Benchmarks continue to wilt under pressure; Metal stocks suffer the most

Benchmarks continue to wilt under selling pressure on account of global risk off sentiment after US lawmakers failed to prevent the imposition of $85 billion in spending cuts that kicked in at the end of last week. With no signs of recovery in sight, Indian equity markets, lacking any positive trigger, continue to languish in red terrain after showing modest recovery in the previous session, which enticed bouts of profit-booking by wary investors, leading the markets to the downside. Thus, witnessing across the board selling pressure, 30 share index, Sensex, is trading below the 18850 level, with a loss of over century of points, likewise 50 share index Nifty, too taking a knock of over 40 points, continue to gyrate below the psychological 5700 level. Only stocks from Oil & Gas counter are managing to hold their fort in green, while stocks from Metal, Consumer Durables and Capital Goods are showing major weakness.

Shares of state-owned oil marking companies (OMC) are trading higher in an otherwise weak market after they hiked petrol price by Rs 1.40 per litre from Friday midnight. On the other hand, this development comes as disappointment to the Auto sector, which would see lower demand of petrol driven vehicles. The overall market breadth on BSE is in the favour of declines, which have thumped advances in the ratio of 1776:689, while 104 shares remained unchanged.

The BSE Sensex is currently trading at 18802.86, down by 115.66 points or 0.61% after trading in a range of 18930.86 and 18760.41. There were 8 stocks advancing against 21 declines and one remains unchanged on the index.

The broader indices continued to bleed thick and fast; the BSE Mid cap index and Small cap indices were trading down with a cut of over a percent.

The top gaining sectoral index on the BSE was, Oil & Gas up by 0.08%, while Metal down by 2.27%, Consumer Durables (CD) down by 1.98%, Capital Goods (CG) down 1.83%, Realty down by 1.27% and Fast Moving Consumer Goods down 1.15% were the top losers on the BSE.

The top gainers on the Sensex were Dr Reddys Lab up by 1.35%, Sun Pharma up by 0.66%, Reliance up by 0.49%, TCS up by 0.43% and NTPC up by 0.17%.

On the flip side, Sterlite Industries down by 3.17%, Hindalco down by 3.08%,Jindal Steel down by 3.05%, Bajaj Auto down by 2.44% and L&T down by 2.01% were the top losers on the Sensex.

Meanwhile, joining the government’s resolve to get rid of impediments to economic growth, Planning Commission Deputy Chairman Montek Singh Ahluwalia said 6.5 percent economic growth projection for FY14 is reasonable. He said that 'if you have taken corrective steps needed to get rid of impediments to growth, projecting 6.5 percent is not too much. The 6.5 percent economic growth is not that unreasonable.’

As per Ahluwalia, for the next fiscal, 6.5 percent economic growth would be achievable in the backdrop that India’s last decade long-term average GDP growth was around 7.3-7.4 percent.

Commenting on whether the Union Budget is the right response to the challenge economy is facing at present; he said the key challenges for Indian economy are huge micro imbalance, very large fiscal deficit and widening current account deficit. Therefore, the FY14 Budget is focused to get micro-economic balance and enhancing the foreign currency inflow into the country, which is important to reduce the fiscal deficit.

On whether finance minister went for a big cut of around Rs 92,000 crore in Plan expenditure to reduce the current financial year's fiscal deficit to 5.2 percent of GDP, he said this happened because of strict enforcement of rules by the finance minister.

On doubts whether the lesser Plan expenditure would hurt economic growth prospects, he suggested that economic growth will not depend only on government spending and by ‘the restraint on government expenditure has to be offset by big increase in private investment and public sector investment which is not in the budget. If that happens, the growth will take place.’

The CNX Nifty is currently trading at 5,679.30, down by 40.40 points or 0.71% after trading in a range of 5,712.00 and 5,663.60. There were 10 stocks advancing against 39 declines on the index.

The top gainers of the Nifty were Dr Reddy’s up by 1.20%, BPCL up by 1.04%, Sun Pharma up by 0.73%, Reliance up by 0.35% and TCS up by 0.34%.

On the flip side, Ambuja Cement down by 5.08%, ACC down by 4.24%, Sesa Goa down by 3.38%, Jindal Steel down by 3.08% and Hindalco Industries down by 2.98% were the major losers on the index.

Most of the Asian equity indices were trading in the red; Shanghai Composite tumbled 3.76%, Hang Seng crumbled 1.67%, Jakarta Composite declined 1.22%, KLSE Composite slipped 0.35%, Straits Times dropped 0.88%, KOSPI Composite contracted 0.66% and Taiwan Weighted was down by 1.22%. On the flip side, Nikkei 225 was up by 0.40%.