Benchmarks witness consolidation after two days rally

Indian equity indices, after garnering gains of over one and a half percent in previous two sessions, witnessed consolidation in a volatile trade on last trading day of the week. Though, both the gauges opened in the green terrain buoyed by firm cues from US markets coupled with positive first quarter results from Tata Consultancy Services (TCS), but failed to hold on to their gains and slipped into the negative terrain in late trade as profit booking picked up in realty, banks, power and capital goods. Sentiments also got hurt on report that foreign institutional investors (FIIs) sold shares worth a net Rs 178.30 crore on July 18, 2013.

Supportive cues from US markets provided the much needed support to local markets in early deals and investors’ morale got buttressed after the US initial jobless claim fell sharply in last week, index of regional manufacturing activity in Philadelphia unexpectedly jumped in July. However, disappointing cues from European market took their toll on domestic sentiments and dragged the frontline gauges near their intraday lows at the end. Investors mainly resorted to profit booking following the decline in European markets as traders remained on sideline awaiting the outcome of the G20 finance leaders meeting in Moscow. Asian markets too ended mostly in the red.

Back home, sentiments also remained dampened after international credit rating agency Moody’s warned that the rupee fall may constrain country’s sovereign credit rating, as it will exacerbate inflationary and fiscal pressures. However, RBI Governor D Subbarao said that the currency’s exchange rate will largely be market-determined but central bank would intervene to prevent disruptions to macro-economic stability. Prime Minister’s forecast of economy growing lower than 6.5 percent in FY14, too spooked investors’ sentiment. Meanwhile, there were concerns among the trader that the Reserve Bank of India (RBI) may not cut interest rates but instead hike cash reserve ratio, the portion of deposits banks kept with RBI.

Sentiments also got dented as marketmen offloaded holding in financial space on account of lower-than-expected Q1 earning from HDFC.  The stock of country’s biggest private mortgage lender tumbled after its net interest margin (NIM) declined to 3.9% in the quarter ended June 30, 2013 (Q1 FY2014) against 4.2% during March 31, 2013 quarter. On the flip side, stocks from software and technology counters remained on the buyers’ radar led by about five percent rally in TCS on reporting 15.46% surge in its net profit at Rs 3830.64 crore in Q1 as compared to Rs 3317.68 crore in a year ago period.  Total income has increased by 21.19% at Rs 18245.56 crore for quarter under review as compared to Rs 15054.97 crore for the same quarter in the previous year.

The NSE’s 50-share broadly followed index Nifty declined by just about ten points, but managed to hold its psychological 6,000 support level, while Bombay Stock Exchange’s Sensitive Index - Sensex rose by over twenty points to hold its psychological 20,100 mark.

The broader markets, however, struggled to get some traction and ended the session with a cut of over half a percent. The market breadth remained in favor of declines as there were 1,033 shares on the gaining side against 1,309 shares on the losing side while 145 shares remain unchanged.

Finally, the BSE Sensex gained 21.44 points or 0.11% to settle at 20,149.85, while the CNX Nifty lost by 8.85 points or 0.15% to end at 6,029.20.

The BSE Sensex touched a high and a low of 20,256.60 and 20,111.13, respectively. The BSE Mid cap index was down by 0.58% and Small cap index was down by 0.56%.

The top gainers on the Sensex were, TCS up by 4.92%, Bajaj Auto up 3.68%, Hero MotoCorp up 2.62%, Tata Motors up 2.52% and GAIL India up by 2.51%, while BHEL down by 8.02%, Sun Pharma down 3.35%, Sterlite Industries down 2.93%, Jindal Steel down 2.77% and ICICI Bank down by 2.64% were the top losers on the index. 

The top gainers on the BSE Sectoral space were, IT up 2.81%, TECk up 2.20%, Auto up 1.66% and Oil & Gas up 0.67%, while Capital Goods down 1.99%, Power down 1.87%, Bankex down 1.84%, Realty down 1.83% and Consumer Durables down 1.19% were the top losers on the sectoral space.

Meanwhile, Prime Minister Manmohan Singh, despite raising concerns over economic slowdown and volatility in foreign exchange markets, is hopeful that the government’s steps will show their impact soon. “The impact of initiatives taken by the government will be felt in the second half of the current fiscal,' Manmohan Singh said.

He also assured that his government will leave no stone unturned to ensure the recovery of the economy. Further, while underscoring that the basic fundamentals remain sound and healthy, PM said that the government is committed to bringing the situation under control.

Amidst rising concerns over the volatility in the Indian markets and the rupee, there have been many steps announced by the government in the past few days. The government in a bid to boost the sagging economy, decided to hike Foreign Direct Investment (FDI) in 13 sectors, including 100 per cent in telecom and higher caps in insurance and defence sectors.

Further, allaying the mounting fears that the Reserve Bank of India (RBI) may hike interest rates in its monetary policy review on July 30, Prime Minister stated that steps taken by the central bank to stabilise rupee do not signal a rise in rates.

The CNX Nifty touched a high and low of 6,066.85 and 6,020.25 respectively. 

The top gainers on the Nifty were TCS up 4.97%, Bajaj Auto up 3.97%, HCL Tech up 3.43%, GAIL up 2.73% and Hero MotoCorp up by 2.44%.

On the flip side, the top losers of the index were, BHEL down 9.02%, IndusInd Bank down 3.98%, Axis Bank down 3.88%, Sun Pharma down 3.70% and Ranbaxy down by 3.60%.

The European markets were trading in red, France’s CAC 40 down by 0.34%, the United Kingdom’s FTSE 100 down by 0.35% and Germany’s DAX down by 0.43%.

Asian markets concluded Friday’s trade mostly in red. Japanese Nikkei retreated after opening comfortably higher in morning, with a wave of selling ahead of weekend elections in the country, dragging on other regional markets. The volatility came ahead of the country’s upper house elections this weekend, in which the ruling Liberal Democratic Party (LDP) is expected to easily clinch a majority. The LDP already has a majority in the lower house of the parliament, and a majority in the upper chamber of the Diet would strengthen Prime Minister Shinzo Abe’s government in its attempt to revive the Japanese economy. China’s Shanghai Composite too concluded the trade in red.

South Korean shares experienced choppy trade as investors took to the sidelines ahead of the Upper House election in Japan on Sunday that was expected to strengthen the weak yen trend. The weak yen trend was feared to damage price competitiveness of South Korean exporters that are competing with Japanese rivals in overseas markets. Cautiousness also remained among investors over the second-quarter earnings season that will be start from next week. Besides, the central bank data showed that corporate bankruptcies in South Korea fell to a record low last month as local financial institutions eased lending attitude toward small businesses.

Indonesia’s Jakarta Composite concluded in green. The country’s central bank raised $600 million in its first currency swaps auction, well above its indicative target of $500 million. The swaps with tenure of one, three and six-months were oversubscribed with incoming bids worth $1.24 billion, Bank Indonesia reported. Hong Kong managed to close in green but utilities fell and developers slid amid concern more cities will take steps to cool the property market.