Political jitters and global worries drag markets lower

Snapping their two days winning streak, key domestic benchmarks ended the Friday’s trade with over half a percent cut as market participants chose to take some profits off the table amid sluggish global cues. Political jitters too pressurized the sentiments and bourses drifted lower on the buzz that  Nationalist Congress Party (NCP) chief Sharad Pawar and party member Praful Patel have sent their resignations to Prime Minister Manmohan Singh for not being given due credit for their work and seniority in the government. Though, the benchmarks traded in the tight range through the day as 5,200 and 17,150 proved to be a strong support level for Nifty and Sensex respectively.

The sentiments also remained subdued after Public sector undertaking (PSU) oil marketing companies (OMCs) BPCL, HPCL and IOC edged lower as international crude oil prices surged for the seventh straight session on concern that Middle East tensions will pose potential supply disruptions. While, the shares of sugar companies like Shree Renuka Sugars, Balrampur Chini Mills, Sakthi Sugar and Dhampur Sugar Mills tumbled in the trade, after Cabinet Committee on Economic Affairs (CCEA) approved the hike in the fair and remunerative price (FRP) of sugarcane by 17% to Rs 170 per quintal.

The pressure also came from the result front after JSW Energy, Dr. Reddy’s and Kotak Mahindra Bank traded lower after their Q1 FY13 results failed to meet market estimates while, Hero MotoCorp, which announced its earnings yesterday, also felt the pressure. However, decent Q1 numbers from United Phosphorus, Asian paints, Karnataka Bank and Hindustan Zinc provided some support to the bourses.

Market made little effort to recover in noon but, the effort got bashed by subdued opening in European counters. The equities in European markets traded lower in early session ahead of the Euro-region finance ministers’ conference call to discuss the terms for the Spanish bank bailout today. Moreover, Asian markets mostly fell on Friday on profit-taking after the previous day’s rally.

Back home, the undertone remained cautious but tad optimistic as investors remained watchful about corporate results and awaited announcements on pending reforms. On the sectoral front rate sensitive banking space remained the biggest loser on concern that there may not be any further rate cuts by the Reserve bank of India (RBI) in its upcoming monetary policy review. In addition, the power companies came under pressure after slapping of 21% duty on imports of power equipment, expressing their disappointment at the decision, power companies have said that the move would raise equipment prices and raise electricity tariffs. But, the losses remained capped, up to certain extent as some amount of support was provided by auto and metal sector. Moreover, aviation pack also supported the sentiments and stocks like Spicejet Jet Air India Kingfisher Air edged higher after Union Commerce minister Anand Sharma recent announcement that the government plans to soon allow foreign carriers to invest up to 49% in Indian airlines.

The NSE’s 50-share broadly followed index Nifty, plunged by about forty points but managed to retain psychological 5,200 support level while Bombay Stock Exchange’s Sensitive Index - Sensex nosedived by over a hundred and twenty points to finish below the psychological 17,200 mark. The broader markets too settled in the red while, the market breadth remained in favor of declines as there were 1,165 shares on the gaining side against 1,659 shares on the losing side while 120 shares remained unchanged.

The BSE Sensex lost 120.41 points or 0.70% to settle at 17,158.44, while the S&P CNX Nifty declined by 37.60 points or 0.72% to close at 5,205.10.

The BSE Sensex touched a high and a low of 17,275.20 and 17,129.69 respectively. The BSE Mid cap and Small cap index ended lower by 0.23% and 0.11% respectively.

Bajaj Auto up 2.67%, Maruti Suzuki up 2.43%, TCS up 1.86, Coal India up 0.38% and Tata Steel up 0.28% were major gainers on the Sensex, while Dr Reddys Lab down 2.68%, BHEL down 2.47%, Cipla down 1.67%, ICICI Bank down 1.58% and Wipro down 1.47% were top losers on the index.

The top gainers on the BSE sectoral space were Auto up 0.27%, Consumer Durables (CD) up 0.21%, Metal up 0.12 and FMCG up 0.01%, while Bankex down 1.28%, Capital Goods (CG) down 1.14%, Realty down 0.99%, Power down 0.95% and Oil & Gas down 0.71% were top losers on the BSE sectoral space. 

Meanwhile, as part of government’s renewed attempts to forge a consensus on FDI in multi-brand retail, commerce minister Anand Sharma has succeeded in garnering a strong support from Chief Ministers of many states, though several Chief Ministers are yet to respond on the issue but Anand Sharma has said that apart from West Bengal's Mamata Banerjee, no other state government has raised objections to the proposal, adding that opposition from states was less intense now, compared with few months ago.

Earlier, keeping all the resistance from the opposition and other political parties aside, the Union cabinet, chaired by Prime Minister Manmohan Singh had approved and allowed 51 % FDI in multi-brand retail but with strong opposition from its own allies like Trinamul Congress, the government had to hold back plans till political consensus on the matter could be reached. But as Trinamul Congress has been sidelined because of Mamta Banerjee’s stand on the presidential polls and the government has sought support from the Samajwadi Party so hopes are high that it will move ahead with retail reform with their support.

Many global retail giants like Wal-Mart and Carrefour are keen to enter the sector and have been waiting for the final cabinet decision for long.

The S&P CNX Nifty touched a high and low 5,238.70 and 5,197.50 respectively.

The top gainers on the Nifty were Bajaj Auto up 2.73%, Maruti Suzuki up 2.65%, Asian Paints up 2.23%, TCS up 1.83% and JP Associates up by 1.04%. On the flipside, BHEL down 3.02%, Kotak Bank down 2.82%, Dr Reddy’s down 2.75%, IDFC down 1.89% and Ranbaxy down 1.67% were top losers on the index. 

The European markets were trading in red, France's CAC 40 was down 0.93%, Germany's DAX was down 0.32% and United Kingdom’s FTSE 100 was down 0.49%.

After yesterday’s rally, most of the Asian shares fell on Friday on the back of profit-taking on last day of the week. However, Japan's Nikkei remained under strain after the yen strengthened in New York against the greenback while it continued to stay strong against the euro, while Shanghai was down amid reports that China has ordered local governments to strictly implement property control measures and rectify easing policies that have been introduced after a rebound in prices in June. Meanwhile, Spain is expecting a first slice of 30 billion euros by the end of the month and has in turn agreed to a raft of banking sector reforms and EU inspections to ensure the restructuring process is effective.