Markets reeling under pressure amid continued selling

Following a weak opening and subsequent fall, Indian equity markets continued trading lower in the late morning session on Friday amid sustained selling pressure. The BSE Sensex was down around 229 points, while Nifty was down by 71 points. Investors sentiments were dampened after Reserve Bank of India Governor Duvvuri Subbarao’s comment that retail inflation is still high, and several upside risks to inflation remain. Meanwhile, country’s Gross domestic product (GDP), a measure of the country's total economic output, expanded at a 4.8% for the fourth quarter ended March 31, 2013, much in line with the expectation and better than the 4.5% growth in the previous three months, which now stands revised to 4.7%. In currency market, rupee continued to reel under pressure for the fourth consecutive day amid increasing dollar demand from importers. On the sectoral front, FMCG, bank, automobile, oil and realty stocks were mostly down with notable losses. Capital goods, power, metal and healthcare stocks were also trading weak, while only information technology stocks were trading in green.

On the global front, most Asian markets advanced with the Japanese Nikkei springing back from a 5.2% drop in the day's trade on May 30, boosted by gains on Wall Street after subdued US economic data hinted the Federal Reserve may not prune its massive global asset buys. Back home, the market breadth was favoring negative trend; there were 778 shares on the gaining side against 1,151 shares on the losing side, while 108 shares remain unchanged.

The BSE Sensex is currently trading at 19,986.30, down by 229.10 points or 1.13% after trading in a range of 20,191.29 and 19,917.57. There were 8 stocks advancing against 22 declines on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.38% and Small cap index was down by 0.47%.

The only gaining sectoral index on the BSE was, IT up by 0.46%, while FMCG down by 1.48%, Oil & Gas down by 1.28%, Bankex down by 1.24%, Auto down by 1.12%, and Realty down by 1.00% were the top losers on the BSE.

The top gainers on the Sensex were Sterlite Industries up by 1.43%, Infosys up by 1.02%, Gail India up by 1.01%, Tata Power up by 0.89% and Dr Reddys Lab up by 0.70%.

On the flip side, Hindalco Inds was down by 3.01%, Mahindra & Mahindra was down by 2.87%, ITC was down by 2.87%, HDFC Bank was down by 2.51% and RIL was down by 2.20% were the top losers on the Sensex.

Meanwhile, as per the World Gold Council (WGC), India’s gold import in April to June quarter of 2013 may increase by 200 percent y-o-y to around 300-400 tonnes, which would be almost half the imports of whole of 2012. As per WCG, purchasing behaviour has been extremely strong in India due to fall in yellow metal price in April and indicated sustained demand over 2013.

In April, the value of gold imports stood at $7.5 billion, more than double from a year earlier. While, in quantity terms, the actual imports were 100-120 tonnes, higher than the average monthly import level of 70-80 tonnes. Strong demand of gold has become a worried factor for Indian policymakers as the country is facing a record current account deficit (CAD), partly stoked by Indian consumers’ appetite for the yellow metal. The CAD widened to a record high of 6.7% in the third quarter of FY13. 

However, to curb the gold import, the government has taken several steps recently, including raising import duty. Further, the RBI too had put restrictions on banks on gold imports, which has led to forex outflow. It is expected that the government may further increase the import duty on gold, or limit the quantum of imports by state-run agencies.

The CNX Nifty is currently trading at 6,052.80 down by 71.25 points or 1.16% after trading in a range of 6,106.25 and 6,031.80. There were 10 stocks advancing against 38 declines on the index and two remain unchanged.

The top gainers of the Nifty were Sesa Goa up by 2.00%, Tata Power up by 1.28%, Infosys up by 1.21%, Gail up by 1.12% and HCL Tech up by 1.06%.

On the flip side, Hindalco down by 3.51%, M&M down by 2.91%, ITC down by 2.86%, HDFC Bank down by 2.67% and Reliance Industries down by 2.29% were the major losers on the index.

Most of the Asian equity indices were trading in green; KLSE Composite increased 0.09%, Nikkei 225 surged 1.89%, KOSPI Composite added 0.19%, Hang Seng up 0.04% and Taiwan Weighted was up by 0.14%

On the flip side, Shanghai Composite declined by 0.07%, Jakarta Composite declined 0.36% and Straits Times was down by 0.72%.