Weakness persists at D-Street; Nifty continues to languish below 6000 level

Weakness prevails at D-street as gloomy global set-up continues to push bulls to the sidelines, by discouraging investors from pouring their fund into risky asset class such as equities. Weak macro-data print on the domestic front, has also added to the investors’ angst. On the macro-front, shrinking for the first time in over four years, the seasonally adjusted HSBC Purchasing Managers’ Index, a composite indicator of operating conditions in the manufacturing economy slowed to 50.1 in May against its previous reading of 51.1 in April, registering its third monthly decline.

Meanwhile, on the global front, European markets too have got off to a negative start for a second day, extending a one-month low, amid concern the Federal Reserve will cut back its debt-buying program and as a gauge of Chinese manufacturing fell. While, Asian pacific shares continue to trade downbeat after factory activity data from China pointed to momentum slowing in the world's second-biggest oil consumer. The HSBC/Markit Purchasing Managers' Index (PMI) in China for May slipped to 49.2, the lowest level since October 2012 and down from April's final reading of 50.4.

Closer home, 30 and 50 share index, Sensex and Nifty trading with a cut of close to half a percent are languishing below the psychological 19,800 and 6,000 level respectively. On the BSE sectoral front, stocks from Oil & Gas, Power and Auto counters are the weakest pockets of trade, while some support seems to be coming from Technology, Information Technology and Metal counters. Rally of IT bellwether, Infosys as its founder Murthy's returns as chairman, has mainly spelled some optimism for entire pivotal, which has turned out to be the best performer of the session. The overall market breadth on BSE is in favour of declines, which have thumped advances in the ratio of 1094:896; while 129 shares remain unchanged.

The BSE Sensex is currently trading at 19,676.58, down by 83.72 points or 0.42% after trading in a range of 19,860.19 and 19,631.00. There were 13 stocks advancing against 17 declines on the index.

The broader indices added some ground; the BSE Mid cap and Small cap index were trading up by 0.38% and 0.10% respectively.

The top gaining sectoral indices on the BSE were, Teck up by 1.28%, IT up by 1.26%, Metal up 0.61%, Health Care up 0.56% and Realty up by 0.37%, while Oil & Gas down by 1.36%, Power down by 0.99%, Auto down by 0.81%, FMCG down by 0.74% and Capital Goods down by 0.73% were the top losers on the BSE.

The top gainers on the Sensex were Infosys up by 4.45%, Bharti Airtel up by 1.83%, Gail India up by 1.38%, Jindal Steel up by 1.30% and Dr Reddys Lab up by 1.21%. On the flip side, Bajaj Auto was down by 3.93%, Maruti Suzuki was down by 2.77%, Sun Pharma down by 2.69%, Hero MotoCorp down by 2.67%, and RIL was down by 1.81% were the top losers on the Sensex.

Meanwhile, satisfied over the declined fiscal deficit number for 2012-13, Finance Minister P Chidambaram said, the government will focus on raising revenues to bring down deficit to below 4.8 percent of GDP in the current financial year. However, the minister is not wishing to compress the expenditure and attributed the decline in fiscal deficit from revised estimate of 5.2 percent to about 4.9 percent of GDP, to the higher non-tax revenue and savings on expenditure side.

The government had budgeted revenue realization for FY13 fiscal at Rs 10.38 lakh crore in which direct tax collection was estimated at over Rs 5.65 lakh crore and around Rs 4.69 lakh crore came from indirect taxes. Meanwhile, government’s total expenditure was pegged at Rs 14.30 lakh crore. Further, non-tax revenues were higher by about Rs 8,000-10,000 crore besides savings on plan expenditure to the tune of Rs 6,000 crore, in previous fiscal.

Meanwhile, the government is committed to contain the fiscal deficit and in budget had proposed to lower fiscal deficit to 4.8 percent of GDP in FY14 and reduce it gradually to 3 percent by FY17. Earlier, the finance minister had said that fiscal deficit target is a red line that would never be breached and expressed confidence that the revenue target for 2013-14 financial year would be achieved as the GDP growth is likely to be over 6 percent.

 The CNX Nifty is currently trading at 5,961.50, down by 24.45 points or 0.41% after trading in a range of 6,011.00 and 5,941.90. There were 17 stocks advancing against 33 declines and one remains unchanged on the index.

The top gainers of the Nifty were Infosys up by 4.18%, Lupin up by 2.75%, Bank of Baroda up by 2.09%, Gail India up by 1.62% and JP Associates up by 1.60%.

On the flip side, Bajaj-Auto down by 3.82%, Hero MotoCorp down by 2.90%, Maruti Suzuki down by 2.51%, Sun Pharma down by 2.50% and Grasim down by 2.10% were the major losers on the index.

Most of the Asian equity indices were trading in red; Jakarta Composite declined 1.44%, Nikkei 225 tumbled 3.72%, Straits Times slipped 0.59%, Shanghai Composite slid 0.23%, KOSPI Composite decreased 0.57% and Taiwan Weighted was down by 0.65%. On the flip side, Hang Seng was trading flat with positive bias and KLSE Composite added 0.13%.

European markets got to a weak start; with CAC 40 declining by 1.29%, DAX plunging 1.25% and FTSE 100 plunging 2.01%