Bourses resume southward journey; Sensex breaches below 17,700 level

After showcasing decent performance in the previous two sessions, Indian frontline equity indices resumed southbound journey on Thursday’s session registering their first negative close for the week. Though, Indian markets remained closed on Wednesday on account of Independence Day. Benchmark indices, after getting a positive start today, failed to extend the gaining momentum as investors lacked conviction to take larger bets and snapped the range-bound session with a loss of a tad over 0.30 percent. However, the psychological 5,350 (Nifty) and 17,650 (Sensex) levels have once again proved as tough nuts to crack for the frontline indices as they failed to sail beyond those levels. Worries of deficient rain and draught like situation also kept markets under pressure; rice production is poised to slump from a record, as the worst monsoon since 2009 has reduced planting.

The pressure also came from currency market as Indian rupee fell for the fourth straight session to a two-week low against the US dollar on Thursday on increased demand for the US currency. The rupee fell 39 paise to 56.04 to the dollar in early trade after the US currency strengthened again. Moreover, fall in public sector undertaking (PSU) oil marketing companies (OMCs) like BPCL, HPCL and IOC too dampened the market sentiments as Crude prices surged on Wednesday, touching their highest level since May on report of a steep drop in US oil stockpiles and fresh tensions in the Middle East. Also, there were hopes for further stimulus from major central banks to support the weakening global economy that helped the prices move higher.

Leads from the global front remain mixed as most of the Asian markets ended higher on Thursday but gains were limited ahead of European Central Bank policy measures announcements in the coming week while, European counters and the euro traded lower in the opening session after global growth engine China warned its trade outlook was worsening and stronger US data tempered expectations of additional stimulus from the Federal Reserve.

Back home, the main pressure came in on the frontline indices from FMCG counter as the sector itself lost over two percent as below normal monsoon triggered profit booking after recent rally. The monsoon has been less than average during the current year. Moreover, the pressure was also increased by shares of metal companies, which extended their losses tracking weakness in industrial metal prices on the London Metal Exchange. Moreover, investors remained cautious on the buzz that CAG report may be tabled in parliament soon. Stock of Sterlite Industries, Hindalco and Tata Steel tumbled during the trade. However, the losses remain capped by rally in Auto space, which rose over half a percent on hopes that the central bank will find more space to ease monetary policy after inflation based on the wholesale price index eased in July 2012.

The NSE’s 50-share broadly followed index Nifty, declined by about 20 points but, managed to settle just above its psychological 5,362 support level moreover, Bombay Stock Exchange’s Sensitive Index -Sensex- plummeted about eighty points to finish below the psychological 17,700 mark. However, the broader indices outperformed the benchmarks to snap the session in the green terrain. The market breadth was largely in favour of decline, as there were 1,298 shares on the gaining side against 1,517 shares on the losing side while 138 shares remained unchanged.

The BSE Sensex lost 70.99 points or 0.40% to settle at 17,657.21, while the S&P CNX Nifty declined by 17.40 points or 0.32% to close at 5,362.95.

The BSE Sensex touched a high and a low of 17,763.59 and 17,640.62 respectively. However, the BSE Mid cap index was up by 0.12% and Small cap index up by 0.27%.

Hero MotoCorp up by 2.69%, Mahindra & Mahindra up by 2.13%, Reliance up by 2.04%, Cipla up by 2.01% and L&T up by 1.57% were top gainers on the Sensex, while ITC down by 3.59%, Hindalco down by 2.75%, Sterlite Industries down by 2.44%, GAIL India down by 2.17% and Tata Steel down by 1.93% were top losers on the index.

The major gainers on the BSE sectoral space were, Capital Goods up by 0.82%, Oil & Gas up by 0.65%, Auto up by 0.58% and Health Care up 0.08%, while FMCG down by 2.06%, Metal down 1.44%, Consumer Durables down by 1.02%, Bankex down 0.76% and PSU down 0.57% were top losers on the BSE sectoral space.  

Meanwhile, marking a third straight rise since the month of July, Jet fuel or aviation turbine fuel (ATF) prices were hiked by over 3.2% to Rs 67,135.76 per kilolitre (kl) in Delhi. Meanwhile, in Mumbai, jet fuel will now cost Rs 68,103.26 per kl from today as against Rs 65,884.34 per kl previously. The rate hike, which comes right after a steep 4.5% hike in August 1, has erased all of the reduction in prices done in May and June, thereby adding to the cost burden of cash-strapped airlines, since Jet fuel constitutes over 40% of an airline's operating costs.

Indian Oil Corporation (IOC) and two other state-owned fuel retailers had on July 16 hiked rates by Rs 1,039.1 per kl and followed it up with Rs 2,797.41 per kl increase in price on August 1.Fuel retailers revise jet fuel prices on the 1st and 16th of every month, based on the average international price in the preceding fortnight.

Meanwhile, Jet fuel, which had hit an all-time high level of Rs 71,028.26 per kl in August 2008, shortly after international oil rates touched a record $147 per barrel, had fallen to eight-month low of Rs 61,169.08 per kl in early July.

The S&P CNX Nifty touched a high and low of 5,390.65 and 5,356.65 respectively.

The top gainers on the Nifty were IDFC up by 4.25%, Hero MotoCorp up by 2.55%, Ranbaxy up by 2.37%, M&M up by 2.20% and Reliance up by 2.16%. On the flip side, Sun Pharma down by 2.33%, ITC down by 3.58%, Sterlite Industries down by 3.10%, Hindalco down by 2.79%, Sesa Goa down by 2.74% and SAIL down by 2.54% were the major losers.

The European markets were trading in red, France's CAC 40 down by 0.13%, Germany's DAX was down by 0.01% and United Kingdom’s FTSE 100 was down by 0.30%.

Most of the Asian markets ended higher on Thursday but gains were limited ahead of European Central Bank policy measures announcements in the coming weeks.  Investors waited for some major triggers and for further measures to tackle the euro zone's debt crisis and support global growth. Meanwhile, Japan's Nikkei hits a six-week high and gained a steady foothold above 9,000 after strong U.S. data pushed the yen lower against the U.S. dollar, triggering a wave of short-covering on exporters. Hong Kong shares erased gains in weak trading, as disappointing earnings underscored growth concerns even after Chinese Premier Wen Jiabao said slowing inflation is giving more room for using monetary policy to support expansion.