Benchmarks drift lower; negative European markets start to add pressure

In the highly choppy session of trade, benchmark equity indices have now drifted lower as traders settle their position on account of expiry of May derivatives contracts. Further, with weak global cues and prevailing caution ahead of January-March GDP figures, the trend is likely to be downbeat for the rest of the session at Dalal Street. At this point of time, benchmark 30-share index, Sensex, paring over 25 points, is trading below the psychological 20,150 level, while widely followed index, Nifty, slashing close to 10 points, has drifted further lower from its crucial 6,100 level. Meanwhile, broader indices too continue to reel under pressure.

On the global front, Japanese equities have led a tumble in Asian shares as the dollar slipped to fresh lows against the yen on Thursday and as investors worry over the possibility of the US Federal Reserve's winding back its massive stimulus program. Meanwhile, European shares too have opened lower on uncertainty over when the US Federal Reserve will wind down its stimulus programme. Closer home, stocks from Realty, Oil & Gas and Consumer Durable counters are the weakest link of trade, while only stocks from Auto and Fast Moving Consumer Goods space are managing to show resilience. The overall market breadth on BSE is in favour of declines, which are outnumbering advances in the ratio of 1229:823; while 138 shares remain unchanged.

The BSE Sensex is currently trading at 20,120.44, down by 27.20 points or 0.14% after trading in a range of 20,156.02 and 20,066.14. There were 10 stocks advancing against 20 declines on the index.

The broader indices too continued to reel under pressure; the BSE Mid cap and Small cap index was down by 0.29% and 0.34% respectively.

The top gaining sectoral indices on the BSE were Auto up by 1.04%, FMCG up by 0.75%, while Realty down by 3.03%, Oil & Gas down by 1.18%, Consumer Durables down by 1.03%, TECK down by 0.59% and Metal down by 0.57% were the top losers on the BSE.

The top gainers on the Sensex were Tata Motors up by 2.98%, Mahindra & Mahindra up by 2.26%, ITC up by 1.45%, HDFC up by 1.31% and Sun Pharma up by 0.72%.

On the flip side, Cipla down by 3.62%, ICICI Bank down by 2.42%, Tata Steel down by 1.85%, Bharti Airtel down by 1.59% and RIL down by 1.56% were the top losers on the Sensex.

Meanwhile, India’s engineering exports has declined by 10 per cent to $4.5 billion in April from $5 billion recorded in the same month of previous fiscal year, owing to sluggish demand in western markets. In FY13, the engineering exports also declined by 3 per cent to $56.7 billion.

Engineering goods exports which include exports of goods, transport equipment, capital goods, other machinery/equipment and light engineering products like castings, forgings and fasteners, constitutes around one-fourth of the country's total merchandise shipments. The US and Europe together account for 60 per cent of the country’s total engineering exports.

Indian exporters are getting less number of orders as the demand is still weak in the US and European markets. The global economic crisis, sovereign debt crisis in Europe and the economic slowdown in developed economies are the major reasons contracting the engineering goods exports.  Although, the domestic exporters have found new markets in Africa and Latin America, but they are cautious due to reasons such as fear of payment default.

Concerned over the declining export, the export council feels that the government needs to take urgent steps to boost exports from the sector in the coming years. In the annual foreign trade policy, the government had announced a slew of measures to boost the country’s export. These measures include sops for Special Economic Zones (SEZs) and extension of the popular EPCG scheme to all sectors to boost shipments.

The CNX Nifty is currently trading at 6,093.35, down by 10.95 points or 0.18% after trading in a range of 6,103.40 and 6,072.15. There were 19 stocks advancing against 31 declines on the index.

The top gainers of the Nifty were Tata Motors up by 3.03%, M&M up by 2.23%, PNB up by 1.59%, NMDC up by 1.50% and ITC up by 1.47%.

On the flip side, JP Associate down by 3.83%, Cipla down by 3.71%, DLF down by 3.44%, ICICI Bank down by 2.36% and Reliance Infra down by 2.27% were the major losers on the index.

Most of the Asian equity indices were trading in red; Shanghai Composite dipped 0.23%, Hang Seng declined 0.48%, Jakarta Composite tumbled 1.23%, KLSE Composite contracted 0.41%, Nikkei 225 crumbled 5.15%, Straits Times dropped 1.42%, KOSPI Composite was up by 0.05% and Taiwan Weighted was down by 1.13%.

European markets got off to a negative start; with CAC 40 declining 0.03%, DAX losing 1.70% and FTSE 100 plunging by 1.99%.