Benchmarks end lower on profit taking; Sensex tumbles below 19,300 level

Wednesday’s trading session turned out to be a disappointing one for the Indian equity markets, as investors booked profit after last session’s rally ahead of the start of official Q1FY14 earnings  season with Infosys’ releasing its Q1 numbers on Friday. Though, the frontline gauges opened in the green as some support came in from report that foreign institutional investors (FIIs) bought shares worth Rs 165.6 crore while domestic institutional investors too were net buyers worth Rs 37.83 crore on July 9, 2013. But, investors turned cautious tracking weakness in rupee, the Indian currency after recovering in last session on the SEBI and RBI’s measures to control its fall, once again depreciated in early deals, despite RBI’s further efforts to check the fall, asking each state-run oil company to buy dollars from a single bank. Sentiments also got dented after the International Monetary Fund (IMF) cut India’s growth outlook for 2013-14 to 5.6 percent from the 5.8 percent it projected in April.

Supportive cues from US markets provided the much needed support to local bourses initially. Investors’ morale got buttressed with Alcoa reporting a better than expected second quarter numbers. Moreover, most of the Asian counters too ended in the green on Wednesday. Chinese benchmarks surged over two percent, as sentiments remained upbeat on hopes that Beijing may ease policy to boost growth after feeble trade data earlier in the day.

However, weakness in European market took their toll on domestic sentiments in second half and dragged the frontline gauges below their psychological 5,850 (Nifty) and 19,300 (Sensex) levels. Investors mainly resorted to profit booking following the decline in European markets as the mood turned cautious ahead of the minutes of the Fed meet to be released later in the day and on comments from an ECB policymaker that the bank plans to keep interest rates low for more than a year.

Back home, selling in index heavyweight Reliance Industries (RIL) too weighed on sentiments after Finance Ministry in its latest gas pricing formula reportedly told Oil Ministry that RIL must deliver outstanding gas at old rate of $4.2 and that upside needs to be capped as it cannot allow unlimited gains to the companies. Selling in shares of public sector oil marketing companies like BPCL, HPCL and IOC too dampened the sentiments as Crude oil prices moved higher and the Nymex crude surged to its fourteen-month high, tracking gains in the global equity markets and fears of supply disruption through the Suez Canal, on the increasingly fluid situation in Egypt.

However, the losses remained capped as some support came in after Prime Minister Manmohan Singh, in a high-level committee meeting, stated that sustained growth in manufacturing was critical if the country had to grow at 8-9 per cent. In the meeting it was decided that more domestic manufacturing capabilities would be created. Moreover, sugar stocks gained further after the government, raised the import duty on sugar to 15 percent from 10 percent with immediate effect.

The NSE’s 50-share broadly followed index Nifty declined by over forty points to end below its psychological 5,850 support level, while Bombay Stock Exchange’s Sensitive Index - Sensex dropped by about one hundred and fifty points to end below its psychological 19,300 mark.

Moreover, the broader markets struggled to get traction and ended the session in the red. The market breadth remained in favor of declines as there were 1,145 shares on the gaining side against 1,170 shares on the losing side while 144 shares remain unchanged.

Finally, the BSE Sensex lost 145.36 points or 0.75% to settle at 19,294.12, while the CNX Nifty declined by 42.30 points or 0.72% to end at 5,816.70.

The BSE Sensex touched a high and a low of 19,505.93 and 19,237.91, respectively. The BSE Mid cap index was down by 0.40% and Small cap index was down by 0.04%.

The top gainers on the Sensex were, Wipro up by 1.33%, Tata Power up 0.88%, Jindal Steel up 0.74%, TCS up 0.60% and ICICI Bank up by 0.34%, while Mahindra & Mahindra down by 2.63%, Hindalco down 2.58%, Bajaj Auto down 2.13%, Tata Steel down 1.97% and Reliance down by 1.95% were the top losers on the index. 

The top gainers on the BSE Sectoral space were, Consumer Durables up 1.95%, IT up 0.66%, TECk up 0.27% and HealthCare up 0.11%, while Oil & Gas down 1.82%, Auto down 1.50%, Realty down 1.32%, PSU down 1.02% and Capital Goods down 0.98% were the top losers on the sectoral space.

Meanwhile, in a bid to enhance the share of manufacturing in the country’s GDP, Prime Minister Manmohan Singh has said that India needs to focus on the manufacturing over the next decade to achieve economy’s potential growth rate of 8-9 percent in the future. During the meeting of the high-level committee on manufacturing, Manmohan Singh said that the country’s economy is witnessing shift in its structure as agriculture sector, which continues to account for more than 50 percent of population, today represents less than 15 percent of GDP, therefore, there is a need to develop manufacturing sector, particularly labour-intensive manufacturing to pick up the economy’s growth.

Prime Minister further stated that there are certain manufacturing sectors which have done well over the last 20 years, like automobiles and pharmaceuticals among others, but, we did not leverage our strengths both in traditional industries and in emerging sectors and the country’s manufacturing production is at lower end of the value chain and hardly have any manufacturing capabilities in electronics and telecommunications sectors.

Manmohan Singh expressed the need to remove bottlenecks that hinder progress of manufacturing sector. Prime Minister will meet industry leaders on 29 July to discuss ways to enhance the Indian industry output. Though, the government has been taking all possible measures to boost the manufacturing growth and has already introduced a National Manufacturing Policy that seeks to take the share of manufacturing to 25% of GDP in the next 10 years from around 14% now. 

The CNX Nifty touched a high and low of 5,879.35 and 5,802.85 respectively. 

The top gainers on the Nifty were Lupin up 2.87%, HCL Tech up 2.28%, Ultra Tech Cement up 1.64%, NMDC up 1.26% and Tata Power up by 1.23%.

On the flip side, the top losers of the index were, Hindalco down 3.12%, BPCL down 3.07%, Bank of Baroda down 3.05%, M&M down 2.79% and Cairn down by 2.46%.

The European markets were trading in red, France’s CAC 40 down by 0.67%, the United Kingdom’s FTSE 100 down by 0.47% and Germany’s DAX down by 0.45%.

Most of the Asian equity indices ended the session in the green on Wednesday with Chinese benchmarks surging over half a percent, as sentiments remained up-beat on hopes that Beijing may ease policy to boost growth after feeble trade data earlier in the day. China’s exports fell 3.1 per cent in June from a year earlier, while imports dropped 0.7 percent, severely missing market expectations and reinforcing signs of a second-quarter economic slowdown in the world’s second-largest economy. Meanwhile, Hong Kong shares hit a three-week closing high on Wednesday. However, Japanese Nikkei ended the session in the negative terrain, reversing earlier gains ahead of a speech by US Federal Reserve chief Ben Bernanke, with investors waiting for clues to the future of the bank's stimulus programme.