Benchmarks witness massacre on feeble global cues

Monday turned out to be a disappointing session of trade for the Indian equity markets, as market participants booked all their gains garnered in previous session on account of feeble global cues. After a negative opening, the domestic bourses never looked in recovery mood and continued sliding till end, closing near the lowest point of the day with both the frontline gauges tumbling below their crucial 5,600 (Nifty) and 18,550 (Sensex) levels. Selling was both brutal and wide-based as none of the sectoral indices on BSE were spared. Counters, which featured in the list of worst performers, include realty, consumer durables, capital goods and public sector undertakings.

Some pressure also came in after data showed that foreign funds remained net sellers of Indian stocks on June 21, 2013. Foreign institutional investors (FIIs) sold shares worth a net Rs 1768.60 crore on the same day. Sentiments also remain dampened after shares of the companies engaged in gems and jewellery business remain under pressure on the bourses and ended lower by up to 20 percent, on concerns that the Reserve Bank of India and government initiative to curb gold imports may impact the sector’s growth.

Global markets remained turbulent after the Fed announcement last week that the economy looked in good enough shape for it to start rowing back on its $85-billion-a-month bond-buying scheme. Selling got intensified after European markets opened lower after Chinese markets dropped to new 2013 lows, as investors in Asia and Europe remain concerned about China's liquidity condition and the potential cutback in monetary stimulus by the US Federal Reserve later in 2013. Meanwhile, all the Asian markets shut shop in red led by the Chinese market amid cash crunch at the banks and after an investment banker lowered its 2013 growth estimates for the country, citing weaker economic indicators and tightening of financial conditions.

Back home, sentiments also got dented after Indian rupee weakened during the trade, hovering near a record low hit last week, as worries about China’s economic and financial stability hit global risk assets, while caution prevailed ahead of current account deficit data due this week. The rupee was trading at 59.81/82 to the dollar at the time of equity markets closing, compared to its close of 59.27/28 on Friday. Fall in metal counter too hurt the sentiments as a recent spike in Shanghai interbank interest rates fueled worries about the world’s second-largest economy. China is the world’s largest consumer of copper and aluminum. Additionally, shares of oil exploration firms declined as crude oil prices fell. Lower crude oil prices would result in lower realizations from crude sales for oil exploration firms.

The NSE’s 50-share broadly followed index Nifty lost about eighty points but managed to end below its psychological 5,600 support level, while Bombay Stock Exchange’s Sensitive Index - Sensex declined by over two hundred and thirty points to finish below its psychological 18,550 mark.

Moreover, the broader markets too butchered badly during the trade and ended the session with a cut of over two percentage points. The market breadth remained in favor of declines as there were 651 shares on the gaining side against 1,635 shares on the losing side while 114 shares remain unchanged.

Finally, the BSE Sensex shaved off 233.35 points or 1.24% to settle at 18,540.89, while the CNX Nifty plunged by 77.40 points or 1.37% to end at 5,590.25.

The BSE Sensex touched a high and a low of 18,714.06 and 18,467.16, respectively. The BSE Mid cap index down by 2.56% and Small cap index was down by 2.16%.

The top gainers on the Sensex were, Jindal Steel up by 1.44%, Hindalco up 0.64%, Tata Power up 0.61%, ICICI Bank up 0.60% and HDFC up by 0.46%, while Sterlite Industries down by 3.91%, Bharti Airtel down 3.23%, BHEL down 3.02%, ONGC down 2.97% and L&T down by 2.80% were the top losers on the index. 

The top losers on the BSE Sectoral space were, Realty down 4.79%, Consumer Durables down 3.38%, Capital Goods down 2.91%, PSU down 2.42% and FMCG down 2.10%, while there was no gainer on the sectoral space.

Meanwhile, constituted to liberalize the India's foreign direct investment (FDI) policy, the Arvind Mayaram committee has recommended nine sectors be categorised as those where Indian ownership and control will be mandatory. These sectors include FM radio, print media (news & current affairs), stock exchanges along with depositories and clearing corporation, power exchanges, petroleum & natural gas refining, insurance, defence production and private security agencies among others.

The committee has suggested keeping the FDI cap at 49 per cent in these nine sectors through the automatic route except for defence production and private security agencies to protect India's strategic interests in these sectors and will be subject to FIPB scrutiny. Further, it has also clarified that FDI will not include portfolio investments in insurance and petroleum & natural gas refining.

The proposal is currently needed to be vetted by the Foreign Investment Promotion Board (FIPB) and if accepted will lead to significant liberalization of some sectors, such as commodity exchanges, stock exchanges and insurance, in which FDI up to 49 per cent will be allowed. The panel has also suggested for 100 per cent foreign investment in those sectors where Indian control and ownership are not material. Presently, 100 per cent FDI is allowed under the automatic route in infrastructure, energy and manufacturing sectors.

Further, there are many sectors in India, which are still in their nascent stage and require financial security and the panel has also recommended many sectors including IP services in telecom, broadcasting carriage services, uplinking and down linking of non-news and current affairs and TV channels, printing among others for 100 per cent FDI under automatic route.  

The CNX Nifty touched a high and low of 5,640.00 and 5,566.25 respectively. 

The top gainers on the Nifty were Jindal Steel up 1.61%, Lupin up 1.14%, ACC up 0.79%, ICICI Bank up 0.64% and HDFC up by 0.51%.

On the flip side, the top losers of the index were, JP Associates down 11.45%, Ranbaxy down 6.99%, DLF down 6.14%, Kotak Bank down 4.50% and Asian Paints down by 3.68%.

The European markets were trading in red, France’s CAC 40 down by 1.91%, the United Kingdom’s FTSE 100 down by 1.71% and Germany’s DAX down by 1.15%.

Asian markets ended lower on Monday with Chinese shares dragging the bourses to a fresh low as investors, worried about Beijing’s economic and financial stability. The Shanghai financials sub-index was down 7.1 per cent, headed for its worst single day loss since November 2008. Japanese shares went home with red mark despite a sharp weakening of the yen and the ruling Liberal Democratic Party and its coalition making big gains in Tokyo's metropolitan assembly elections. South Korea's Kospi also closed lower extending losses for a fourth consecutive session.