Post Session: Quick Review

All hopes of some recovery in the Indian markets after three consecutive sessions of decline were dashed on Thursday, with the meltdown in global equity markets. The mood remained somber since morning, while the selling picked up pace from the very first hour after there was a massacre in Japanese and Hang Seng markets. Nikkei witnessed biggest loss in last two years, closing lower by huge over seven percent. Hong Kong markets too ended lower by over two and half a percent after Chinese manufacturing output unexpectedly contracted for the first time in seven months.

Meanwhile, the domestic markets lost their crucial levels with Nifty slipping below 6000 mark and Sensex 19800, both losing close to two percent for the day. The tone of weakness in the local markets was set by the overnight decline in the US markets, which plunged on sign that Federal Reserve may start tapering its asset purchase program soon, after Chairman Ben Bernanke told Congress that US central bank could slow down its asset purchase program in the next few months. Later the fall widened with the slump in Japanese market after a surge in Japanese government bond yields, forced the Bank of Japan to offer 2 trillion yen in funds to calm investor nerves. The gap down opening of the European markets further added pressure to the domestic markets.

The global risk-off sentiments remained the major reason of plunge in the domestic markets, but there were few local issues too that impacted the mood of the traders. Rupee that had slipped to its six months low in last session breached the 56/$ mark in early trade, however it recovered later on some suspected RBI intervention, but continued trading near the six months low. Not only this, there were some major let downs from the earnings front, when the largest PSU bank SBI, disappointed the street by posting its first quarterly net profit drop in two years. The bank posted net profit of Rs 3,299 crore in the March quarter, 15.5 percent lower compared with Rs 4,050 crore in the same period a year ago, while its Net interest income (NII), fell 4.4 per cent to Rs.11,080 crore. Another earnings disappointment came with BHEL, whose Q4 profit declined by 4.22 percent to Rs 3237 crore from Rs 3380 crore in same quarter last year, while its net sales were down by 2.15 percent to Rs 18850 crore. There was slight recovery or halt in selling after Finance Minister P Chidambaram said that the Fed statement on the possible scaling back of the bond buying programme has been “misunderstood”. But the selling intensified towards the end of the trade with realty, capital goods suffering cut of around 5 percent and power near to 4 percent. All the 13 sectoral indices on the BSE snapped the session with considerable losses, IT sector too was unable to escape the wrath despite rupee plunging to its eight months low and witnessed cut of over half a percent.

The market breadth on the BSE ended negative; advances and declining stocks were in a ratio of 593: 1736, while 117 scrips remained unchanged. (Provisional)

The BSE Sensex lost 371.86 points or 1.85% to settle at 19,690.38.The index touched a high and a low of 20,027.56 and 19,634.79 respectively. Among the 30-share Sensex pack, 2 stocks gained, while rest of 28 declined (Provisional)

The BSE Mid cap and Small cap indices ended lower by 1.89% and 2.10% respectively. (Provisional)

On the BSE Sectoral front, Realty down by 5.84%, Capital Goods down by 4.87%, Power down by 3.56%, Bankex down by 2.71% and Oil & Gas down by 2.69%, were the top losers while there were no gainers in the space. (Provisional)

The top gainers on the Sensex were HDFC up by 0.53% and Sun Pharma up by 0.46%, while, SBI down by 7.96%, L&T down by 6.49%, Jindal Steel down by 4.05%, RIL down by 3.99% and NTPC down by 3.88% were the top losers in the index. (Provisional)

Meanwhile, the Cabinet Committee on Economic Affairs (CCEA) is likely to allow highway builders to fully exit the project or partially divest equity in the road project after approval from the stakeholders. After the CCEA’s authorization, the project would be constructed by the company which specializes in road building and can then be taken over by the one whose expertise is operation and maintenance.

The exit however, can only be allowed if there is another willing company to take up the project. Further, it may also allow exit of consortium member or sole bidder from contract who cannot be salvaged and also facilitate divestment of equity three-month post commercial operation date (CoD). Though, this can be done after getting approval from NHAI and consortium of lenders.

In other development in the road sector, CCEA is also expected to approve the four-laning of the Dimapur-Kohima highway in Nagaland estimated at Rs 2,000 crore. The project was delayed due to setback in land acquisition process in the state. Meanwhile, major highways projects in the country have been blocked for long due to various reasons including delays in environment clearances and financial challenges.

However, the government is doing all efforts to boost progress of construction of national highways in the country. Further, the Reserve Bank of India has given dispensation to treat the loan to the toll projects as secured loan.

India VIX, a gauge for markets short term expectation of volatility gained 5.69% at 18.73 from its previous close of 17.72 on Wednesday. (Provisional)

The CNX Nifty lost 121.25 points or 1.99% to settle at 5,973.25. The index touched high and low of 6,081.45 and 5,955.70 respectively. 6 stocks advanced against 44 declining on the index. (Provisional)

The top gainers on the Nifty were Tata Motors up by 0.84%, Sun Pharmaceuticals up by 0.46%, HDFC up by 0.24%, CIPLA up by 0.17% and UltraTech Cement was up by 0.02%. On the other hand, Reliance Infrastructure down by 9.96%, Jaiprakash Associates down by 8.24%, SBI down by 8.10%, DLF down by 7.26% and Ranbaxy Laboratories down by 6.97% were the top losers. (Provisional)

The European markets were trading in red with, France’s CAC 40 down by 2.31%, Germany’s DAX down by 2.82% and the United Kingdom’s FTSE 100 down by 1.98%.

Asian markets closed the shutter on a weak note on Thursday after hawkish comments by US Federal Reserve Chairman Ben Bernanke and weakness in China's factory activity. Japan’s Nikkei plummeted and went home with red mark after a spike in government bond yields. China's shares ended lower as HSBC's preliminary manufacturing purchasing managers’ index fell to 49.6 in May--a seven-month low--compared with the final reading of 50.4 in April. Hong Kong stocks ended in negative territory amid losses in banks and property stocks.