Profit booking, bleak global cues drag benchmarks near day’s low

After witnessing sharp gains in the previous session, Indian equities snapped the trade near day’s lows as market participants preferred to take some profit off the table. It was a lackluster start to the F&O expiry week for the month of September where lack of buying interest combined with bleak global cues sent Dalal Street below its psychological 18,700 mark in the late trade. The gauges traded choppy throughout the session as some sense of cautiousness was drawn after international rating agency Standard & Poor’s cut India’s GDP forecast to 5.5%. Earlier, Indian rating agency CRISIL too had slashed its forecast for the country's GDP growth to 5.5% from 6.5% earlier for this fiscal. HSBC has also cut growth forecast for fiscal 2012-2013. The Planning Commission recently lowered the annual average economic growth rate to 8.2% for the 12th Five Year Plan period (2012-17) from 9%.

Global cues too remain subdued as European counters traded in the red terrain in the early deals as investors confidence was weighed down by concerns that the debt crisis faced by the euro zone is intensifying amid disagreement between Germany and France. Moreover, Asian markets mostly fell on Monday as the recent rally fuelled by central banks' stimulus plans petered out, while there were fears over Greece's ability to meet requirements to get more bailout cash. Earlier losses in China and Hong Kong were pared despite a People's Bank of China adviser warning that the mainland economy was still weak.

Back home, FMCG pack also pressurized the markets, losing by about one and half a percent on profit booking after strong gains over the past couple of months. Hindustan Unilever, ITC and Colgate Palmolive shed between 1-2.5 percent. Selling in software space too dampened the sentiments as rupee continued its gaining streak against the dollar, inching closer to 53 levels on dollar selling by exporters. However, losses remain capped as realty stocks extended recent gains as investors bet that retail real estate will get a boost from the entry of foreign supermarket chains in the country. The government had last week braved intense political opposition to notify the rules for allowing 51% foreign direct investment (FDI) in multi-brand retail.

Some amount of support also came in after shares of power generation, transmission and distribution companies and power equipment makers extended their last week's gains on speculation that the Union Cabinet at its meeting on September 24, 2012, will clear a proposal to restructure the debt of state electricity boards (SEBs) and power distribution companies (DISCOMS) to revive the ailing sector. Meanwhile, Sugar shares like Shree Renuka Sugar, Oudh Sugar Mills, Balrampur Chini Mills, Rana Sugars and Dhampur Sugar Mills edged higher on buzz the government may today announce reduction in subsidy on sugar made available to below-poverty-line consumers.

The NSE’s 50-share broadly followed index Nifty, fell by over twenty points to end way below the psychological 5,700 support level, while Bombay Stock Exchange’s Sensitive Index - Sensex tumbled by about eighty points to finish below the psychological 18,700 mark. However, the broader markets traded with traction through the session outperforming benchmarks and ended the trade with a gain of about half a percent.

The overall volumes stood at over Rs 1.95 lakh crore, which remained on the lower side as compared to that on Friday. Moreover, the market breadth remained in favor of advances as there were 1,694 shares on the gaining side against 1,197 shares on the losing side while 128 shares remain unchanged.

The BSE Sensex lost 79.49 points or 0.42% to settle at 18,673.34, while the S&P CNX Nifty declined by 21.55 points or 0.38% to close at 5,669.60.

The BSE Sensex touched a high and a low of 18,811.13 and 18,650.43 respectively. However, the BSE Mid cap index was up by 0.33% and Small cap index up by 0.38%. 

BHEL up by 6.41%, Jindal Steel up by 4.18%, M&M up by 3.66%, Maruti Suzuki up by 3.13% and HDFC Bank up by 1.47% were top gainers on the Sensex, while HDFC down 2.52%, ITC down 2.25%, HUL down 2.16%, ONGC down 2.06% and RIL down 1.61% were top losers on the index.

The major gainers on the BSE sectoral space were, Power up 1.70%, Realty up 1.45%, Capital Goods (CG) up 1.15%, Consumer Durable (CD) up 0.88% and Auto up 0.78%, while FMCG down 1.48%, Oil & Gas down 1.43%, PSU down 0.50%, TECk down 0.32% and Health Care (HC) down 0.32% were top losers on the BSE sectoral space.  

Meanwhile, with an aim to meet the gap between high demand and peak deficit, the Planning Commission of India has targeted a power generation capacity of 88,425 MW during the 12th five year plan, 2012-17, while the commission had previously projected additional power generation capacity of 75,785 MW in the next five years.

The panel has estimated that the private sector has to share about 52% in the extra capacity, compared to the 19% in the 11th five year plan. It also affirmed the importance of developing a policy framework to trigger more investments in private sector. The 11th Plan had set a target addition of 78,577 MW capacity, but achieved about 52,000 MW capacity in the period. However, the renewable power share is declining, and this has to be enhanced to ensure low carbon growth strategy.

The commission has projected capacity addition in the non-fossil fuel plants including hydro capacity addition of 11,897 MW and nuclear capacity addition of 5,300 MW. It has considered importing of about 1,200 MW of hydro power from Bhutan. 30,000 MW grid interactive renewable capacity additions is also under consideration, constituting 15,000 MW wind, 10,000 MW solar, 2,100 small hydro and remaining from bio mass.

The S&P CNX Nifty touched a high and low of 5,709.85 and 5,662.75 respectively.

The top gainers on the Nifty were BHEL up by 7.27%, Jindal Steel up by 4.64%, Maruti Suzuki up by 3.74%, M&M up by 3.72% and Reliance Infra up by 3.17%. On the flip side, HDFC down by 2.77%, ONGC down 2.55%, SAIL down 2.37%, ITC down 2.20% and HUL down by 2.15% were top losers.

The European markets were trading in red, France's CAC 40 down by 1.17%, Germany's DAX down by 0.62% and United Kingdom’s FTSE 100 down by 0.55%.

Asian markets made a mixed closing on Monday, though the mood in the region remained subdued since morning but few of the indices showed good efforts to close in green in the dying hours. There was concern related to Europe that kept the markets under pressure, as Germany and France disagreed on when to introduce a banking union for the 17-nation single currency and attempts to resolve the region’s debt crisis seemed deadlocked. On the same time the reports from China remained discouraging, as a survey pointed out that manufacturers and retailers in the nation are less optimistic about sales than they were three months ago and are cutting jobs. Meanwhile, China’s overnight money-market rate climbed to a seven-month high on speculation cash shortages will worsen when the financial markets will remain closed for a week starting October 1.