Benchmarks witness massacre on profit booking; Nifty slips below 6,000 mark

Indian markets witnessed butchery on Monday with both the major indices losing over two percentage points, a biggest fall since May 8, 2012, breaching crucial support levels, 19,700 (Sensex) and 6,000 (Nifty) on profit booking after a sharp gains last week. A gap-down start of markets never looked in recovery mood and continued sliding till end, closing near the lowest point of the day. Selling was both brutal and wide-based as none of the sectoral indices on BSE were spared. Meanwhile, counters which featured in the list of worst performers include fast moving consumer goods, capital goods and metal.

Market-participants remained anxious after Reserve Bank of India’s investigations report, which reportedly pointed out anomalies in banks related to the Cobrapost expose. Web portal, Cobrapost, in its string of exposures has alleged money laundering and other wrong doings by several public sector banks and financial institutions ranging from the country's largest bank SBI to the youngest lender Yes Bank. Traders also shrugged off better than expected CPI figures for the month of April, which came in single digit at 9.39% as against 10.39% seen in the previous month. The decline was despite the double digit growth of food inflation for consumers, which rose an annual 10.61% in April, nevertheless, slower than an annual rise of 12.42% in March.

Selling got intensified after India’s April trade deficit rose to $17.8 billion mainly on the back of surge in gold imports, thereby increasing concerns about the current account deficit in Asia's third largest economy. The country’s trade deficit has widened in the month of April to $17.8 billion, as compared to $14 billion, up by 27.1% year-on-year. While, exports were up by 1.6% at $24.16 billion and imports rose 10.9% to $41.95 billion year-on-year.

Global cues too remained choppy with European markets opening in red as investors awaiting a European finance ministers meet in Brussels, where issues such as a banking union and bailouts would be debated. Asian markets too ended lower in trades on Monday as sentiment was hit by selling pressure in commodities.

Back home, disappointment in the market also crept in with Bank of Baroda’s fourth quarter earnings. The stocks plunged over 2.5% after the net profit for the quarter ended March 31, 2013 declined by 32.23% at Rs 1028.85 crore for the quarter, as compared to Rs 1518.18 crore for the quarter ended March 31, 2012. Sentiments also remain dampened after an ASSOCHAM survey stated that owing to demand slowdown, the contribution of the manufacturing sector in the country's Gross Domestic Product (GDP) may fall below 15 percent in 2013-14.

The NSE’s 50-share broadly followed index Nifty declined by over one hundred and twenty points to end below the psychological 6,000 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex tumbled by over four hundred and thirty points to finish below the psychological 19,700 mark. Moreover, broader markets too witnessed blood-bath and ended the session with a cut of over a per cent.

The overall volumes stood above Rs 1.74 lakh crore, which remained on the higher side as compared to that on Friday. The market breadth remained in favor of declines as there were 808 shares on the gaining side against 1,542 shares on the losing side while 106 shares remain unchanged.

Finally, the BSE Sensex shaved off 430.65 points or 2.14% to settle at 19,691.67, while the CNX Nifty plunged by 126.80 points or 2.08% to end at 5,980.45.

The BSE Sensex touched a high and a low of 20,109.08 and 19,667.39, respectively. The BSE Mid cap index down by 1.45% and Small cap index was down by 1.17%.

There was no gainer on the Sensex, while ITC down by 5.31%, Tata Steel down 4.22%, Bharti Airtel down 4.14%, Tata Motors down 3.27% and L&T down by 2.96% were the top losers on the index. 

There was no gainer on the BSE Sectoral space, while FMCG down 3.17%, Capital Goods (CG) down 2.61%, Metal down 2.54%, Auto down 2.06% and TECk down 2.05% were the top losers on the sectoral space.

Meanwhile, India's April trade deficit rose to $17.8 billion on account of massive surge in imports of cheaper gold and silvers, which were up by 138% to $7.5 billion last month compared with a year earlier as retail consumers in the world’s biggest gold importer went on a buying spree after global prices fell.

Overall merchandise imports rose by 10.9% to $41.95 billion on y-o-y basis, driving the trade deficit up by more than 72% from March. On the other hand, India’s export increased by 1.6% from a year earlier to $24.16 billion, up for the fourth straight month. The increased import has also raised concerns over the current account deficit in Asia's third largest economy.      

The government is already concerned over the burgeoning trade deficit as it depreciates the home currency leading to increased rupee cost of import and adds to the subsidy burden. Increasing subsidy adversely affects India’s ability to achieve its fiscal targets and poses serious impediments to tackling inflation. However, the government is taking steps to check the rising import especially of gold like it has hiked the import duty to 6% from 4% on gold import. 

The CNX Nifty touched a high and a low of 6,104.95 and 5,972.90 respectively. 

There was no gainers on the Nifty, while ITC down 5.12%, Reliance Infra down 4.97%, Bharti Airtel down 4.27%, Tata Steel down 4.20% and Tata Motors down by 3.67%.

The European markets were trading in red, France’s CAC 40 down by 0.29%, the United Kingdom’s FTSE 100 down by 0.18% and Germany’s DAX down by 0.37%.

Asian markets ended mostly lower on Monday, as investors sentiment were hit by selling in commodities triggered by a strong dollar. However, Japanese market closed higher, on the back of weakening yen as it improves earnings prospects for exporters and underpins the export-reliant economy. Shanghai stocks went home with red mark, dragged by gold producers and financial firms. Hong Kong shares closed lower after suffering worst loss in almost a month as Ping An Insurance fell sharply after regulators slapped a three-month ban on its brokerage unit for helping list a fraudulent Chinese company.