Gloomy global leads stall Indian benchmarks’ three session winning streak

Indian frontline equity indices failed to extend the winning momentum for the fourth straight day on the opening day of a new week as undermining leads from the stock markets across the globe pummeled domestic investors’ conviction. Marketmen refrained from initiating fresh long positions as profit booking remained the order of the day as uncertainties over European sovereign debt crisis loomed large after euro-zone finance ministers decided on Friday to delay a second tranche of aid worth 109 billion euros to Greece amid increasing concerns that European Union will not be able to come up with a plan to prevent Greece from defaulting on its debts. Moreover, Europe warned Greece that further support will be kept on hold unless it meets its budget targets. Apart from European policy makers failing to introduce a plan to stem the region’s debt crisis at a meeting over the weekend, deteriorating earnings outlook for banks, exporters and raw-material producers were among the other concerns that kept investors pessimistic. On the domestic front, market participants went on to overlook encouraging reports that the government has cleared 12 proposals for foreign direct investment in the country amounting to Rs 242.88 crore based on the recommendations of the FIPB. Furthermore traders also remained worried that the RBI, touted to be the world’s most aggressive central bank, may not pause its monetary tightening streak which may substantially dampen the growth prospects of Asia’s third largest economy.

Earlier on Dalal Street, the benchmark got off to a gap down opening, in tandem with the daunting sentiments prevailing in Asian markets after European finance heads failed to agree a plan to solve the region’s debt woes. The frontline gauges kept trying hard to pare the losses and move towards the neutral line but ruthless profit booking at higher levels kept dragging the key indices closer to the session’s lows. The second half of the session remained upsetting as European markets after the somber opening got crushed further and undermined local sentiments. However, a mild short covering in dying moments of trade ensured that the key indices shut shops above intraday lows. Finally the NSE’s 50-share broadly followed index Nifty, deposed over a percent to settle below the crucial 5,050 support level while Bombay Stock Exchange’s Sensitive Index, Sensex garnered around two hundred points and ended below the psychological 16,750 mark. Moreover, the broader markets showed some resilience and abstained from giving in to the selling pressure witnessed by their larger peers. The midcap index settled on a flat note with mild losses while the smallcap index was little changed from its previous closing levels. On the BSE sectoral space, Capital Goods counter bore the maximum brunt and got pulverized by over two percent as bellwether L&T sank by over three percent while other majors like BHEL, Siemens and Crompton Greaves too suffered heavy losses. The rate sensitive Banking index too succumbed to the selling pressure as majority of the components of the gauge finished in the negative terrain. On the other hand, only the Consumer Durables and Automobile pockets witnessed some buying and managed to settle in the green territory with 0.75% and 0.34% gains respectively. The markets bounced on weaker volumes of around Rs 1.11 lakh crore while the turnover for NSE F&O segment too remained lower at over 1.01 lakh crore. The market breadth remained pessimistic as there were 1358 shares on the gaining side against 1415 shares on the losing side while 111 shares remained unchanged.

Finally, the BSE Sense plunged 188.48 points or 1.11% to settle at 16,745.35, while the S&P CNX Nifty plummeted by 52.30 points or 1.03% to close at 5,031.95.

The BSE Sensex touched a high and a low of 16,865.93 and 16,709.41 respectively. The BSE Mid cap index was down by 0.29% and Small cap index eased by 0.02%.

The top gainers on the Sensex were Maruti Suzuki up 3.09%, JP Associates up 2.17%, Wipro up 0.52%, Hero Moto up 0.39%, and Bharti Airtel up by 0.29%.

On the flip side, Sterlite down 3.49%, L&T down 3.02%, Sun Pharma down 2.62%, ICICI Bank down 2.42% and DLF down 2.08% were the top losers on the index.

The top gainers on the BSE sectoral space were CD up 0.75% and Auto up 0.34%. While, Capital Goods down 2.19%, Bankex down 1.17%, Power down 1.15%, Metal down 1.12% and PSU down 1.05% were the top losers on the BSE sectoral space.

Meanwhile, the Empowered Group of Ministers (EGoM) headed by Finance Minister Pranab Mukherjee, on September 20, will review its decision of ban on onion exports. The EGoM on food had restricted the exports of onion, to control the prices in domestic market. The EGoM’s decision of restricting the exports of commodity has led agitation by farmers across the country. Farmers from Maharashtra, who produce around 33% of India’s total output, have stopped selling onions.

The Centre's ban on onion export will be reviewed by the EGoM on September 20. The ban came into effect on September 7 on fears that onion prices could rise, stoking food inflation further. Their inventory has increased around 14 lakh tonnes. In Nashik, the main center of India’s onion trade, the farmers’ protests has made agriculture producer market yards being shut indefinitely.

On September 17, the Finance Minister and Chief Minister of Maharashtra and other senior State Ministers met delegation of farmers from state and assured them that the central government will consider their demands. Maharashtra's Minister for Public Works Chhagan Bhujbal, after the meeting said that the farmers want the ban to be lifted immediately or the Centre should fix a minimum support price.

Farmers told Mukherjee that the sudden rise in North India was not triggered by them and they must get at least Rs 1,200 for a quintal of onion. Export ban will lead to drastic fall in prices and that would result in massive losses, Bhujbal said. By adding further he said, ‘at Rs 1,200 a quintal, farmers are not reaping huge profits; but it is enough to keep them going. If protest from farmers is continued then the prices of onion is expected to increase dramatically as onion bulbs are drying and losing up to 30% of their weight. 

The S&P CNX Nifty touched high and low of 5,068.40 and 5,019.25, respectively.

The top gainers of the Nifty were JP Associates up 3.22%, Maruti up 2.75%, GAIL up 2.34%, HCL TEch up 1.92% and Wipro up 1.55%.

On the flip side, R Infra down 4.29%, Sterlite down 4.26%, L&T down 3%, ICICI Bank down 2.99% and Axis Bank down 2.44% were the top losers on the index.

The European markets were trading in the red. France's CAC 40 plummeted 2.37%, Britain's FTSE plunged by 1.69%, and Germany's DAX got pummeled by 2.48%.

All the Asian equity indices finished the day’s trade in the negative terrain on Monday after European finance heads failed to agree a plan to solve the region’s debt woes, while they also put off a decision on releasing rescue funds to Greece. European finance ministers meeting Friday in Poland said they would push back a decision on whether Greece should get its next payment from last year's $151 billion bailout package until next month. Moreover, China's benchmark index Shanghai Composite ended at a 14-month closing low with a cut of 1.79 percent, weighed by cyclical names in thin turnover on fears of tight money supply, as a $2.7 billion IPO by Sinohydro Group is set to be launched this week. However, Japanese equity markets remained closed for the trade in observance of a public holiday.