Benchmarks snap three days winning streak

Indian equity indices ended Tuesday’s session of trade on a very depressing note after plunging about a percentage point, snapping three days winning streak. The frontline gauges kept trying hard to recover and move higher but ruthless profit booking capped the pull back, despite this market managed to pare losses of over a percentage point by the end. Sentiments remained subdued from the beginning of the trade as the Reserve Bank of India (RBI) last night came out with a slew of measures, including hiking the lending rates for banks and sucking up Rs 12,000 crore to stem the rupee volatility. This also hurt the banking stocks badly, other rate sensitive counters such as realty and infra too ended with a deep cuts.

Sentiments also got clobbered after Asian Development Bank (ADB) for the second time this year, lowered its growth forecast for the South Asia’s largest economy to 5.8 percent from its April estimate of 6.0 percent, with growth still constrained by supply-side bottlenecks and sluggish progress in pushing through structural reforms. Some pressure also came in on report that foreign institutional investors (FIIs) sold shares worth a net Rs 227.26 crore on July 15, 2013.

Global cues remained mixed, European markets made a flat-to-positive start in the absence of any major trigger and CAC, DAX and FTSE were trading near their neutral line. Asian markets ended mixed as profit-taking weighed on prices after Monday’s gains fuelled by Chinese economic growth data that come in line with forecasts. However, the 7.5 per cent expansion in April-June still represented a second mixed straight quarter of slower growth, highlighting weakness in the world’s number two economy. Back home, nasty selling in Realty (5.84%) and Banking (4.83%) counters mainly dragged the markets lower as stocks like, Yes Bank, State Bank of India, ICICI Bank HDFC Bank, HDIL, Unitech, Godrej Properties, Sobha Developers etc. tumbled after the Reserve Bank of India announced measures to curb the rupee's decline by tightening liquidity. Gems and Jewellery stocks viz. Titan Industries, Gitanjali Gems and Shree Ganesh Jewellery too ended in the red after India’s gems and jewellery exports nosedived about 41% year-on-year to $2.3 billion in June, 2013 on account of shortage of yellow metal and limited inventory in domestic market. Stocks related to Tea and Coffee segment like Tata Coffee, Mcleod Russel and Terai Tea too ended lower after tea production in the country declined 2.17 percent to 101.18 million kg in May due to a fall in output in Assam.

Bucking the trend, telecom stocks like Idea Cellular, Bharti Airtel and Tata Teleservices (Maharashtra) edged higher on reports that Prime Minister Manmohan Singh will meet senior ministers to discuss raising foreign investment limit in a number of sectors, including telecom. Additionally, shares of public sector oil marketing companies (OMCs) viz. IOC, BPCL and HPCL extended their previous session’s gains triggered by a hike in petrol price.

The NSE’s 50-share broadly followed index Nifty declined by over seventy points to end below its psychological 6,000 support level, while Bombay Stock Exchange’s Sensitive Index - Sensex dropped by over one hundred and eighty points to end below its psychological 19,900 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 873 shares on the gaining side against 1,421 shares on the losing side while 138 shares remain unchanged.

Finally, the BSE Sensex shaved off 183.25 points or 0.91% to settle at 19,851.23, while the CNX Nifty plunged by 75.55 points or 1.25% to end at 5,955.25.

The BSE Sensex touched a high and a low of 19,890.63 and 19,649.58, respectively. The BSE Mid cap index was down by 1.45% and Small cap index was down by 0.79%.

The top gainers on the Sensex were, ITC up by 2.30%, Bharti Airtel up 2.08%, Hindustan Unilever up 1.55%, ONGC up 1.28% and NTPC up by 1.09%, while ICICI Bank down by 5.61%, SBI down 4.57%, HDFC down 3.88%, L&T down 3.42% and Jindal Steel down by 3.22% were the top losers on the index. 

