Benchmarks end lower on sluggish global cues

Indian equity indices resumed their southward journey after a day of halt, snapping the day’s trade with a cut of about half a percent due to sluggish global cues. The sentiments remain dampened for the whole day as US lawmakers failed to come to a conclusion to avert the imposition of $85 billion in spending cuts that kicked in on Friday last week. After a horrendous start, key domestic benchmarks tried harder to pare initial losses as sentiments got some boost from finance minister’s promise that his Income Tax Department gumshoes won’t haunt overseas investors for revenues.

However, cues from global front continued to dampen sentiments as European counters traded choppy in early deals on concerns about Italy’s political picture, while the euro was steady against the dollar as investors looked to a meeting of euro-zone finance ministers. Italian stocks underperformed peers ahead of a Euro-group meeting in Brussels, with further discussion on the country’s political situation expected to feature high on the agenda. Meanwhile, Asian markets too shut shop mostly in the red with Chinese benchmark losing over three percent after Beijing hit property developers with harsher-than-expected tightening measures to contain housing costs.

Back home, recovery was seen in the Indian market and most of the initial losses got pared led by gains in blue chip stocks such as Reliance Industries and banking stocks - the only sector that traded in the green. Investors also got some confidence after global rating agency Moody’s Investor’s Service said that India’s budget for the next fiscal year offers a ‘realistic’ plan to meet the country’s fiscal deficit target, and should be a credit positive for its sovereign ratings. But, it was not enough to bring the frontline gauges into the green terrain as optimism got fizzled out after Reserve Bank of India governor D Subbarao said that India’s growth story is still intact, with the potential to grow at double digit rates, provided some issues are addressed, as a mere 5-6% growth is not sufficient.

Sentiments also got dented after metal counter dropped by over two and a half percent after the Chinese government late on March 1, 2013, announced fresh measures to cool the property market, including higher down-payments and mortgage rates on second homes in cities with steep price gains. Some pressure also came in after stocks from Capital goods sector like Punj Lloyd, BEML, Bhel, Siemens, Crompton Greaves and L&T all edged lower on worries that a slowing economy will crimp new orders.

The NSE’s 50-share broadly followed index Nifty losing over twenty points to end tad below its psychological 5,700 support level, while Bombay Stock Exchange’s Sensitive Index - Sensex declined by forty points, ending below its psychological 18,900 mark. Moreover, the broader markets hammered badly during the trade and ended the session with a cut of over one and a half percent. The market breadth remained in favor of declines as there were 860 shares on the gaining side against 1,958 shares on the losing side while 110 shares remain unchanged.

Finally, the BSE Sensex lost 40.56 points or 0.21% to settle at 18,877.96, while the CNX Nifty declined by 21.20 points or 0.37% to end at 5,698.50.

The BSE Sensex touched a high and a low of 18,930.86 and 18,760.41, respectively. The BSE Mid cap index down by 1.37% and Small cap index was down by 1.89%.

The top gainers on the Sensex were, Dr Reddy’s Lab up by 1.52%, Bharti Airtel up 1.46%, HDFC Bank up 0.94%, TCS up 0.71% and ITC up 0.69%, while Hindalco down by 4.55%, Jindal Steel down by 4.26%, Sterlite industries down by 2.74%, Hindustan Unilever down by 2.63% and L&T down by 2.52% were the top losers on the index.

The only gainer on the BSE Sectoral space was, Bankex up 0.27%, while Metal down 2.54%, Realty down 2.25%, Consumer Durables (CD) down 2.15%, Capital Goods (CG) down 1.85% and PSU down 1.14% were the top losers on the sectoral space.

Meanwhile, as per the credit rating agency, Crisil the government is likely to miss the revenue growth target of 23.4 percent in FY14 as its estimates from spectrum and divestment sale inflows are too ambitious. As per the report, given the weak GDP figures, along with the fact that it is an election year, achieving a budgeted revenue and expenditure target will be an arduous task and the Rs 58,000 crore expected from disinvestment and Rs 40,000 crore from spectrum sale are difficult to achieve. 

Regarding the economic growth for the next financial year, the Crisil report said ‘as budgetary proposals are broadly in-line with our expectations, we retain our pre-budget forecast of 6.4 percent GDP for 2013-14, which is the midpoint of the GDP growth range (6.1 to 6.7 percent) that the budget has assumed’. On inflation, the rating agency said it would decline during the next financial year with WPI inflation averaging around 6.5 percent due to low crude oil price, strengthening of rupee and lower core inflation.

By adding further, it noted that the government’s move for fiscal consolidation could hurt growth in the short-run, but it would also create an environment in which the Reserve Bank can cut interest rates and provide support to growth. 'We expect a lowering of the repo rate by 50-75 bps during the rest of 2013-14, due to lower inflation. This will lower the floor for the G-Sec rate and soften yields to around 7.7-7.8 percent by March-end 2014' it added.

Further, it also added that market borrowing of Rs 4.84 trillion for next fiscal against Rs 4.67 trillion this fiscal would create an upside pressure on 10-year G-Sec yields, while, rupee is likely to settle around 51-52 per dollar by the end of March 2014.

The CNX Nifty touched a high and a low of 5,712.00 and 5,663.60 respectively. 

The top gainers on the Nifty were Bharti Airtel up by 1.88%, TCS up 1.20%, Dr Reddy’s up 1.16%, ITC up 0.94% and Axis Bank up by 0.87%.

On the flip side, the top losers of the index were, JP Associates down by 5.95%, Hindalco down by 5.00%, Jindal Steel down by 4.71%, ACC down by 3.66% and Reliance Infra down by 3.40%.

The European markets were trading in red, France’s CAC 40 down by 0.21%, United Kingdom’s FTSE 100 down by 0.36% and Germany’s DAX down by 0.46%.

Asian markets ended mostly lower on Monday as US lawmakers were not able to prevent the imposition of $85 billion spending cuts that kicked in at the end of last week. Chinese markets closed with huge losses as its property developers were affected by the measures to cool the housing market. On the other hand, Japan’s Nikkei went home with green mark as a weaker yen helped to improve the sentiment.