Benchmarks fail to negotiate positive close

Monday turned out to be a disappointing performance for the stock markets in India as the benchmark equity indices failed to extend its initial rally and settled the session in red at the end as traders resorted to profit booking after the index hit 31-month high level. The frontline equity indices traded on a sanguine note for most part of the day on rising optimism about global growth with frontline gauges, at one point of time, surpassing the psychological 20,400 (Sensex) and 6,200 (Nifty) levels. Strong fund flows remained the biggest driver of the initial rally. So far, foreign investors have invested around Rs 12,000 crore (about $2.2 billion) into the Indian equity market this month. With this, the total foreign investment in the country’s equity market has reached Rs 73,029 crore ($13.5 billion) since January.

Supportive cues from US markets provided the much needed support to local markets in first half. Investors’ morale got buttressed as Consumer sentiment in the month of May improved substantially, while the leading economic indicators rose better than expected. Firm closing in Asian markets too supported the sentiments. Meanwhile, European markets too opened slightly in green on Monday.

Back home, profit booking in the last leg of trade mainly played spoilsport for the Indian markets, dragging the frontline gauges below the psychological 6,200 (Nifty) and 20,300 (Sensex) levels. Major disappointment came in from selling in pharma space with stocks like Ranbaxy Laboratories, Lupin, GlaxoSmithkline Consumer Healthcare, Venus Remedies and Elder Pharma edging lower after the government’s notification on the new Drug Price Control Order (DPCO). The new order will bring 652 drugs under price control and will enable the National Pharmaceutical Pricing Policy 2012 to regulate prices of 348 drugs covered under the National List of Essential Medicines (NLEM) 2011. Realty stocks too edged lower on profit booking after recent gains triggered by expectations that the RBI may further cut policy rates to perk up economic growth after the latest data showed a sharp fall in wholesale price inflation in April 2013.

However, losses remain capped after Auto stocks rose on expectations that the RBI may further cut policy rates to perk up economic growth. Meanwhile, depreciation of Rupee past 55/$ psychological level mainly lifted software and information technology stocks.

The NSE’s 50-share broadly followed index Nifty lost by over thirty points to end below its psychological 6,200 support level, while Bombay Stock Exchange’s Sensitive Index - Sensex declined by over sixty points to finish below its psychological 20,250 mark. Moreover, the broader markets too traded in-line with benchmarks and snapped the session slightly in red.

The overall volumes stood at over Rs 1.80 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 1,120 shares on the gaining side against 1,304 shares on the losing side while 128 shares remain unchanged.

Finally, the BSE Sensex lost 62.14 points or 0.31% to settle at 20,223.98, while the CNX Nifty declined by 30.40 points or 0.49% to end at 6,156.90.

The BSE Sensex touched a high and a low of 20,443.62 and 20,186.66, respectively. The BSE Mid cap index down by 0.39% and Small cap index was down by 0.20%.

The top gainers on the Sensex were, Maruti Suzuki up 1.90%, Mahindra & Mahindra up 1.83%, Bajaj Auto up 1.70%, Tata Steel up 1.07% and Coal India up 1.06%, while Bharti Airtel down 2.42%, ONGC down 2.09%, Cipla down 1.71%, Wipro down 1.70% and ICICI Bank down 1.62% were the top losers on the index. 

The top gainers on the BSE Sectoral space were, Auto up 0.82%, IT up 0.61% and TECk up 0.15%, while Health Care down 1.79%, Consumer Durables down 1.19%, Bankex down 0.92%, Oil & Gas down 0.86% and Realty down 0.70% were the top losers on the sectoral space.

Meanwhile, following the Cobrapost expose that alleged money laundering by banks, the Reserve Bank of India (RBI) has proposed a review of all banking licences from the ‘fit and proper’ angle, which involves assessment of the promoters, management, CEOs, even for the existing banks. 

The issues raised by the Cobrapost sting operation include inter-connectedness among entities forming part of a banking conglomerate, with insurance, mutual funds and brokerage arms in its ambit. The central bank noted that the review is necessary to ensure that an arm’s length is maintained from these various operations, to avoid a systemic risk. However, by adding further it said, this is a judgmental call and the decision needs to be taken after due deliberations.

Moreover, the RBI also suggested for taking up the issue at the Financial Stability and Development Council (FSDC) or its sub-committee, so that it can be approached in a holistic manner, after getting feedback from other regulatory agencies.  Meanwhile, the RBI has completed the investigation into the working of banks and has revealed various discrepancies in banking operations, including non-compliance of KYC norms and fictitious PAN cards.

The CNX Nifty touched a high and a low of 6,229.45 and 6,146.05 respectively. 

The top gainers on the Nifty were Bajaj Auto up 2.24%, Maruti Suzuki up 1.94%, M&M up 1.39%, HCL Tech up 1.34% and Coal India up 1.18%.

On the other hand, top losers on Nifty were, Ranbaxy down 5.94%, Lupin down 4.38%, JP Associates down 2.55%, Bharti Airtel down 2.33% and ONGC down by 2.27%.

The European markets were trading in green, France’s CAC 40 up by 0.19%, the United Kingdom’s FTSE 100 up by 0.46% and Germany’s DAX up by 0.39%.

Asian stock markets ended mostly higher on Monday, following positive cues from Wall Street where upbeat US economic data and comments from a Federal Reserve official boosted investors sentiment. However, the South Korean stock market went home with red mark on geopolitical concerns. The Japanese stock market closed higher after touching a new five-and-a-half year high, on the back of a weaker yen. Meanwhile, Hong Kong market ended higher with property developers’ gains, which were among the leading gainers following the home prices data.