Soft European markets opening add to glum of Indian equity markets

Downtrend continues to prevail in Indian equity markets in the noon deal, as soft opening of European counterparts, has added to the investors’ reluctance for opening fresh bets on F&O expiry day, where volatility is expected to play its part to the fullest. Although benchmarks are trading off their intra-day’s low level, they are mostly seen gyrating listlessly in the red zone, with no efforts of further recovery. 30 share barometer index of Bombay Stock Exchange (BSE), Sensex, trimming over 3/4 percent, are oscillating near the 17400 mark. Meanwhile, for the widely followed index of National Stock Exchange (NSE), Nifty, descending over 15 points is trading a tad above 5250 mark. Meanwhile, broader indices have holding their head above the water, as both Midcap and Smallcap index, are trading in the positive terrain. Sectorally, Realty and defensive Healthcare and Fast Moving Consumer Goods, have put up a tough face of resistance, however, stocks from Capital goods, Oil & Gas and Consumer Durable, languishing at the bottom are providing fodder to the unrelenting bears.

On the global front, European stocks have kick started the session on soft note as better-than-expected U.S. data Wednesday provided disbeliever of quantitative easing another reason to doubt whether the Fed will turn on the money-printing press. In line with economists' expectation, a revision to U.S. gross domestic product in the second quarter showed growth at 1.7% from the previous quarter, higher than an original reading of 1.5%. Meanwhile, Asian shares continued to reel under pressure.

Closer home, the BSE Sensex is currently trading at 17,416.61, down by 74.20 points or 0.42% and has touched a high and low of 17,442.48 and 17,367.55 respectively. There were 8 stocks advancing against 21 declines on the index, while 1 share remained unchanged. The overall market breadth on BSE was in the favour of declines which have thumped advances in the ratio of 1287:1047, while 145 shares remained unchanged.

The broader indices held their neck up in green; the BSE Mid cap and Small cap indices were trading higher by 0.10% and 0.02% respectively.

On the BSE sectoral front, Realty up by 1.07% Healthcare (HC) up by 0.49% and FMCG up by 0.32%, were the only sectors that showcased resilience. On the flip side, Capital Goods (CG) down by 1.09%, Oil and Gas down by 0.56%, Consumer Durables (CD) down by 0.51%, Information technology (IT) down by 0.40% and Public Sector Undertaking down by 0.39% were the major losers.

The top gainers on the Sensex were Hindalco Industries up by 2.17%, Cipla up by 1.42%, Wipro up by 1.32%, Tata Power up by 0.96% and Bajaj Auto up by 0.56%. On the other hand, Gail India down by 2.14%, Maruti Suzuki down by 2.08%, Jindal Steel down by 1.89%, HDFC down by 1.80% and Tata Steel down by 1.58% were the top losers on the Sensex.

Meanwhile, in a latest study by CRISIL it has been revealed that for the first time in two decades Consumption in rural India is growing at a faster pace than in cities and towns. It was reported that between 2009-10 and 2011-12, additional spending by rural India was Rs 375,000 crore, much higher compared to Rs 299,400 crore by urbanites in the same period. The CRISIL study also noted a shift in spending patterns in rural areas, with consumers moving beyond necessities such as toothpaste and soap to so-called discretionary products such as televisions and mobile phones.

Growth in rural consumption was fuelled by a rise in household incomes due to greater non-farm job opportunities and government initiated employment generation schemes. As per National Sample Survey Organisation (NSSO) data, during 2004-05 to 2009-10, rural construction jobs rose 88 per cent, while the number of people employed in agriculture fell from 249 million to 229 million.  Migrants from villages to urban areas, who benefited from job opportunities in infrastructure and construction projects, increased remittances to their families in rural India, which has boosted consumption.

CRISIL’s study showed that nearly 42% of rural households owned a television in 2009-10, up from 26% five years earlier, while 14% of rural households had a scooter or motorbike in 2009-10, almost double to that in 2004-05.

The study has also lauded the efforts of the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), which fuelled job creation on an unprecedented scale and nearly 27 per cent of rural households availed themselves of employment under MGNREGS in 2009-10. However, it also said that despite the positive impacts of these schemes, pressure on public finances will make it difficult to significantly hike such spending in future.

The S&P CNX Nifty is currently trading at 5271.35, down by 16.45 points or 0.31% after trading in a range of 5,278.10 and 5,255.05. There were 16 stocks advancing against 33 declines on the index, while 1 stock remained unchanged.

The top gainers of the Nifty were DLF up by 3.33%, Hindalco Industries up by 2.26%, Wipro up by 1.28%, Cipla up by 1.21% and Cairn India up by 1.18%. On the flip side, Gail India down by 2.15%, Maruti down by 1.99%, Jindal Steel down by 1.92%, Hero Moto Corp down by 1.83% and HDFC down by 1.69% were the major losers on the index.

Most of the Asian indices were trading in red; Shanghai Composite declined 0.41%, Hang Seng index plunged by 1.22%, Jakarta Composite plummeted 1.71%, Nikkei 225 lost 0.95%, Straits Times descended 0.97%, Kospi Composite Index offloaded 1.15% and Taiwan Weighted lost 0.27%. On the other hand, KLSE Composite up by 0.03% was the lone gainer amongst Asian pack.

European markets got a soft opening; France’s CAC 40 declined 0.18%, Germany’s DAX lost 0.71% and UK’s FTSE 100 slid 0.36%.