Selling pressure gets arrested; mood remains downbeat at D-street

Benchmark equity indices continue to trade in red, although the selling pressure remains arrested, the overall mood at D-street continues to remain downbeat in absence of any positive catalyst. On the global front, shrugging aside positive Asian pacific shares, European markets have got off to negative start, with strong US economic data reigniting concerns that the Federal Reserve could scale back its accommodative monetary policy earlier than expected. US data showed on Tuesday home prices accelerated in March by the most in nearly seven years, while consumer confidence was the strongest in May in over five years.

Closer home, benchmark 30-share index, Sensex, on Bombay Stock Exchange (BSE), chopping more than 50 points, is currently trading above 20,100 mark, after momentarily piercing through the 20,200 level in early deals, which turned out to be stiff resistance level for the index. While, 50-share index, Nifty, on National Stock Exchange (NSE) too slashing over 25 points, is oscillating below the crucial 6,100 level. Broader indices, meanwhile, continue to trade on mixed note.

Hefty selling in Realty, Bankex and Power counters is mainly endorsing the underlying weakness of bourses seen after three sessions of uptrend. Nevertheless, stocks from Health Care, Fast Moving Consumer Goods and Auto counters are slogging to cut short bourses’ loss. Led by gains of Sun Pharmaceuticals Industries, Health Care counter has turned out to be the best performer of the session. Sun Pharma’s stocks surged to record high level after the company’s consolidated net profit rose 23% to Rs 1,012 billion for the January-March quarter and after management guided for robust sales growth in FY14. The overall market breadth on BSE is in favour of declines which are outnumbering advances in the ratio of 1106: 880; while 122 shares remain unchanged.

The BSE Sensex is currently trading at 20,103.89, down by 59.93 points or 0.28% after trading in a range of 20,216.49 and 20,062.89. There were 8 stocks advancing against 22 declines on the index.

The broader indices continued to trade mixed; the BSE Mid cap index was down by 0.09% and Small cap index was up by 0.05%.

The top gaining sectoral indices on the BSE were, Health Care up by 1.99%, FMCG up by 0.37%, Consumer Durables up by 0.23% and Auto up by 0.12% while, Realty down by 1.52%, Bankex down by 1.06%, Power down by 1.00%, Capital Goods down by 0.93%, and Metal down by 0.78% were the top losers on the BSE.

The top gainers on the Sensex were Sun Pharma up by 7.68%, Tata Motors up by 1.40%, Hero MotoCorp up by 0.87%, ONGC up by 0.69% and Coal India up by 0.48%. On the flip side, BHEL was down by 1.89%, HDFC was down by 1.81%, Jindal Steel was down by 1.44%, Sterlite Industries was down by 1.42% and Bharti Airtel  down by 1.34% were the top losers on the Sensex.

Meanwhile, as per the Centre for Asia Pacific Aviation (CAPA), an aviation think tank, Indian aviation industry's outlook for FY14 remains weak. In its India Aviation Outlook 2013-14, CAPA noted that in FY13, the domestic airlines industry have reported loss of $1.65 billion with more 40 per cent of the annual loss coming from operations in the last quarter (January-March) of previous fiscal year. Since 2007, the accumulated loss for the industry works out to around $9.5 billion as on March 31, 2013.  

Regarding the debt of the aviation industry, the CAPA report stated that the debt of the aviation industry has increased 8 to 9 per cent in 2012-13 to $14.5 billion with additional vendor-related liabilities of around $2 billion compared with an average cash position of just $500-$550 million. Air India holds just over 60 per cent of that debt.

CAPA further stated that average airlines fares increased by 15-20 per cent year-on-year in the last fiscal and aggressive discounting during the traditionally weak period between January and March resulted in loss of $700 million in the last quarter alone. Further, as per CAPA, the fare level in the current financial year will remain softer compared to the previous fiscal, but there would not be significant easing in airline costs as fuel, the largest input cost, is expected to remain high.  

Referring to the company wise outlook, the report stated that Air India, a major player of the industry, would report a loss of $750-$800 million in FY14. Air India's international operations account for a whopping 80 per cent of its loss. However, the report projects a prosper near-term outlook  for the country's four private airlines - SpiceJet, GoAir, Jet Airways, and IndiGo - which are expected to post a combined profit of over $300 million (Rs 1,620 crore) during the same period. Meanwhile, the overall industry result is expected to remain in the red dragged down by a projected $750-$800 million loss at Air India.   

The CNX Nifty is currently trading 6,086.40, down by 24.85 points or 0.41% after trading in a range of 6,125.05 and 6,077.35. There were 13 stocks advancing against 37 declines on the index.

The top gainers of the Nifty were Sun Pharmaceuticals up by 7.60%, Lupin up by 1.48%, Tata Motors up by 1.42%, PowerGrid up by 0.67% and Hero MotoCorp up by 0.63%. On the flip side, JP Associate down by 3.56%, BHEL down by 2.35%, IDFC down by 2.15%, Grasim down by 1.89% and Ranbaxy down by 1.87% were the major losers on the index.

Most of the Asian equity indices were trading in green; Shanghai Composite rose 0.18%, KLSE Composite strengthened 0.35%, Nikkei 225 surged 0.10%, KOSPI Composite jumped 0.75%, Jakarta Composite up 0.34% and Taiwan Weighted was up by 0.91%. On the flip side, Hang Seng declined 1.16% and Straits Times was down by 0.39%.

European markets got off to a negative start; with CAC 40 declining by 0.77%, DAX sliding by 0.68% and FTSE 100 losing 0.85%.