Benchmarks end lower for third straight day on weak global cues

Indian stock markets continued their southward journey and completed a hat-trick of negative close ahead of WPI inflation numbers to be announced tomorrow. Selling got intensified after Morgan Stanley and HSBC each cut their India’s economic growth forecasts for 2013-14 to 6% from 6.2% to reflect lower-than-expected growth in the October-December quarter. Further, HSBC expects 50 basis points of additional rate cut in the calendar year 2013, and a slightly more protracted recovery in India. However, some consolidation was witnessed near 19,450 (Sensex) and 5,880 (Nifty) levels on Prime Minister Manmohan Singh’s statement that the economy will return back to high growth trajectory within the next 2-3 years. He also said that the GDP has slowed down in the last couple of years owing to several domestic as well as international factors.

But, selling resumed after nervous market participants resorted to ruthless across the board profit booking following the disappointing start of European stock markets, weighed down by a string of weak earnings reports, with investors looking to economic data to back the rally in key stock indexes to multi-year highs. Asian shares fell on Wednesday on investor concerns that the recent rally in global equities was running out of steam, while sterling remained vulnerable after weak UK data fed fears of a triple-dip recession.

Back home, selling in banking stocks too dampened the sentiments as stocks like ICICI Bank, HDFC Bank, SBI, Axis Bank, Indusind Bank, Bank of Baroda and Yes Bank all edged lower after higher-than-expected industrial growth in January and retail inflation remaining in double digits for the third straight month diminished hopes of a rate cut by the central bank. Shares of Consumer Durables counter also got offloaded after high inflation for the past few months has led to lower spends on consumer durables.

Sentiments also got dented as shares of public sector oil marketing companies like BPCL, HPCL and IOC edged lower as US crude oil futures traded near the highest level in 2 weeks after an industry report showed crude stockpiles fell for the first time in a month in the US, the world’s biggest oil user. Additionally, shares of software exporters tumbled on account of appreciating rupee against the US dollar as most of these companies earn a major portion of their revenue from exports to the US.

The NSE’s 50-share broadly followed index Nifty lost about sixty points but managed to hold its psychological 5,850 support level, while Bombay Stock Exchange’s Sensitive Index - Sensex tumbled by over two hundred points to finish below its psychological 19,500 mark. Moreover, the broader markets too butchered during the trade and ended the session with a cut of over half a percent.

The market breadth remained in favor of declines as there were 992 shares on the gaining side against 1,893 shares on the losing side while 128 shares remain unchanged.

Finally, the BSE Sensex lost 202.37 points or 1.03% to settle at 19,362.55, while the CNX Nifty declined by 62.90 points or 1.06% to end at 5,851.20.

The BSE Sensex touched a high and a low of 19,511.97 and 19,338.52, respectively. The BSE Mid cap index down by 1.00% and Small cap index was down by 1.27%.

The top gainers on the Sensex were, Sun Pharma up by 1.25%, ITC up 0.89%, Bharti Airtel up 0.76%, Hindustan Unilever up 0.59% and Coal India up 0.14%, while Hindalco Industries down by 3.67%, ICICI Bank down by 3.25%, Bajaj Auto down by 3.16%, Maruti Suzuki down 3.07% and Jindal Steel down by 2.84% were the top losers on the index.

On the BSE Sectoral front, Bankex down by 2.18%, Consumer Durables down by 1.57%, Auto down by 1.53%, PSU down by 1.41% and IT down by 1.18%, were the top losers, while FMCG up by 0.50% was the sole gainer in the space.

Meanwhile, to capture inter-state trade data, considered as essential for the proposed Goods and Service Tax (GST) regime, the government is ready with a roadmap and will soon submit a report on creating such an interstate database to the Fourteenth Finance Commission. The tracking of trade flows between states, which has never been attempted before in the country, could improve the credibility of state-level GDP numbers and help in better planning for infrastructure projects on the basis of goods movement trends.

At present, states’ GDP at market prices figure do not contain proper inter-state trade data, which often renders to ineffective state-level fiscal policies as they are based on wrong numbers. This move by the government comes on the back of the Thirteenth Finance Commission stressing on the need to compile inter-state trade data, especially in the context of the proposed GST regime which requires such transactions to be 'zero rated.'

For creating an inter-state trade database, the Directorate General of Commercial Intelligence and Statistics (DGCIS), which compiles India's foreign trade data and the Central Statistics Office, have submitted recommendations after conducting a pilot project to track trade flows between four states - Tamil Nadu, Kerala, West Bengal and Sikkim. After which, the commerce ministry is expected to submit a report to the Fourteenth Finance Commission, stating that domestic trade figures of states could be released on an annual basis to start with.

According to DGCIS, data compilation on interstate trade for now is done through railways, river, air and sea. However, statistics of interstate movement of goods by road is not collected by any agency and has never been done before. About 60% of the total freight movement in the country takes place by road and this share is likely to increase as India's road networks are developed further. Thereby, the government has expressed the need for states to common reporting codes for commodities and to share primary trade data with the DGCIS.

The CNX Nifty touched a high and a low of 5,893.85 and 5,842.25 respectively. 

The top gainers on the Nifty were Sun Pharma up by 1.11%, Bharti Airtel up 1.10%, Asian Paints up 0.98%, ITC up 0.97% and HCL Tech up by 0.72%.

On the flip side, the top losers of the index were, Hindalco down by 3.77%, ICICI Bank down by 3.48%, Siemens down by 3.48%, Bajaj-Auto down by 3.45% and Kotak Bank down by 3.43%.

The European markets were trading in red, France’s CAC 40 down by 0.30%, Germany’s DAX down by 0.24% and the United Kingdom’s FTSE 100 down by 0.76%.

Asian markets shut shop mostly in the red as investors booked their profit from the markets’ recent rally. Shanghai Composite ended with a cut of about a percent as investors assessed whether the economic outlook supported further gains. Japanese Nikkei also declined by over half a percent after yen edged higher as investors weighed reports that Japan’s main opposition party will vote against one of the government’s nominations for deputy governor of the country’s central bank.