Benchmarks end below crucial levels tailing sluggish global cues

Pressurized by subdued global cues, domestic benchmarks snapped the day’s trade below their psychological 5,400 (Nifty) and 17,800 (Sensex) levels. Both the frontline indices traded choppy through the session, though they tried to make some recovery in the late morning session. However, the recovery proved short lived as key benchmark indices weakened on political concern after parliament deadlocked once again over the coal block issue, where BJP stuck to its stand of demanding resignation from Prime Minister Manmohan Singh, also prompted market-men to book their profits. Moreover, rupee dropped to 55.39/40 against its previous close of 55.26/27, after four sessions of gains, tracking a weaker global risk sentiment.

The main pressure came in from rate sensitive counters like Banking, realty and consumer durables which remained the top laggards after Reserve Bank of India (RBI) poured cold water on the hopes of rate cuts in upcoming mid-quarterly monetary policy review, in its ‘Annual Report for 2011-12’, a review of the previous fiscal year's macroeconomic conditions and outlook for the current year, stated that ‘lower interest rates alone are unlikely to jump-start the investment cycle.’ Metal space also dampened the sentiments and declined over half a percent. Stocks like, Hindalco, Tata Steel, Jindal Steel edged lower after preliminary reading showed that China’s manufacturing may be contracting at a faster pace this month. China is the world’s largest consumer of copper and aluminum. HSBC said its preliminary or “flash” reading of its China manufacturing Purchasing Managers' Index (PMI) for August fell to a nine-month low of 47.8 on a 100-point scale, dropping from July's final print of 49.3.

Global cues too remained sluggish as disappointment over weak economic indicators from the United States, China and Europe offset hopes for more stimulus from central banks. Traders were dismayed by US data showing the number of people seeking unemployment assistance rose for a second straight week. Moreover, all the Asian equity indices shut shop in the red as investors grew gloomy about the health of the global economy and prospects for central-bank action. In addition, European counters too traded in the negative trajectory during the early trade as investors speculated over the likelihood of a new round of stimulus from the US Federal Reserve.

Back home, pressure also came in as shares of diesel car makers skidded after Minister of State for Petroleum and Natural Gas R.P.N. Singh stated that the Ministry of Petroleum & Natural Gas had wrote to the Ministry of Finance for levying additional excise duty on diesel cars. However, losses remained capped as some respite came from FMCG pack, which edged higher on reports of revival of monsoon rains this month, with FMCG major Hindustan Unilever (HUL) and Jyothy Laboratories hitting record high. Moreover, rise in PSU oil marketing companies too aided the sentiments and stocks like BPCL and HPCL rose as US crude-oil futures extended their fall in Asian electronic trading on August 24, 2012.

The NSE’s 50-share broadly followed index Nifty, declined by about thirty points and ended below its crucial 5,400 level while Bombay Stock Exchange’s Sensitive Index - Sensex lost about seventy points to finish below its crucial 17,800 mark. Moreover, the broader markets too were completely lackluster and snapped the session with over half a percent cut.

The markets fell on weak overall volumes of over Rs 1.85 lakh crore while the turnover for NSE F&O segment too remained on the higher side as compared to that on Thursday at over Rs 1.25 lakh crore. Moreover, the market breadth remained in favor of declines as there were 966 shares on the gaining side against 1,656 shares on the losing side while 141 shares remained unchanged.

The BSE Sensex lost 67.01 points or 0.38% to settle at 17783.21, while the S&P CNX Nifty declined by 28.65 points or 0.53% to close at 5,386.70.

The BSE Sensex touched a high and a low of 17822.50 and 17725.42 respectively. However, the BSE Mid cap index was down by 0.58% and Small cap index down by 0.78%.

Coal India up by 2.26%, ONGC up by 1.95%, Cipla up by 0.88%, Maruti Suzuki up by 0.88% and Sterlite Industries up by 0.63% were top gainers on the Sensex, while Tata Steel down by 2.73%, Jindal Steel down by 2.33%, Hindalco down by 1.99%, ICICI Bank down by 1.79% and RIL down by 1.55% were top losers on the index.

The major gainers on the BSE sectoral space were, FMCG up by 0.34%, Health Care up by 0.25% and Auto up 0.05%, while Realty down 2.54%, Bankex down 1.08%, Power down 0.80%, Capital Goods down 0.79% and Metal down 0.57% were major losers on the BSE sectoral space.  

Meanwhile, amid strong opposition from key ruling front ally Mamata Banerjee, Commerce and Industry Minister Anand Sharma affirmed that no state will be forced to implement Foreign Direct Investment (FDI) in multi-brand retail. He expressed confidence that the sates which are currently opposing FDI will also come forward realizing the wide benefits. About 10 states have already endorsed Centre's decision to open up the sector to foreign investments.

He pointed out that the venture will benefit farmers, consumers as well as entrepreneurs as integrated modern infrastructure will benefit the rural economy. Even after securing the Cabinet approval, the government was stuck up with the implementation of FDI in multi-brand retail.

Sharma also confirmed that the government would come up with the fresh special economic zones guidelines soon, also added that the withdrawal of Minimum Alternate Tax (MAT) and the Dividend Distribution Tax (DDT) is under consideration of Finance Minister.

The S&P CNX Nifty touched a high and low of 5,399.65 and 5,371.00 respectively.

The top gainers on the Nifty were ONGC up by 2.13%, Coal India up by 2.09%, BPCL up by 1.20%, Maruti up by 1.00% and Sesa Goa up by 0.95%. On the flip side, Reliance Infra down by 3.01%, DLF down by 2.92%, JP Associates down by 2.91%, Jindal Steel down by 2.78% and Tata Steel down by 2.77% were the major losers.

The European markets were trading in red, France's CAC 40 down by 0.24%, Germany's DAX was down by 0.27% and United Kingdom’s FTSE 100 was down by 0.17%.

Asian markets retreated from a two-week high and ended with red mark on Friday as investors trimmed down their expectations on disappointing weak economic indicators from the United States, China and Europe which offset hopes for more stimulus from central banks. Meanwhile, Hong Kong closed lower on Friday, as the investors digested earnings from large Chinese companies, while in Tokyo, the Nikkei tumbled amid global growth fears and ahead of a speech by Bank of Japan Governor Masaaki Shirakawa.