.57% and Bankex down by 0.43% were major losers on the BSE sectoral space.

Meanwhile, India Inc anguished over downgrade of outlook by S&P said that this should serve as a “wakeup call” for government and it should consider fast tracking of economic reforms especially on FDI and tax fronts. It has also added that opening up of sectors like aviation and insurance to FDI would help in improving foreign capital inflows and also improve investors’ sentiment.

In another statement industry body ASSOCHAM has said that the government should keep its political compulsions away and demonstrate that the reforms process is well on track. It is also of the opinion that fiscal consolidation in terms of cutting subsidies for fuel, fertilisers and social schemes is a must to reverse economic indicators.

On a positive note financial services provider Nomura is of the opinion that it is unlikely that the sovereign rating downgrade on India is unlikely as economic activity is expected to show some rebound shortly. The debt-to-GDP ratio is also likely to remain stable, and the fiscal deficit should not worsen substantially. However risk can come in from the declining forex reserves.

S&P has revised the outlook on India's sovereign credit rating to negative from stable, while reaffirming its BBB- rating. The rating agency cited slowing investment and economic growth, and the widening current account deficit as the main reasons.

The S&P CNX Nifty touched a high and low of 5,215.60 and 5,179.05 respectively.

The top gainers on the Nifty were Kotak Bank up by 3.46%, ACC up by 2.32%, Coal India up by 2.15%, TCS up by 2.01% and Jindal Steel up by 1.35%.

On the flip side, GAIL down by 3.92%, Tata Power down by 3.68%, BPCL down by 3.17%, RCOM down by 3.11%, and Hero MotoCorp down by 3.02% were the top losers on the index.

The European markets were trading mixed, as France's CAC 40 down 0.93%, Britain’s FTSE 100 up 0.06%, while Germany's DAX was down by 0.52%.

Market participants in the Asian region remained encouraged and most of the Asian counters snapped the day’s trade in the green on Thursday on news that Federal Open Market Committee (FOMC) remained committed to keeping low interest rates at least until late 2014, while Fed Chairman Ben Bernanke said the central bank was ready to ease monetary policy further if needed. The Fed’s statements provided confidence that recovery is on track with the security that someone has their back if things go pear shaped, while the earnings season continued to have a mixed impact across the region.

Meanwhile, Hong Kong shares ended higher Thursday, tracking gains on Wall Street and boosted by China Unicom's strong first-quarter results. Though, Chinese benchmark ended flat as heavyweight financial companies dropped following China Life Insurance’s lower-than-expected first-quarter net profit, offsetting gains in metal companies while, Japanese Nikkei share average ended flat on Thursday after dipping in and out of negative territory as a sluggish start to earnings season and wariness ahead of a Bank of Japan meeting dampened sentiment.