Late hour reversal seizes all early gains of the market

It was another down day for the Indian markets and the major disappointment was losing direction in final hours after a gap-up start. Traders booked profit at high point of the day fearing further decline owing to F&O series expiry and political uncertainty. Earlier the markets made a solid start of the day after a bad run last week, supported by gains in regional peers as Cyprus reached an agreement for an international bailout. Gains in US markets ahead of weekend too aided the sentiments. But some political jitters in late trade led to the reversal of gains for the markets as DMK after snapping ties with the Union Government, in a key party executive meet held in Chennai decided not to give support to the government from outside.

Meanwhile, paving the way for 10 billion euros ($13 billion) of emergency loans Cyprus agreed an aid package to stave off the threat of default. The accord between Cyprus and the so-called troika of international lenders was reached in overnight talks in Brussels and was ratified by the euro-zone finance ministers. The development gave a reason to cheer to the European markets, with majority of them making a gap up start. But their gains failed to support the domestic markets and they lost traction in the latter part of trade.

Back home, the chance of recovery was thwarted due to some sector and scrip specific profit booking, traders took the opportunity at higher levels as the market has been witnessing lull since last six straight session. The day was likely to be good on supportive global cues but on the same time volatility too was expected, as it being a holiday shortened F&O March series expiry week, with no trading on March 27 and March 29. Markets in initial trade moved higher as Finance Minister P Chidambaram in an effort to bridge the widening current account deficit decided to ease restrictions for foreign institutional investors in government and corporate bonds next month, for FII investment in corporate bonds and long-term infrastructure bonds will be merged effective from April 1. However, the finance minister also mandated that the total FII investments in borrowing should not be above 5 percent of the total as recommended in the Raghuram Rajan Committee report.

Meanwhile, Capital Goods along with rate sensitive and high beta auto, metal and banking stocks took a beating, though realty, power and oil & gas led some support to indices from slipping further. There was buzz in the oil & gas sector since morning after the state-owned oil marketing companies announced a hike in diesel prices last week and on report that the government will give an additional cash subsidy of Rs 25,000 crore to PSU OMCs to make up for the losses suffered by them on selling fuel at subsidized rates. Though, volume turnovers remained on the upper side at around 2.11 lakh crore, but the benchmarks lost about a quarter percent to end near the lows of the day.

Finally, the BSE Sensex lost 54.18 points or 0.29% to settle at 18,681.42, while the CNX Nifty declined by 17.50 points or 0.31% to end at 5,633.85.

The BSE Sensex touched a high and a low of 18,950.22 and 18,654.61, respectively. The BSE Mid cap index was down by 0.32%, while the Small cap index lost 0.80%.

The top gainers on the Sensex were, ONGC up by 2.96%, NTPC up 2.04%, HDFC up 1.16%, Dr Reddy up 0.77% and Hindustan Unilever up 0.72%, while Hero MotoCorp down by 2.42%, Tata Steel down by 2.28%, L&T down by 2.19%, Bharti Airtel down 1.95% and GAIL down by 1.94% were the top losers on the index.

The top gainers on the BSE sectoral front were, Realty up 0.79%, Power up 0.56%, Oil & Gas up 0.49%, Consumer Durables down 0.43% and PSU up 0.20%, while Capital Goods down by 1.44%, Auto down 0.78%, Metal down 0.71%, Bankex down 0.66% and FMCG down 0.41% were the top losers on the sectoral space.

Meanwhile, worried by declining exports and the rising trade account deficit, Commerce and Industry Minister Anand Sharma said, in the upcoming foreign trade policy (FTP), the interest subsidy scheme could be extended to more export sectors as the country faces a trade deficit crisis because of the contraction in exports. Trade deficit for the first 11-month of the fiscal stood at $182 billion and is expected to reach at $196 billion in the current fiscal.     

In the Board of Trade meeting, that had representatives from finance, external affairs, MSMEs, textiles and DIPP, Sharma expressed the need to enhance the export as declining export is hurting the country’s trade deficit. 'The trade deficit would become unmanageable because it directly impacts the current account deficit, and both of them together put pressure on the valuation of our currency,' he added.

In the first 11-month of this fiscal, India’s exports declined by 4% to $265.95 billion, while, the country’s current account deficit touched an all time high of 4.6% of the GDP in the first half of this fiscal and is estimated to touch 5% this fiscal.

Further, the government is also looking at ways to increase exports through the FTP to bridge the growing deficits in the trade and the current account and bring the balance of payment under control. The commerce ministry is also examining a number of proposals from the industry that include extending direct cash incentives to exporters of a larger number of products to targeted markets. T

The annual FTP is expected to come in the first week of April. The government is also considering an export development fund with a likely corpus of about Rs 5,000 crore to Rs 10,000 to help the exporters in their marketing initiatives.

The CNX Nifty touched a high and a low of 5,718.40 and 5,624.40 respectively. 

The top gainers on the Nifty were, DLF up by 5.04%, NTPC up 2.05%, BPCL up 2.04%, ONGC up 1.74% and PowerGrid up by 1.71%.

On the flip side, the top losers of the index were, Bank of Baroda down by 2.18%, Hero MotoCotp down by 2.75%, L&T down by 2.57%, Tata Steel down by 2.52% and IDFC down by 2.34%.

The European markets were trading in red, France’s CAC 40 up by 1.64%, Germany’s DAX up by 1.35% and the United Kingdom’s FTSE 100 up by 0.83%.

Asian markets ended mostly higher on Monday after Cyprus and its international lenders reached on an outcome that will qualify the island for a bailout and avoid the collapse of its banking system. Japan’s Nikkei went home with green mark, as retailers extended the strong gains they had enjoyed in recent sessions. Hong Kong market closed higher supported by gains in index heavyweights.