Butchery continues at D-Street on gloomy global leads

The southbound journey of Indian benchmarks showed little signs of coming to a halt in the afternoon session brutally tormented by the gloomy global developments which have taken the center stage, prompting investors to take profits off the table. In the interim, European markets have got off to a cautious start tracking weak Asian cues and soft commodity prices as investors continue to worry about the outlook for the Federal Reserve's stimulus program and rising risks to China's economic growth as the nation faces its worst cash crunch in at least a decade. Additionally, sentiments also took a hit for the worst after European finance ministers failed to secure consensus on the banking resolution and recovery directive over the weekend after almost 20 hours of negotiations.

Closer home, benchmark 30 and 50 share indexes, Sensex and Nifty, witnessing a cut of over 3/4 of a percent, were trading below the psychological 18,600 and 5,600 levels respectively. Besides, sluggish global cues, concerns over Rupee again trading near record low have spooked markets. Amidst across the board selling pressure, stocks from Realty, Consumer Durables and Capital Goods are the worst hit of the session, so far. Additionally, the government’s efforts to curb the import of gold and some of the financial institutions’ decisions to curb lending against sale of gold and gold ETFs is having a negative impact on the shares of companies involved in gem and jewellery industry with two stocks falling to 52-week lows. While, PC jewelers has scaled new low by plunging 9%, Shree Ganesh Jewellery stocks are trading near their 52-week low of Rs 73. The overall market breadth on BSE is in favour of declines, which are outnumbering advances in the ratio of 1420:550; while 119 shares remain unchanged.

The BSE Sensex is currently trading at 18,622.47, down by 151.77 points or 0.81% after trading in a range of 18,714.06 and 18,582.55. There were 6 stocks advancing against 24 declines on the index.

The broader indices too slid further in red; the BSE Mid cap and Small cap indexes were trading with a sharp nick of 2.03% and 1.50% respectively.

While, there were no gainers on BSE, the top losing sectoral indices on the BSE were, Realty down by 4.15%, Consumer Durables down by 3.01%, Capital Goods down by 2.55%, PSU down by 2.00%, and Power down by 1.55%.

The top gainers on the Sensex were Sun Pharma up by 0.94%, Tata Power up by 0.49%, Hindalco Industries up by 0.32%, ITC up by 0.31% and Jindal Steel up by 0.20%.

On the flip side, Gail India down by 3.84%, BHEL down by 3.14%, L&T down by 2.87%, Bajaj Auto down by 2.64% and SBI down by 2.63% were the top losers on the Sensex.

Meanwhile, in an attempt to increase jewellery exports, the finance ministry hiked the duty drawback rate on gold jewellery by 72 percent to Rs 173.70 per gram of net gold content in jewellery from Rs 100.70 per gram earlier. Duty drawback is the reimbursement of customs duty and the recent step will also provide relief to the jewellers as they were protesting the government’s move to raise customs duty on gold imports to eight per cent.

Further, under the duty drawback scheme, the revenue department refunds the duty incidence such as excise, customs, and service tax on the imported inputs used in the manufacture of exported goods. Reacting to the drawback duty hike, the Federation of India Export Organisations (FIEO) president Rafeeque Ahmed said that recent move along with the recent rupee depreciation would add to the competitiveness of jewellery exports and expressed confidence that gems and jewellery exports will bounce back this year.

However, the government is concerned over the rising gold import, which touched 162 tonnes mark in May, while in April, it was around 100-120 tonnes, higher than the average monthly import level of 70-80 tonnes. High gold import has also become main reason for widening current account deficit (CAD), which broadened to a record high of 6.7 percent in the third quarter of FY13. 

The CNX Nifty is currently trading at 5,610.25, down by 57.40 points or 1.01% after trading in a range of 5,640.00 and 5,602.25. There were 7 stocks advancing against 42 declines on the index, while 1 stock remains unchanged.

The top gainers of the Nifty were Lupin up by 0.96%, Tata Power up by 0.80%, Sun Pharma up by 0.76%, Bank of Baroda up by 0.69% and ITC up by 0.47%.

On the flip side, JP Associate down by 8.76%, DLF down by 6.37%, Ranbaxy down by 6.00%, Kotak Bank down by 3.90% and GAIL down by 3.45% were the major losers on the index.

Most of the Asian equity indices were trading in red; Shanghai Composite tumbled 5.09%, Hang Seng declined 2.48%, Jakarta Composite slipped 1.35%, KLSE Composite dropped 0.77%, Nikkei 225 contracted 1.26%, Straits Times decreased 1.07%, KOSPI Composite dropped 1.31% and Taiwan Weighted was down by 0.45%.

European markets have got off to a cautious start; with CAC 40 trading lower by 0.02%, DAX sliding by 0.05% and FTSE 100 plunging 0.81%.