Post Session: Quick Review

Shrugging off positive global set-up, benchmark equity indices ended flat at the start of F&O expiry week. Benchmark came off substantially from day’s high level, scaled in the afternoon deals, to conclude flat for second consecutive session, largely weighed down by disappointing earnings from index heavyweight, L&T and Reliance Industries whose numbers were announced after the market hours on Friday. Additionally, release of disappointing Q1FY14 earnings from Asian Paints towards the end of the trade, also piled up pressure. In yet another pessimistic domestic development, DBS forecasted potential revival of sovereign downgrade risk to India on account of weak rupee, slow growth, deterioration in the current account, and the likelihood of fiscal worries. Thus, by the close of trade, benchmark indexes, Sensex and Nifty, keeping head little above water, ended just over the crucial 20,150 and 6,000 levels respectively. Meanwhile, listless broader indices settled on a mixed note, with Midcap index ending flat and Smallcap index witnessing a cut of over 0.25%.

On the global front, Asian pacific shares ended mostly higher on Monday, tracing gains of Nikkei, which rose after Japan's ruling party won a majority in parliament's upper house, while banks lagged in China after the local Central Bank removed a floor on lending rates. Additionally, bullish results from the likes of Philips and Julius Baer lifted European shares higher, however drag of telecom stocks limited the upmove.

Closer home, banking stocks, witnessing relief rally on Monday, followed by IT and Technology shares. On the flip side, stocks from Capital Goods, Oil & Gas and Power counters were the top laggards. Sharp decline of BHEL and L&T stocks dragged the entire pivotal lower.  Larsen & Toubro plunged over 7% in afternoon trade to hit its lowest level in last one month, soon after the engineering and construction major reported a 12.5% y-o-y drop in the net profit for the quarter ended June 30 to Rs 756.30 crore hit by job mix, lower margins and other income. While, Oil & Gas pivotal cracked under pressure of RIL stocks, which fell as much as 2% even after its earnings beat estimates late on Friday, as other income, mainly from treasury-related gains, accounted for 38 percent of pre-tax profit for the quarter. The market breadth on the BSE remained negative; advances and declining stocks were in a ratio of 1037: 1228, while 151 scrips remained unchanged. (Provisional)

The BSE Sensex gained 9.27 points or 0.05% to settle at 20159.12.The index touched a high and a low of 20264.90 and 20065.69 respectively. Among the 30-share Sensex pack, 19 stocks gained, while 11 stocks declined. (Provisional)

The BSE Mid cap index ended higher by 0.04%, while Small cap index ended lower by 0.32%. (Provisional)

On the BSE Sectoral front, Auto up by 1.06%, Bankex up by 0.98%, IT up by 0.73% and Teck up by 0.71% were the only gainers, while Capital Goods down by 5.57%, Oil & Gas down by 1.65%, Power down by 0.91%, PSU down by 0.62% and Realty down by 0.53% were the top losers. (Provisional)

The top gainers on the Sensex were HDFC up by 3.17%, Mahindra & Mahindra up by 2.63%, Sun Pharma up by 2.49%, Bharti Airtel up by 1.65% and ICICI Bank up by 1.64%, while, L&T down by 7.46%, BHEL down by 7.05%, Tata Steel down by 2.95%, ONGC down by 2.94% and Dr Reddys Lab down by 1.71% were the top losers in the index. (Provisional)

Meanwhile, on the grounds of potential threat to country’s security, the Home Ministry has strongly opposed any move to increase the FDI cap in the broadcasting and print media. Apprehending 'undue' influence by big global players, the Home Ministry strongly favours control of media houses by Indians, and is of the view that opening up of current affairs TV channels, newspapers and periodicals dealing with news and current affairs may lead to meddling in India’s domestic affairs and politics.

The Ministry also fears that increase of FDI in broadcasting and print media may also allow foreign players to launch propaganda campaign during any national crisis as well as when interests of any particular country is harmed through any government decision.

Further, it feels that big foreign media players with vested interests may try to fuel fire during internal or external disturbances and also can encourage political instability in the country through their publications or broadcasting outlets.

It was basically after Home Ministry's strong objections that a high-level meeting chaired by Prime Minister Manmohan Singh, on July 16, did not clear the Commerce Ministry's proposal for increasing FDI in broadcasting and print media to 49% through automatic route. Currently, the sectoral cap for FDI in FM radio, uplinking news and current affairs TV channels and in print media is 26 per cent and the Commerce Ministry has proposed to raise it to 49 per cent through the automatic route.

India VIX, a gauge for markets short term expectation of marginally lost 2.75 % at 17.63 from its previous close of 18.13 on Friday. (Provisional)

The CNX Nifty gained 1.45 points or 0.02% to settle at 6,030.65. The index touched high and low of 6,064.15 and 6,004.25 respectively. 24 stocks advanced against 26 declining ones on the index. (Provisional)

The top gainers on the Nifty were HDFC up by 3.42%, IndusInd Bank up by 2.84%, Sun Pharmaceuticals up by 2.72%, M&M up by 2.59% and Bank of Baroda up by 2.57%

On the other hand, L&T down by 7.60%, BHEL down by 6.97%, Ambuja Cements down by 4.49%, ONGC down by 3.31% and Tata Steel down by 3.24%.

Most of the European markets were trading in green; France’s CAC 40 up by 0.18%, and Germany’s DAX up by 0.01%, while the United Kingdom’s FTSE 100 down by 0.24%.

Asian markets concluded Monday’s trade mostly in green after China removed a floor on banks’ lending rates and Japan’s ruling government regained control of the parliament’s upper house, raising hopes for further reforms in both economies. China’s Shanghai though declined in the early deals but ended the trade in green. The banking sector witnessed hectic activity after China removed controls on lending rates. People’s Bank of China’s decision to abandon a floor on the rates bank could charge on their loans marked a structural reform, but one that wouldn’t significantly affect bank earnings nor provide help to the economy. Credit ratings agency Moody’s Investors Service stated that while the removal of the lending rate marked an important step in China’s financial reforms, removal of the lending rate floor was a credit negative for banks. Separately, the average new home cost rose to a 20-week high last week in Shanghai amid strong sales of luxury properties, while overall transaction volume registered a rather insignificant rebound during the same period. The average price of new residential properties, excluding government-subsidized affordable housing, climbed 2% to 25,566 yuan ($4,137) per square meter during the seven-day period ended on Sunday. Meanwhile, new home purchases rose 7.3% week-on-week to 164,300 square meters.

Japan’s Nikkei closed in green after the ruling Liberal Democratic Party’s coalition easily won a majority of the 121 seats contested in the upper house elections over the weekend. The victory gave Prime Minister Shinzo Abe’s LDP control over both houses, consolidating its political power. South Korean shares made the first rise in three sessions as both foreign and institutional investors bought shares. Indonesia’s Jakarta Composite concluded the trade in red. The country’s Finance Minister Chatib Basri stated that, inflation rate is poised to peak after rising quite substantially in June and July. Basri, who last month oversaw Indonesia’s first price increase for subsidized fuel in five years as Southeast Asia’s largest economy grapples to cut energy spending. Consumer prices rose 5.9% last month from the year earlier, the fastest pace since May 2011, based on the latest data from the Central Bureau of Statistics.

Meanwhile, global finance chiefs sought to buttress the global economic recovery with pledges to avoid spooking markets as China moved to scrap a lending rule that had constrained its banks. Group of 20 nations will pursue carefully calibrated and clearly communicated policy moves so that the US and Japan don’t cause cross-border damage when they start rolling back stimulus.