Markets end near two months low on global concern and domestic jitters

Indian markets went through a roller coaster ride on the start of the F&O expiry week, both the major indices lost over one and half a percent and closed near their two months low, breaching major crucial support levels, 17,000 (Sensex) and 5,200 (Nifty) on puny global cues. Since the start of the trade markets remained under pressure of weakness in the global markets, as the Asian markets made an extremely weak start after Chinese central bank adviser forecast an economic slowdown and on renewed concern that Greece may not meet its bailout targets.

A gap-down start of markets never looked in recovery mood and continued sliding till last, closing near the lowest point of the day. Though, the Presidential elections got over and it was expected that the governments will go for a big round of reforms but the European concerns along with the hangover of insufficient monsoon rains weighed on the sentiments. Also, the reform hopes got a setback after Samajwadi party opposed the foreign direct investment in multi-brand retail, saying that FDI in multi-brand retail, if approved, will affect the local kirana stores and increase unemployment.

Asian markets closed with significant losses as doubts intensified on Spain's ability to avoid sovereign bailout after two indebted regions Valencia and Catalonia sought financial support. The domestic markets were unable to get any respite from the European markets opening too, as the major indices lost over a percent in early trade as concern grew that Greece will default and more Spanish regions will follow Valencia and Catalonia in seeking a bailout.

Back home, market-men took the Samajwadi party’s stand as extremely negative and feared that other reform measures too may get stalled with such kind of oppositions, as India needs foreign inflows for balancing the current account deficit and FDI in retail could have been one of the best bet for the government. All the retail sector stocks plunged after the news. The other sectors that lost considerably in day’s trade were metal, capital goods, realty and power. The speculation of slowing growth in China weighed heavily on the commodity stocks across the globe and the local metal index was the biggest laggard, down by around three and half a percent, while the rate sensitive realty emerged as the other big loser, down by almost three percent. The power sector too was under pressure as the ministry of environment and forests (MOEF) has proposed new rules, applicable from January 2014, seen as imposing conditions too tough to be met by the power sector.

There were some result related announcements too that added to the woes of the market. Reliance Industry’s quarterly profit fell to Rs 4,473 crore, down 21 percent from a year earlier, as margins in its refining and petrochemicals business slipped. However, its petrochemicals business posted a 19 percent rise in revenue on higher demand and prices capping the further slide. The other market heavyweight, Larson & Toubro lost over a percent after reporting 15.7 per cent rise in net profit at Rs 863.65 crore for the quarter ended June 30 on higher revenue. The company’s concern on uncertainties of the global markets and delayed policy measures at domestic front weighed on the sentiments. However, Dabur India and Indian bank rose on reporting good Q1 numbers.

None of the sectoral gauges could manage to close in green on the BSE, while the broader indices performed a bit better, still closing down by over a percent each. The volume of trade remained on the higher side with total turnover reaching at 2.3 lakh crore while the F&O segment turnover too remained on higher side as compared to Friday.

The BSE Sensex shaved off 281.09 points or 1.64% to settle at 16,877.35, while the S&P CNX Nifty plunged by 87.15 points or 1.67 to close at 5,117.95.

The BSE Sensex touched a high and a low of 17,047.73 and 16,849.28 respectively. The BSE Mid cap and Small cap index ended lower by 1.31% and 1.14% respectively.

Dr Reddys Lab up 1.10% and Cipla up 0.43% were only gainers on the Sensex, while Maruti Suzuki down 5.65%, Sterlite down 5.19%, Hindalco down 4.67%, GAIL down 4.52% and BHEL down 3.95% were top losers on the index.

There was no gainer on the BSE sectoral space, while Metal down 3.35%, Realty down 2.87%, Power down 2.70%, Auto down 2.40% and Capital Goods down 1.97% were top losers on the BSE sectoral space. 

Meanwhile, Power Minister Sushilkumar Shinde has expressed his confidence that India could raise 88,000 MW more power capacity in next five years provided the fuel issue is solved. The present power generation capacity of India is 200,000 MW, with a peak shortfall of 10%. The 88,000 MW capacity addition target includes about 8,000 MW nuclear capacity and some of the projects, which were earlier scheduled in the 11th plan will be carried forward to the 12th plan.

The 11th plan period (2007-12) had aimed about 78,000 MW, which was later brought down to 62,000 MW in the mid-term appraisal, but attained 55,000 MW. While, target in the 10th plan period (2002-07) was 42,000 MW but only 50 percent of the capacity was achieved.

Shinde confirmed that the government is setting plans for faster land procurements and increase in coal production for attaining the capacity addition of 88,000 MW by 2017. The government had urged Coal India (CIL) to raise production to meet the demands of the power sector. The company is planning to produce nearly 470 million tonnes of coal during the current financial year (2012-13).

The S&P CNX Nifty touched a high and low 5,164.20 and 5,108.10 respectively.

The top gainers on the Nifty were Dr Reddy up 1.19%, Cipla up 0.91% and ONGC up by 0.76%. On the flipside, Maruti down 5.75%, JP Associates down 4.69%, Sesa Goa down 4.67%, Sterlite Industries down 4.66% and Hindalco down 4.46% were top losers on the index. 

The European markets were trading in red, France's CAC 40 was down 2.07%, Germany's DAX was down 1.69% and United Kingdom’s FTSE 100 was down 1.72%.

Asian markets fell to their lowest level on Monday amid Spain's debt crisis and raising eurozone concerns. With the borrowing costs hitting the danger levels that forced Ireland, Greece and Portugal to seek a bailout, investors were concerned that Spain, one of the eurozone's biggest economies, will also have to call for help. The Hong Kong benchmark Hang Seng plunged to two-month low led by nearly 5% fall in HSBC holding. The Shanghai Composite did perform better than its Hong Kong counterpart, but still had a lousy trading day.