Weakness persist in markets; Nifty below 5,700 level

Indian equity markets extended early losses in the late morning session on Thursday not reacting to the Finance Minister P Chidambaram’s speech on current economic environment and rupee depreciation. Initially when FM started his speech the Sensex recovered to some extent and even rupee recovered quite a bit, but was not able to move the market and rupee towards recovery. The BSE Sensex was down 227.77 points, while Nifty down 62.90 points. Increased selling by foreign funds also weighed on the markets. In currency market, rupee depreciated against greenback and extended losses following finance minister’s comment that, there is concern about the rupee and what is happening in India is not unusual for countries with large current account deficit. On the sectoral front, except the consumer durables and metal, all other sectoral indices were down in negative territory. Auto sector was the biggest loser with leading automobile stocks under severe selling pressure. FMCG, healthcare, information technology, PSU and oil stocks were also mostly trading notably lower. 

On the global front, Asian shares hovered near 2013 lows and Japanese stocks took another dive as the prospect of fewer stimuli from central banks depressed sentiment. While, Chinese market was trading lower, after 3-days of public holidays reacting to the recent disappointing inflation data. Back home, the market breadth was favoring negative trend; there were 526 shares on the gaining side against 1,350 shares on the losing side, while 110 shares remain unchanged.

The BSE Sensex is currently trading at 18,813.36, down by 227.77 points or 1.20% after trading in a range of 18,914.13 and 18,765.53. There were 5 stocks advancing against 25 declines on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 1.08% and Small cap index was down by 0.84%.

The top gaining sectoral indices on the BSE were, Consumer Durables up 1.76% and Metal up 0.21%, while Auto down by 2.35%, FMCG down by 1.62%, IT down by 1.45%, PSU down by 1.32% and Health Care down by 1.31% were the top losers on the BSE.

The top gainers on the Sensex were Hindalco Industries up by 4.71%, Bharti Airtel up by 2.61%, Tata Steel up by 1.11%, Dr Reddys Lab up by 0.31%, and SBI up by 0.25%.

On the flip side, Tata Motors was down by 3.87%, Sun Pharma was down by 3.38%, Maruti Suzuki was down by 2.72%, Wipro was down by 2.63% and ITC was down by 2.48% were the top losers on the Sensex.

Meanwhile, concerned over the decline in industrial production in April, India Inc pressed for rate cut by Reserve Bank of India (RBI) to boost output and revive economic growth, besides speedy clearance of projects. Country’s industrial production grew less than expected, at 2 percent in April on YoY basis. India’s economic growth fell to a decade low of 5 per cent in 2012-13 from 6.2 per cent recorded in 2011-12.  

FICCI President Naina Lal Kidwai said that the investment sentiments remain subdued in manufacturing and infrastructure and the RBI should intervene and cut interest rates to stimulate demand. ‘Unless we see speedy implementation of projects which are stuck due to inter-ministerial clearances, industrial growth is likely to remain moderate’ she added. Moreover, Industry body Assocham also demanded for special steps to boost economic growth citing that the stubborn nature of the slowdown can be helped only by some bold measures by government in terms of providing and enabling environment for investment.

Further, the Confederation of Indian Industry (CII) said that although the Index of Industrial Production (IIP) has shown some signs of improvement, the growth triggers which would pave the way for a sustained recovery have yet to become apparent. Thereby, CII is looking forward to an accommodative monetary policy announcement on June 17 to stimulate investments. Referring to the infrastructure development, industry body said there was an urgent need to kick start the investment cycle through speeding up clearances by the Cabinet Committee on Investment (CCI) and addressing supply-side bottlenecks in infrastructure.

Manufacturing sector, which constitutes over 75 per cent of the index, grew by marginal 2.8 per cent in April against a decline in the output by 1.8 per cent in the same month of previous year. Within the manufacturing sector, consumer durables segment registered one of its highest falls since 2009.

The CNX Nifty is currently trading at 5,697.30 down by 62.90 points or 1.09% after trading in a range of 5,729.85 and 5,683.10. There were 8 stocks advancing against 41 declines on the index and one remains unchanged.

The top gainers of the Nifty were Hindalco up by 4.93%, Bharti Airtel up by 2.92%, Tata Steel up by 1.30%, Axis Bank up by 0.60% and Dr Reddy’s up by 0.36%.

On the flip side, Tata Motors down by 3.95%, PNB down by 3.74%, Sun Pharmaceuticals down by 3.23%  Bank of Baroda down by 3.18%, and JP Associates down by 2.88% were the major losers on the index.

All the Asian equity indices were trading in red; Shanghai Composite slumped 3.41%, Hang Seng tumbled 2.71%, Jakarta Composite declined 1.70%, KLSE Composite dropped 1.07%, Nikkei 225 crumbled 6.35%, Straits Times decreased 1.53%, KOSPI Composite contracted 1.50% and Taiwan Weighted was down by 2.03%.