Benchmarks witness massacre on feeble global cues

Indian equity markets witnessed butchery on Thursday with both the major indices losing nearly two percent and closed near their lowest level in almost eight and a half weeks, breaching major crucial support levels 19,700 (Sensex) and 6,000 (Nifty) on feeble global cues. 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. However, counters which featured in the list of worst performers, include realty, capital goods and power.

Sluggish global cues remained the major reason behind the sell-off in domestic markets. European counters made a gap down opening as Italy reported disappointing economic data on Thursday, where retail sales fell by 0.3 per cent month-on-month in March. Asia Pacific indices too ended in red as sentiments got dented after Chinese May HSBC flash PMI data shrank for the first time in seven months, in addition to concerns that the US Federal Reserve may stop its bond buying program. Japanese stock market tumbled by over 7 per cent, as surging Japanese bond yields and a strengthening yen contributed to the moves. Meanwhile, trading in Japan’s Nikkei 225 Futures was halted in Osaka briefly.

Back home, selling in Metal space too dampened the sentiments with stocks like NMDC, Jindal Steel & Power, Hindalco Industries, Tata Steel, Sterlite Industries and Nalco ending in red after the preliminary HSBC China Manufacturing Purchasing Managers’ Index fell to 49.6 in May 2013. Some disappointment also came in from currency front where Indian Rupee depreciated to its lowest level in over eight and a half months to breach 56 per dollar level. Though, it recovered up to certain extent later on some suspected RBI intervention. Slight recovery was seen in noon trade 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 in last leg of trade after disappointing set of Q4 numbers from State Bank of India (SBI) dented the sentiments. The bank’s net profit contracted 18.54 percent at Rs 3,299.22 crore as compared to Rs 4,050.27 crore in Q4 FY12. However, total income of the bank has increased by 6.98 percent to Rs 36,330.87 crore in Q4 FY13 from Rs 33,959.54 crore in same quarter previous year. BHEL’s Q4 earning too upset the street, with the company’s net profit declining by 4.22 percent to Rs 3,237 crore from Rs 3,380 crore in same quarter last year, while its net sales were down by 2.15 percent to Rs 18,850 crore.

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 about three hundred and ninety points to finish below the psychological 19,700 mark. Moreover, broader markets too witnessed blood-bath and ended the session with a cut of about two percent.

The overall volumes stood above Rs 3.00 lakh crore, which remained on the higher side as compared to that on Wednesday. The market breadth remained in favor of declines as there were 592 shares on the gaining side against 1,737 shares on the losing side while 117 shares remain unchanged.

Finally, the BSE Sensex shaved off 387.91 points or 1.93% to settle at 19,674.33, while the CNX Nifty plunged by 127.45 points or 2.09% to end at 5,967.05.

The BSE Sensex touched a high and a low of 20,027.56 and 19,634.79, respectively. The BSE Mid cap index down by 1.99% and Small cap index was down by 2.20%.

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

There was no gainer on the BSE Sectoral space, while Realty down 5.95%, Capital Goods down 5.19%, Power down 3.96%, Bankex down 2.84% and PSU down 2.68% were the top losers on the sectoral space.

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.

The CNX Nifty touched a high and a low of 6,081.45 and 5,955.70 respectively. 

The top gainers on the Nifty were Tata Motors up 0.84%, Sun Pharma up 0.46%, HDFC up 0.24%, Cipla up 0.17% and UltraTech Cement up 0.02%.

On the other hand, top losers on Nifty were, Reliance Infra down 9.96%, JP Associates down 8.24%, SBI down 8.10%, DLF down 7.26% and Ranbaxy down by 6.97%.

The European markets were trading in red, France’s CAC 40 down by 2.20%, the United Kingdom’s FTSE 100 down by 1.88% and Germany’s DAX down by 2.52%.

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.