Markets crash like house of card in last leg of trade

The July series futures and options contract expiry day turned out to be a shocker for the Indian markets as benchmarks, after trading in tight band near its equator, crashed like house of card in the last leg of trade as investors offloaded their positions an hour before the end of F&O contract expiry day.  Nevertheless, the frontline indices managed to trade above their psychological 5,100 (Nifty) and 16,800 (Sensex) levels for most part of the day’s trade but, final hour proved to be the curse for the markets and bourses settled below their crucial 16,700 (Sensex) and 5,050 (Nifty) bastions.

The sentiments remained dampen as shares of companies engaged in Aviation sector butchered after the International Air Transport Association (IATA) said that India’s aviation is in a multi-faceted crisis. IATA director general Tony Tyler warned that in light of critical domestic problems not being addressed, foreign investors might not line up to put their cash in Indian airlines, even if the country allows 49% FDI in Aviation sector. Moreover, below-average southwest monsoon also added to the muted prospects for the Indian economy. Meanwhile, Agriculture minister Sharad Pawar raised the prospect of drought for the first time this year, saying officials would discuss next week the so-far meager monsoon rains that are key to the economy of this major consumer and producer of food crops.

Global cues too failed to support the domestic sentiments as European stock markets hammered the sentiments, trading negatively in early trade as investors reacted to a slew of downbeat earnings across sectors and blue-chip names. In addition, investors remain jittery about the adverse impact of the euro-zone sovereign debt crisis on the global economy. However, Asian stock indices finished mostly higher as a weaker-than-expected home sales data out of the US stoked speculation of fresh monetary easing by the Federal Reserve.

Back home, local bourses crashed like house of cards in the last leg of trade to end near intraday low led by realty and banking counters as outlook on interest rates remained bleak given the stubbornly high inflation, widening twin deficits, weak currency and policy paralysis. Sentiment also got bashed after PSU oil marketing companies edged lower in the trade on account of rise in international crude oil prices. Benchmark crude for September delivery rose 47 cents, or 0.53 percent, to settle at $88.97 a barrel, after trading in a range from $86.84 to $89.36 on the New York Mercantile Exchange. In London, Brent crude for September rose 96 cents to settle at $104.38 on the ICE.

Corporate earnings remained mixed bag today as BHEL reported a better than expected Q1 numbers, registering a jump of 12.92% in its net profit at Rs 920.90 crore for the quarter under review as compared to Rs 815.51 crore a year ago period however, moreover, ITC also reported a decent Q1 net profit of Rs 1602.41 crore, gaining of over 20% y-o-y. However, the company’s stock tumbled over two percent as numbers proved below street expectation. While, Thermax registered a decline of 15.86% in its net profit at Rs 67.21 crore for the quarter under review as compared to Rs 79.88 crore for the same quarter in the previous year.

The NSE’s 50-share broadly followed index Nifty, plunged by over sixty points and breached its crucial 5,050 support level while Bombay Stock Exchange’s Sensitive Index - Sensex nosedived by over two hundred points to finish below the psychological 16,700 mark. None of the sectoral gauges could manage to close in green on the BSE, while the broader markets too settled with a deep cut of over two percentage points.

The overall volumes stood at over Rs 3.27 lakh crore, while the turnover for NSE F&O segment remained on the higher side as compared to that on Wednesday at over Rs 2.08 lakh crore. The market breadth remained in favor of declines as there were 842 shares on the gaining side against 1,934 shares on the losing side while 121 shares remained unchanged.

On the F&O front, July series Nifty and Sensex staged a sluggish performance by losing 2% each, after surging over 5% in June series. Moreover, the broader markets outperformed their larger peers by a fat margin, as by the end of series the Mid Cap and Small Cap garnered around 1.9% and 0.5% respectively. Sectorally, the finance, metals and capital goods space witnessed good rollover, while automobile, infrastructure and oil & gas stocks observed relatively low rolls into the August series.

From the expiry perspective, market wide rollover of 62.96% was observed, which was lower than the three month average of 64.14% while Nifty rollovers were at 57.06%, higher than three month average of 52.74%. Sectorally, Finance, Power and Capital Goods counters witnessed high rollovers, while sectors like Cement, Pharma and Infrastructure pockets observed relatively low rolls. Among individual stocks, Dr Reddy’s (48%), Ambuja Cement (49%) and Ranbaxy (51%) witnessed low rolls while stocks like Sesa Goa (78%), BHEL (78%) and HDFC (75%) witnessed better rollover into the August series.

The BSE Sensex shaved off 206.23 points or 1.22% to settle at 16,639.82, while the S&P CNX Nifty plunged by 66.60 points or 1.30 to close at 5,043.00.

The BSE Sensex touched a high and a low of 16,899.77 and 16,598.48 respectively. The BSE Mid cap and Small cap index ended lower by 2.07% and 2.07% respectively.

Sun Pharma up 2.32%, Bajaj Auto up 1.37%, NTPC up 1.03%, Gail India up 0.77% and Maruti Suzuki up 0.44% were top gainers on the Sensex, while Tata Motors down 3.80%, Tata Power down 2.91%, Sterlite Industries down 2.64%, Wipro down 2.64% and SBI down 2.58% were top losers on the index.

There was no gainer on the BSE sectoral space, while Realty down 3.07%, Capital Goods (CG) down 2.04%, PSU down 1.69%, Bankex down 1.67% and FMCG down were top losers on the BSE sectoral space. 

Meanwhile, in a major blow to private mining companies, Supreme Court has upheld the Jharkhand high court’s order regarding the cancellation of six mining leases, which were allotted to these companies by the Sibhu Soren government. These six mining companies namely are Monnet Ispat Energy, Prakash Ispat, Adhunik Alloys and Power, Abhijeet Infrastructure and JSW Ispat.

Validating the rights of government to reserve mines for public sector unit, the Supreme Court has seconded the cancelation orders of mining leases at Ghatkuri hills in Jharkhand by its government.

Earlier in the month, Union Rural Development Minister Jairam Ramesh averred that mining leases of the private companies for the Saranda Range in Jharkhand should be cancelled, and no further lease should be issued to any of these companies, on background of Maoists privately keeping a hold on these companies, in order to collect huge levies.

The S&P CNX Nifty touched a high and low 5,126.30 and 5,032.40 respectively.

The top gainers on the Nifty were Ambuja Cement up 3.24%, NTPC up 1.23%, Bajaj Auto up 1.19%, Grasim up 1.15% and Hindalco up by 0.74%. On the flipside, PNB down 4.44%, DLF down 4.10%, Tata Power down 3.53%, Tata Motors down 3.29% and SAIL down 3.27% were top losers on the index. 

The European markets were trading in green, France's CAC 40 was up 1.32%, Germany's DAX was up 0.54% and United Kingdom’s FTSE 100 was up 0.61%.

Most of the Asian markets went home in green on Thursday tracking upbeat earnings results in the region and the United States. However investors were hopeful that central banks around the world will take more action to push the global economy. Eurozone fears eased slightly on hopes over the funding of future bailouts, which also supported markets to recover lost grounds. However, in Hong Kong, Sands China fell 5.4% after the casino operator reported a 40% year-on-year decline in second quarter, attributing the decline to a $100 million impairment loss on two land parcels in Macau.