Benchmarks continue southward journey for third straight day in a row

Indian stock markets continued their southward journey and completed a hat-trick of negative closes ahead of the derivatives expiry later this week. The frontline equity indices traded in a narrow range for most part of morning trades but a sharp wave of selling pressure emerged in noon trades, which pushed the key gauges below their psychological 17,650 (Sensex) and 5,350 (Nifty) bastions. However, little support in the dying hour helped the market to close out of their lows. The sell-off in local markets appeared mainly after logjam in Parliament entered its sixth day today, as BJP stuck to its demand for the resignation of Prime Minister Manmohan Singh on the coal block allocation issue. In addition, delay in the major reform due to continuous impasse in the parliament also added to the bout of pessimism at Dalal Street.

Continued worries about weakening economic growth at a time when parliament proceedings remain deadlocked, again dragged banking index lower in today’s trading session. Meanwhile, street is widely expecting India’s economy to have grown 5.3 percent in the April-June quarter, unchanged from January-March quarter. GDP data is due to be released on August 31, 2012. There is also pessimism that the central bank will hold on to key rates despite headline inflation falling below the 7 percent mark. Metal counter too led the downfall as the sector continued its south bound journey for yet another day and remained the top laggard, losing over two and half a percent on concerns that demand would be lower on the back of weakening economic scenario in China after government data showed that profits of major industrial enterprises declined by 5.4% in July.

Global leads too remained subdued as most of the Asian equity indices snapped the day’s trade in the negative terrain as some investors made bearish bets after a recent strong run and as concerns over China’s economic growth outweighed expectations that the US Federal Reserve will soon launch more stimulus. While, European counters too traded choppy in the early trade after Joerg Asmussen, a member of the European Central Bank (ECB) dented hopes of further stimulus from the region's central bank. In addition, Spain’s economic recession deepened in the second quarter. Final data released on Tuesday showed that GDP contracted at a faster pace, both on an annual and a quarterly basis during the April to June quarter.

Back home, the main pressure came in from stocks belonging to companies, which were alleged to be involved in the list of coal scam disclosed by the Comptroller and Auditor General last week, namely, Jindal Steel, Sterlite Industries, Adani Enterprises, etc. In addition, the sentiment at Dalal Street also took a hit when the CAG reportedly pulled out state-owned Oil & Natural Gas Corporation (ONGC) for not placing desired emphasis on discovering oil and gas and being behind the schedule in monetizing its discoveries. However, the losses remain capped as some respite came from FMCG pack, which edged higher on reports of revival of monsoon rains this month. Rainfall up to August 22, 2012 was 14% below normal, reflecting a significant improvement from 29% below normal at end-June and 19% below normal at end-July.

The NSE’s 50-share broadly followed index Nifty, declined by fifteen points and ended below its crucial 5,350 level while Bombay Stock Exchange’s Sensitive Index - Sensex lost by about fifty points to finish below its crucial 17,650 mark. Moreover, the broader markets saw a big fall as the BSE Midcap and Smallcap indices dropped over a percent each as compared to half a percent decline in BSE Sensex and NSE Nifty in trade.

The overall volumes stood at over Rs 2.30 lakh crore on Tuesday. Moreover, the market breadth remained in favor of declines as there were 936 shares on the gaining side against 1,885 shares on the losing side while 114 shares remained unchanged.

The BSE Sensex lost 47.10 points or 0.27% to settle at 17,631.71, while the S&P CNX Nifty declined by 15.65 points or 0.29% to close at 5,334.60.

The BSE Sensex touched a high and a low of 17,712.35 and 17,570.71 respectively. However, the BSE Mid cap index was down by 1.03% and Small cap index down by 1.42%.

TCS up by 2.24%, Sun Pharma up by 1.69%, Tata Power up by 1.55%, Dr Reddys Lab up by 1.53% and NTPC up by 1.48% were top gainers on the Sensex, while Sterlite Industries down by 5.13%, Jindal Steel down by 4.88%, Hindalco Industries down by 3.09%, L&T down by 2.53% and ONGC down by 1.91% were top losers on the index.

The major gainers on the BSE sectoral space were, IT up by 0.92%, FMCG up 0.70%, TECk up 0.58% and Power up 0.57%, while Metal down 2.44%, Capital Goods down 1.66%, Bankex down 0.97%, Auto down 0.81% and PSU down 0.68% were major losers on the BSE sectoral space.  

Meanwhile, with the aim to boost bilateral investments and to strengthen economic relationship, India and China have agreed to establish a joint working group. At the ninth session of the India-China Joint Group on Economic Relations, Trade, Science and Technology, both countries also agreed to work on a five-year plan to address all trade-related issues, including the widening trade balance between the two countries.

In the meeting India raised concerns over widening trade deficit in favour of China and restricted market access in areas such as IT, pharmaceutical and agricultural products. India also pointed that non-tariff barriers by China to discourage imports is a major concern for Indian exporters. India also reemphasized on its invitation for leading Chinese companies to set up manufacturing bases in India.

The Chinese Trade Minister expressed hope of achieving $100-billion trade target by 2013. The total bilateral trade between India and China for 2011-12, stood at $75,457.42 million as compared with $59,000.36 million in 2010-11. During 2011-12, the exports were $17,902.98 million while the imports stood at $57,554.44 million. The provisional trade deficit for 2011-12 was $39,651.46 million.

The S&P CNX Nifty touched a high and low of 5,359.25 and 5,312.60 respectively.

The top gainers on the Nifty were PowerGrid up by 3.42%, TCS up by 2.28%, Asian Paints up by 1.80%, Dr Reddy’s up by 1.67% and Sun Pharma up by 1.65%. On the flip side, Sterlite Industries down by 5.53%, Jindal Steel down by 5.31%, JP Associates down by 3.50%, Hindalco down by 3.27% and Sesa Goa down by 3.20% were the major losers.

The European markets were trading mixed, France's CAC 40 down by 0.59%, Germany's DAX was down by 0.42% and United Kingdom’s FTSE 100 was up by 0.01%.

Most Asian markets fell on Tuesday, on the back of global worries about the impact of the euro zone debt crisis. Meanwhile, investors awaited the release of key US economic data. After plummeting to their lowest level since March 2009 on Monday, Shanghai shares ended with green mark despite fading hopes for more formal monetary easing to underpin China's fragile growth. In Seoul, shares of Samsung Electronics rose 1.6%, recovering some of the value lost on Monday. Hong Kong shares also ended lower, ahead of Federal Reserve chairman Ben Bernanke’s speech in bankers' meet at Jackson Hole on Friday.