Benchmarks tumble after a muted start; HDFC Bank’s scam weigh on sentiment

Prolonging their previous session’s solemnity, Indian equity benchmarks, after making a muted start, collapsed suddenly on report of HDFC Bank’s scam due to which investors started offloading their holding in other banking stocks. The market participants also remained sideways awaiting WPI inflation data to be released later in the day. Though, there is expectation that Wholesale Price Inflation (WPI) for January may have dipped below the psychological 7 percent mark and could give a reason to RBI to lower its key policy rates. C Rangarajan, Chairman, Prime Minister’s Economic Advisory Council too has expressed hope that WPI could fall to 6.5 percent by March. However, RBI will also be considering high level of current account deficit, which is set to exceed last year’s number.

On the global front, the US markets made modest gains on Wednesday, with Dow making its first record nine straight days’ gains since November 1996. Traders took support from the strong jump in retail sales in February. While, prolonging their southbound journey, most of the Asian equity indices are trading in the negative terrain, as traders continued to book profit following recent gains that have been fuelled by growing confidence in the global economy.

Back home, sentiments also remain dampened after jewellery stocks like Gitanjali Gems, Rajesh Exports, Shree Ganesh Jewellery and Tara Jewels edged lower awaiting guideline from the government to implement the provisions of the recently amended Prevention of Money Laundering Act. On the sectoral front, banking witnessed the maximum loss followed by consumer durables and auto while there were no gainers on the BSE sectoral space. The broader indices too were feeling the selling pressure while, the market breadth on the BSE was negative; there were 592 shares on the gaining side against 1201 shares on the losing side while 79 shares remain unchanged.

The BSE Sensex opened at 19,367.26; about 4 points higher compared to its previous closing of 19,362.55, and has touched a high and a low of 19,419.11 and 19,179.33 respectively.

The index is currently trading at 19,226.60, down by 135.95 points or 0.70%. There were 3 stocks advancing against 24 declines while 3 stocks remain unchanged on the index.

The overall market breadth has made a weak start with 31.62% stocks advancing against 64.16% declines. The broader indices were trading in-line with benchmarks; the BSE Mid cap and Small cap indices declined by 0.74% and 0.69% respectively. 

The top losing sectoral indices on the BSE were, Bankex down by 1.46%, Consumer Durables down by 1.22%, Auto down by 1.16%, Metal down by 0.79% and Capital Goods down by 0.72%, while there were no gainers on the sectoral index.

The top losers on the Sensex were HDFC Bank was down by 2.52%, Bajaj Auto was down by 2.41%, Bharti Airtel was down by 2.36%, Jindal Steel was down by 2.14% and Gail India was down by 2.12%.

On the flip side, Maruti Suzuki up by 0.84%, Hindustan Unilever up by 0.34% and Hero MotoCorp up by 0.29% were the only gainers on the Sensex.

Meanwhile, expressing confidence that India’s economy will recover in coming years, Prime Minister Manmohan Singh said the government has taken a number of measures to boost the economic growth and hopes that it will return to the robust growth path in the next two to three years. Though, he admitted that there has been a slowdown in the economy which has been reflected in the GDP figures.

Replying to questions on the slowdown of economy, Singh said ‘it is certainly true that in the last two years there has been a slowdown in the economy and it has been reflected in the GDP. In the Economic Survey of 2012-13 and the Finance Minister’s Budget speech, we have explained at length the factors that are responsible for the slowdown.’

By adding further he said, there are also global issues like the banking crisis of 2008-09 and the euro zone crisis coupled with the domestic issues like inflation and widening fiscal and current account deficits, which has lowered the domestic economic growth. Meanwhile, Singh assured that the government is trying hard to tackle with the prevailing economic crisis. 

The CNX Nifty opened at 5,845.95; about 5 points lower as compared to its previous closing of 5,851.20, and has touched a high and a low of 5,863.80 and 5,791.75 respectively.

The index is currently trading at 5,797.95, down by 53.25 points or 0.91%. There were 4 stocks advancing against 45 declines and one stock remains unchanged on the index.

The only gainers of the Nifty were Maruti Suzuki up by 0.69%, Asian Paints up by 0.37%, Hindustan Unilever up by 0.28% and Hero MotoCorp up by 0.15%.

On the flip side, Axis Bank down by 3.26%, Bajaj-Auto down by 2.61%, HDFC Bank down by 2.50%, Bharti Airtel down by 2.30% and Tata Motors down by 2.16%, were the major losers on the index.

Most of the Asian equity indices were trading in the red; Hang Seng declined 161.15 points or 0.71% to 22,395.50, Jakarta Composite tumbled 66.37 points or 1.37% to 4,769.07, KLSE Composite dipped 3.49 points or 0.21% to 1,642.73, Straits Times slipped 8.41 points or 0.26% to 3,280.11, KOSPI Composite dropped 15.17 points or 0.76% to 1,984.56 and Taiwan Weighted was down by 22.05 points or 0.28% to 7,973.46.

On the other hand, Shanghai Composite rose 3.15 points or 0.14% to 2,267.12 and Nikkei 225 was up by 72.30 points or 0.59% to 12,311.96.