Indian benchmarks inch lower; recovery in second half minimizes damage

Pressurized by weak global cues, Indian equity benchmarks snapped the Wednesday's trade in the red terrain with both the gauges ending the session with a cut of about half a percent. The frontline indices traded choppy throughout the day and extended their southbound journey for second straight day, however the recovery in the second half minimized the extent of damage for the bourses. The psychological 5,750 (Nifty) and 19,000 (Sensex) levels proved as strong supports as the benchmarks rebounded after hitting intraday lows. Sentiments remain dampened from the beginning of the trade and extended its southward movement after government data showed lower-than-expected index of industrial production for April.

India’s annual industrial output growth measured by index of industrial production (IIP) grew by 2 per cent for the month of April 2013, lower than street’s expectation and previous month’s figure of 2.5 per cent. Moreover, higher-than-expected May consumer price inflation data also triggered selling. Declining for third straight month, annual rate of inflation, based on the consumer prices index (CPI), eased in the month of May at 9.31%, but remained higher than expectation of sub 9% figure. The General Indices for rural, urban and combined are 129.8, 128.4 and 129.2 respectively.

Global cues too remained sluggish as European markets opened lower as quantitative easing concerns surfaced again and ahead of the release of Eurozone-wide industrial production data. Asian markets ended the session mostly in red amid looming fear over scale-back of US Federal Reserve bond-buying plan. Meanwhile, Japanese Nikkei too ended in red as investors were rattled by the absence of fresh steps from the Bank of Japan to calm turbulence in the domestic bond market. 

Back home, sentiments also remain dampened as foreign institutional investors (FIIs) sold shares worth a net Rs 885.85 crore on June 11, 2013. Some pressure also came in from selling in Auto space after Society of Indian Automobile Manufacturers (SIAM) said that the car sales in India fell an annual 12.3% in May. Markets, however, pared almost all of their losses in noon deals as rupee added some respite after strengthening for the first time today during the last five trading sessions. The local currency was trading at 57.98 on the Interbank Foreign Exchange Market at the time of close of Indian equity markets. Yesterday it had closed at 58.39 after touching mark of almost Rs 59 per dollar prompting Reserve Bank of India (RBI) to intervene in the market. But, the recovery was not enough to bring markets back into the green and both the gauges ended the session with a cut of about half a percent.

The NSE’s 50-share broadly followed index Nifty slipped by about thirty points to hold the psychological 5,750 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex declined by over one hundred points to finish below the psychological 19,050 mark. Moreover, broader markets too struggled to get traction and ended the session in red with a cut off over half a percent.

The market breadth remained in favor of declines as there were 892 shares on the gaining side against 1,229 shares on the losing side while 852 shares remain unchanged. The overall volumes stood at over Rs 1.76 lakh crore, which remained on the higher side as compared to that on Tuesday.

Finally, the BSE Sensex lost 101.87 points or 0.53% to settle at 19,041.13, while the CNX Nifty declined by 28.60 points or 0.49% to end at 5,760.20.

The BSE Sensex touched a high and a low of 19,143.24 and 18,969.08, respectively. The BSE Mid cap index down by 0.60% and Small cap index was down by 0.56%.

The top gainers on the Sensex were, Jindal Steel up by 3.80%, Cipla up by 1.00%, Mahindra & Mahindra up 0.78%, Reliance up 0.65% and SBI up by 0.62%, while Tata Power down by 3.03%, Coal India down 2.69%, Tata Steel down 2.61%, Hero MotoCorp down 2.37% and Hindalco down by 2.27% were the top losers on the index. 

The top gainers on the BSE sectoral space were Health Care up 0.46%, Oil & Gas up 0.45% and Bankex up 0.01%, while Consumer Durables down 7.37%, Metal down 1.75%, IT down 1.45%, TECk down 1.17% and FMCG down 0.97% were the top losers on the sectoral space.

Meanwhile, in order to enhance FII inflow in Government’s debt, India is considering simplifying the allocations of government debt limits to foreign investors, including the current system of auctions. As the FII’s sell off has been a key reason behind the slump in the rupee to record lows this week, the government is likely to take measures to alter the foreign funds, which have sold over $3.2 billion in government debt for over 14 successive sessions. 

Government is expected to make the debt limits available on a first come, first serve basis for foreign investors, instead of the current system of selling them at monthly auctions. Further, to attract foreign investors into debt, the government has taken a slew of measures this year, including cutting taxes on interest income and raising the amount of debt they can buy. Meanwhile, India has already shifted to a first come first serve basis of selling corporate debt limits earlier this year.

The CNX Nifty touched a high and low of 5,792.90 and 5,738.60 respectively. 

The top gainers on the Nifty were Jindal Steel up by 3.47%, Indusind Bank up 2.96%, JP Associates up 2.53%, IDFC up 2.04% and Lupin up by 1.97%.

On the flip side, the top losers of the index were, Reliance Infra down 3.95%, Axis Bank down 3.28%, Coal India down 3.00%, Tata Power down 2.85% and Tata Steel down by 2.76%.

The European markets were trading in green, France’s CAC 40 up by 0.65%, Germany’s DAX up by 0.05% and the United Kingdom’s FTSE 100 up by 0.12%.

Asian stock markets ended mostly lower on Wednesday as the lack of new steps from the Bank of Japan to quell tumult in the domestic bond market extended losses. After spending most of the day deep in negative territory, Japan’s Nikkei stocks swung upward in the afternoon to end with only mild losses. Meanwhile, South Korea closed lower, after the nation’s factory production lagged estimates and retail inflation accelerated.

Markets in China, Hong Kong and Taiwan remain closed for the trade today.