Local equity markets slid to intra-day’s low level in absence of positive trigger

Local equity markets paring gains have slid to intra-day’s low level, as sluggish start of European counterparts has dented the already feeble sentiment at Dalal Street. Consolidating previous week’s massive gains, Indian equity markets after listlessly gyrating in the early deals, have now surrendered to the selling pressure in absence of positive catalyst. Reports suggesting rating agency S&P lowering India’s GDP growth forecast to 5.5% mainly discouraged investor’s from building position in risky asset class such as equities. However, the downside of the barometer indices remain limited on account of prominent gains in stocks belonging to Realty, Power and Capital Goods counters. On the flip side, stocks from defensive Fast Moving Consumer Goods and Healthcare combined with Information Technology counters continue to be seller’s radar.

Defensives have been a drag as investors preferred to invest in high-beta stocks on renewed hopes of reform measures and the US Federal Reserve’s new asset purchase programme. Meanwhile, Power sector stocks such as BHEL, Tata Power, Power Finance Corp and REC registered smart gains in a choppy market on the hopes of restructuring of loans of state electricity boards. Additionally, even sugar stocks are trading sweet on hopes of price hike. The overall market breadth on BSE remains in the favour of advances which have thumped declines in the ratio of 1608:1003, while 119 shares remained unchanged.

The BSE Sensex is currently trading at 18,734.56, down by 18.27 points or 0.10% after trading in a range of 18,811.13 and 18,687.60. There were 17 stocks advancing against 12 declines on the index, while 1 stock remained unchanged.

The broader indices too pared gains, with the BSE Mid cap index trading up by 1.15% and Small cap index gaining 1.21%.

On the BSE sectoral space, Realty up by 3.04%, Power up by 2.61%, Capital Goods up by 2.17%, Metal up by 1.86% and Bankex up by 1.10% were the top gainers. While FMCG down by 1.75%, IT down by 0.80%, TECk down by 0.51%, Health Care down by 0.33% and Oil & gas down by 0.07% were the top losers.

The top gainers on the Sensex were BHEL up by 6.28%, Jindal Steel up by 5.15%, Tata Power up by 3.16%, Sterlite Industries up by 2.98% and Mahindra & Mahindra up by 2.83%. On the other hand, Hindustan Unilever down by 3.60%, ITC down by 2.58%, HDFC down by 1.82%, TCS down by 1.58% and Cipla down by 1.49% were the top losers on the Sensex.

Meanwhile, notwithstanding the series of reforms the government announced in the past two weeks, rating agency Standard & Poor's (S&P) today scaled down India's GDP growth forecast to 5.5%. The S&P forecast is part of a broader report on Asian economies, where the agency also slashed China’s gross domestic product (GDP) growth forecast to 7.5% from 8% and Japan’s to 2% from 2.5%. The rating agency, which has added to the spate of downgrades from global investment banks and rating agencies, in April, had lowered its outlook on India's sovereign rating of `BBB-' to negative. 

Besides, slew of rating agency and global investment banks slashing its outlook on India’s GDP growth, Prime Minister's Economic Advisory Council (PMEAC) foreseeing global headwinds, sluggish policymaking, high interest rates and worries about a drought in parts of the country suppressing investment and demand, also slashed its economic growth projections for the current fiscal to 6.7% from an earlier 7.5-8%. Further, India’s plan panel also lowered annual average economic growth rate to 8.2% in the 12th Five Year Plan (2012-17) from earlier average economic growth rate of 9% due to lower economic growth and lack of appropriate policy measures.

However, driven by higher-than-expected performance on the agriculture front, India’s GDP grew at 5.5 per cent in the June 2012 quarter after declining in eight consecutive quarters. Agriculture emerged as the only saving grace for the sagging economy, which witnessed a near-stalling of industrial activity. Agriculture came in at better than expected at 2.9 per cent, as against major economists’ estimates at 2 percent.

The S&P CNX Nifty is currently trading at 5,691.90, up by 0.75 points or 0.01%after trading in a range of 5,709.85 and 5,671.50. There were 28 stocks advancing against 20 declines on the index, while 2 stocks remained unchanged.

The top gainers of the Nifty were BHEL up by 6.50%, Jindal Steel up by 5.32%, Reliance Infra up by 4.32%, Axis Bank up by 3.99% and Siemens up by 3.22%. While, Hindustan Unilever down by 3.83%, HCL Tech down by 3.51%, ITC down by 2.64%, HDFC down by 1.99% and TCS down by 1.69% were the losers on the index.

Some of the Asian indices have made it into the green towards the end of the trade, Shanghai Composite was up by 0.31%, Kospi Composite Index gained 0.05%, and Taiwan Weighted was up by 0.18%.    

On the other hand, Hang Seng declined 0.37%, Jakarta Composite lost 0.80%, and KLSE Composite slid 0.87%, Nikkei 225 descended 0.45% and Straits Times skid 0.15%.

European markets got off to a sluggish start as a gloomy macroeconomic outlook and uncertainty about Spain's debt crisis more than offset fading euphoria over global monetary stimulus efforts; with France’s CAC 40 trading lower by 0.74%, Germany’s DAX losing 0.36% and UK’s FTSE 100 declining 0.41%.