The top gainers on the BSE sectoral space were, FMCG up 1.81%, Oil & Gas up 0.74% and TECk up 0.05%, while Realty down 5.84%, Bankex down 4.83%, Capital Goods down 2.23%, Metal down 1.90% and Consumer Durables down 1.13% were the top losers on the sectoral space.

Meanwhile, expressing hopes that Indian economy will pick up pace in coming quarters, Planning Commission Deputy Chairman Montek Singh Ahluwalia is expecting a better economic growth in current year, as compared to last year’s 5 percent growth. India’s growth rate declined to 5 percent, a decade low, in 2012-13 on account of global economic slowdown as well as domestic factors. Ahluwalia said that the nation is expected to see a normal growth process as euro zone will move towards positive growth by 2014.

By adding further he said the country is likely to grow, if not 8 percent then the best is at something about 7 percent, however, the 8 percent is also achievable as it is a long term projection. Though, there has been no change in official estimates of economic growth projection for 2013-14 so far, which was 6.5 percent factored by Finance Minister while presenting budget.The government in its efforts formed the Cabinet Committee of Investment (CCI) to tackle the domestic supply side problems which are impacting Indian economy. Earlier in April this year, Ahluwalia had said that India can grow by 6.5 percent in the current fiscal during which big projects are likely to get clearances from CCI and the decision to set up CCI would have a big impact on the economic growth in the current fiscal. He added that nation’s economy will begin to see the turnaround in coming two - three quarters as the government has taken a number of measures recently to revive investment, including the setting up of CCI.

The CNX Nifty touched a high and low of 5,966.05 and 5,910.95 respectively. 

The top gainers on the Nifty were ITC up 2.60%, BPCL up 2.11%, Ambuja Cement up 2.11%, Bharti Airtel up 1.89% and Hindustan Unilever up by 1.76%.

On the flip side, the top losers of the index were, DLF down 7.74%, IndusInd Bank down 7.56%, JP Associates down 7.42%, IDFC down 7.18% and Axis Bank down by 6.26%.

The European markets were trading in red, France’s CAC 40 down by 0.50%, the United Kingdom’s FTSE 100 down by 0.04% and Germany’s DAX down by 0.31%.

Asian markets concluded the Tuesday’s trade mostly in green despite Asian Development Bank (ADB) lowering its growth forecasts for developing Asia this year and the next, as a softer outlook for the world’s second-biggest economy China meant subdued economic activity elsewhere in the region. The bank lowered its growth forecast for developing Asia by 0.3% points to 6.3% in 2013 and 6.4% in 2014. It cut its growth estimates for China by 0.5% points to 7.7% and 7.5% this year and the next. The ADB expects Japan’s recovery to pick up speed as the effects of ‘Abenomics’ take root and improving corporate profits bolster household income and business environment. It forecast growth in Japan this year of 1.8%, against an April estimate of 1.2%. Japan’s Nikkei and Hang Seng concluded the trade on positive note.

China’s Shanghai Composite Index concluded the trade in green as investors remained focused on the action policy makers might take to prevent a further economic slowdown. China’s central bank Governor Zhou Xiaochuan stated that the country’s economic growth is facing relatively big downward pressures and that the country will increase financial incentives to support small firms. On the economy front, China’s job market remained generally stable in the first half of the year despite the economic downturn. China added 7.25 million jobs in the first half, an increase of 310,000 from the number seen during the same period last year, the minister of human resources and social security reported.

Jakarta Composite ended in green. Fitch Ratings stated that Bank Indonesia’s decision to raise its benchmark interest rate by 50 basis points to 6.5% last week will help maintain the country’s banking stability and slow lending amid weak economic growth this year. Singapore’s Straits Times ended the day on negative note, International rating agency, Moody’s, has revised its outlook on Singapore’s banking system from stable to negative, expressing concern with the debt level rising in the city state. Other agencies such as Fitch still have a rating of stable on the outlook for the banking system in Singapore.