Benchmarks end near day’s low; Sensex below 17,500 mark

Indian equity markets continued their losing streak for the fourth straight session on Wednesday ahead of the expiry of August derivative contracts and first quarter GDP numbers slated to be released on Friday. The gauges got no respite throughout the session and snapped the day’s trade near its intraday low losing their crucial 5,300 (Nifty) and 17,500 (Sensex) levels. The concerns of further slowdown in economy and a reiteration by the Reserve Bank that inflation remained the key threat pushed the undertone lower.

Most of the pressure came in from the realty pack, which tumbled over three percent led by DLF, Indiabulls and HDIL slumping for second day as worries continued over a stringent land acquisition bill from the government. The Land Acquisition Bill, which was being pushed by Sonia Gandhi-led NAC, is set for further delay with the controversial matter being referred to a Group of Ministers (GoM) because of opposition by a number of Cabinet ministers. Moreover, the sentiments were also dampened after auto stocks like Bajaj Auto, Tata Motors, Hero Moto and M&M slipped between 1-4 percent on concerns that sales growth in August would remain subdued on account of high interest rates on auto loans and rising fuel prices.

The sentiments also got clobbered after banking sector, after trading in the green for most part of the day’s trade, ended with cut of about half a percent after the RBI governor reiterated that inflation remained the key threat for the economy, dashing any hopes of a rate cut in September. The RBI governor, Subbarao added that the central bank has been successful in easing price pressures by reducing the inflation rate to 7 percent from 11 percent but also pointed that various factors, including high commodity prices, the fiscal deficit and the monsoon is again pushing it higher.

European counters too traded choppy in the early trade as investors were reluctant to make any moves ahead of a key speech by the US Federal Reserve chairman on August 31 and details of the European Central Bank's response to the region’s debt crisis. Though, Asian markets saw modest gains ahead of Fed chief’s policy announcement on Friday. However, Chinese market was trading lower on news that retailers in the country are reporting weaker sales growth. Retail sales have missed economists’ forecasts in three of the last four months.

Back home, PSU oil marketing companies like BPCL, HPCL and IOC all edged lower on concerns about high under-recovery. PSU OMCs incurred under-recovery of Rs 47,811 crore in Q1 June 2012. However, investors moved their focus towards defensive sector like FMCG and Healthcare. FMCG space edged higher by over half a percent on reports of revival of monsoon rains this month.

The NSE’s 50-share broadly followed index Nifty, plunged by about fifty points to settle below the psychological 5,300 support level while Bombay Stock Exchange’s Sensitive Index - Sensex nosedived by over one hundred and forty points to finish below the psychological 17,500 mark. Moreover, the broader markets too settled on a bleak note and ended with over half a percent cuts.

The markets fell on overall volumes of over Rs 2.40 lakh crore while the turnover for NSE F&O segment too remained on the lower side as compared to that on Tuesday at over Rs 1.50 lakh crore. Moreover, the market breadth remained in favor of declines as there were 1,060 shares on the gaining side against 1,720 shares on the losing side while 150 shares remained unchanged.

The BSE Sensex lost 140.90 points or 0.80% to settle at 17,490.81, while the S&P CNX Nifty declined by 46.80 points or 0.88% to close at 5,287.80.

The BSE Sensex touched a high and a low of 17,653.90 and 17,471.13 respectively. However, the BSE Mid cap index was down by 0.54% and Small cap index down by 0.85%.

Tata Power up by 0.87%, ITC up by 0.50%, Maruti Suzuki up by 0.50%, Jindal Steel up by 0.31% and Wipro up by 0.28% were top gainers on the Sensex, while Sterlite Industries down by 4.69%, Bajaj Auto down by 3.96%, Hero MotoCorp down by 3.30%, BHEL down by 2.89% and Hindalco Industries down by 2.72% were top losers on the index.

The major gainers on the BSE sectoral space were, FMCG up by 0.57% and Health Care up 0.27%, while Realty down 3.08%, Metal down 1.79%, Auto down 1.37%, Oil & Gas down 1.12% and Capital Goods down 1.10% were major losers on the BSE sectoral space.  

Meanwhile, sensing growing split within Cabinet over the contentious Land Acquisition and Rehabilitation and Resettlement (LARR) Bill, 2011, Prime Minister (PM) Manmohan Singh referred the same to a group of ministers (GoM), after its provisions were hailed as 'flawed' and clauses relating to compensation were criticized for being anti-growth.

The very political bill was floated after the government decided to amend the provisions of Land Acquisition bill of 1894 when strong protest against land acquisition, especially in tribal areas, rocked states in 2007. The idea was to abate the absolute powers of state governments to acquire land by specifying in the bill the purpose for which it could be done.

Ironically, despite being endorsed as United Progressive Alliance’s gift to the aam admi, the bill was met with fierce flak by the party’s own ministers during Tuesday’s cabinet meeting. With no price for guessing, the Trinamool Congress (TMC) was also vocal in its opposition to the Bill. However, even vehement argument was put from urban development minister Kamal Nath who condemned that the bill would stall all activity, from metro rail to urbanization and industrialization.

However, Rural Development Minister Jairam Ramesh, who has been keen on pushing the Bill, is optimistic  that there would not be much of trouble to clear the bill, as 25 out of the 28 recommendations of the standing committee, were accepted.

The S&P CNX Nifty touched a high and low of 5,345.50 and 5,282.70 respectively.

The top gainers on the Nifty were Tata Power up by 1.07%, Ambuja Cement up by 0.67%, Kotak Bank up by 0.62%, Jindal Steel up by 0.60% and Ranbaxy up by 0.46%. On the flip side, JP Associates down by 9.58%, SAIL down by 6.28%, Sesa Goa down by 5.70%, DLF down by 5.16% and Sterlite Industries down by 4.75% were the major losers.

The European markets were trading in red, France's CAC 40 down by 0.63%, Germany's DAX was down by 0.59% and United Kingdom’s FTSE 100 was down by 0.50%.

Asian stock markets ended mixed on Wednesday ahead of Federal Reserve Chairman Ben Bernanke's speech to international central bankers gathering in Jackson Hole on Friday and European Central Bank’s meeting next week. The Conference Board's consumer confidence data Tuesday showed that the index fell to its lowest level since November 2011, which also added pressure on Bernanke to give some indication of a further round of quantitative easing during his speech. Hong Kong shares fell on Wednesday, dragged down by a 4.2% loss of foodmaker Want Want China, which was heavily traded on a turnover day. Japanese shares ended higher, with Renesas Electronics Corp surging 35% on the news that U.S. private equity fund KKR & Co plans to invest around $1.3 billion in the struggling chipmaker, while Shanghai declined to a three and half year low. 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.