Benchmarks decline for the fifth consecutive day as RBI lowers GDP forecast

Extending their southward journey for fifth day in a row, key domestic benchmarks snapped the Monday’s trade near intraday low with both the frontline gauges tumbling below their crucial 5,800 (Nifty) and 19,400 (Sensex) levels. The selling was both brutal and wide based as, barring software counter, none of the sectoral indices on BSE were spared. Moreover, those counter which featured in the list of worst performers, included Realty, Oil and Gas and Power. Though, markets traded slightly above their neutral lines ahead of Reserve Bank of India’s (RBI) monetary policy review, but once the policy was announced, market entered into negative trajectory and continued sliding till end.

RBI left the policy interest rates unchanged in the monetary policy as its priority has switched from reviving an economy growing at its slowest in a decade to supporting a currency that plunged to a record low. Thus for the second time, Repo and Reverse Repo rate were left unchanged at 7.25% and 6.25% respectively. Further, Marginal Standing Facility (MSF) Rate, Bank Rate too have been retained at 10.25% each, while Cash Reserve Ratio (CRR) was held out at 4% of their net demand and time liabilities (NDTL). Meanwhile, downward revision of GDP growth by RBI in its ‘first quarter review of Monetary Policy 2013-14’ too dampened the sentiments. RBI lowered the GDP growth projection for the current fiscal to 5.5% from 5.7%.

Moreover, market-men shrugged off positive global leads with most of the Asian equity indices shutting shop in the green as sentiments remained up-beat after Chinese central bank injected funds into money markets via open market operations for the first time since February, easing fears of another cash crunch ahead of the month end after a severe cash squeeze in June caused market panic. European counters too opened mostly in the green ahead of the US Federal Reserve’s Federal Open Market Committee (FOMC) meeting, which begins later in the day.

Back home, depreciating rupee too weighed down sentiments, breaching Rs 60 per dollar level for the first time since July 15. The slide of Rupee battered stocks of public sector oil marketing companies as falling rupee raised concerns about increased costs of importing oil. Metal counter too witnessed a cut of around two percent after Sterlite Industries (India) extended recent losses triggered by the company reporting weak Q1 results, while Tata Steel and SAIL hit 52-week low.  Meanwhile, NTPC declined after the company reported a muted growth in bottom-line in Q1 June 2013.

The NSE’s 50-share broadly followed index Nifty declined by over seventy points to end below the psychological 5,800 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex tumbled by about two hundred and fifty points to finish below the psychological 19,400 mark.

Moreover, broader markets too witnessed selling and ended the session with a cut of about two percentage points. The market breadth remained in favor of decliners, as there were 705 shares on the gaining side against 1,563 shares on the losing side, while 142 shares remained unchanged.

Finally, the BSE Sensex shaved off 244.94 points or 1.25% to settle at 19,348.34, while the CNX Nifty plunged by 76.60 points or 1.31% to end at 5,755.05.

The BSE Sensex touched a high and a low of 19,672.72 and 19,328.54, respectively. The BSE Mid cap index was down by 1.96% and Small cap index was down by 1.98%.

The top gainers on the Sensex were, Wipro up by 2.75%, Jindal Steel up 1.45%, Infosys up 1.20%, L&T up 0.97% and Sun Pharma up by 0.92%, while ONGC down by 5.64%, Hindalco down 4.64%, Tata Motors down 3.94%, Bharti Airtel down 3.76% and Bajaj Auto down by 3.30% were the top losers on the index. 

The only gainer on the BSE Sectoral space was, IT up 0.91%, while Oil & Gas was down 3.89%, Realty down 3.60%, Power down 3.35%, PSU down 3.11% and Auto down 2.06% were the top losers on the BSE sectoral space.

Meanwhile, the Foreign Investment Promotion Board (FIPB) has cleared six proposals envisaging investments of Rs 855 crore in the pharmaceutical sector. The main proposal approved by FIPB, chaired by Department of Economic Affairs Secretary Arvind Mayaram include Singapore based healthcare firm Fresenius Kabi Oncology to bring in FDI worth Rs 349 crore and Calyx Chemicals & Pharmaceuticals to bring in foreign investment of Rs 200 crore.

India is one of the world's biggest markets for generic drugs and allows 100 percent FDI through automatic route in pharma for new projects and as for existing firms it must be approved by the FIPB. Last year, the government had decided that all foreign investments in existing domestic pharma firms should be allowed only after clearance by the FIPB, keeping in view the availability of affordable essential drugs in the wake of multinationals acquiring local companies.

Further, the government was of the view that pharma is a growing industry and there is a need to protect the domestic players from multinationals particularly generics so that Indian pharmaceutical industry continue to grow. There are too many pharma proposals pending with the FIPB as several global pharma companies are looking to buy stake in Indian firms. Meanwhile, the government is likely to soon revise the FDI policy with regard to existing pharma companies.

The CNX Nifty touched a high and low of 5,861.30 and 5,747.60 respectively. 

The top gainers on the Nifty were IDFC up 2.53%, Jindal Steel up 1.95%, HCL Tech up 1.58%, Sun Pharma up 1.36% and L&T up by 1.05%.

On the flip side, the top losers of the index were, BPCL down 8.90%, DLF down 7.09%, Reliance Infra down 7.09%, Ranbaxy down 6.44% and ONGC down by 5.91%.

The European markets were trading in green, France’s CAC 40 up by 0.23%, the United Kingdom’s FTSE 100 up by 0.19% and Germany’s DAX up by 0.17%.

All the Asian markets barring KLSE Composite, which was down by around a quarter percent, concluded Tuesday’s trade in green. Japanese and mainland Chinese stocks rebounded from a string of losses, with a weakened yen lifting exporters in Tokyo. Japan’s Nikkei concluded the trade in green, snapping a four-day losing streak that had pulled the benchmark to its lowest level in more than a month on Monday. Japan’s industrial production took an unexpectedly sharp drop in June, falling a seasonally adjusted 3.3% from May, though manufacturers offered an upbeat outlook for the current month, the Ministry of Economy, Trade and Industry reported. The decrease in output, swinging from a revised 1.9% gain in May, trailed expectations for a 1.7% drop. However, a survey of manufacturers raised their forecast for July’s industrial production to a rapid gain of 6.5%, up from 3.3% projected in last month’s survey. Besides, the consumer spending made a surprise downturn in June, though the unemployment rate eased in the same month. Spending by households of two or more people fell 0.4% on a price-adjusted basis compared to a year earlier, confounding expectations for a 1.2% gain.

Chinese shares closed higher after the central bank injected liquidity into the money market for the first time since February in order to quell credit crunch worries. The People’s Bank of China (PBOC), or the central bank, injected liquidity into money markets via open market operations to rid worries of another possible credit crunch at the end of July, as a reported credit crunch in late June pushed up interbank rates and affected the stock market. Indonesian inflation is probably accelerating to the fastest pace in more than four years this month as higher subsidized fuel prices push up the costs of food and other goods. OCBC Bank forecasts the consumer price index in Indonesia to rise 8.4 percent in July from a 5.9 percent gain in June. The Central Statistics Agency (BPS) will report July inflation data on Thursday.

According to the latest report of the United Nations Development Program (UNDP), the 7.8 percent growth in Philippines’ first quarter gross domestic product (GDP), the fastest in Asia, did not result in a more equitable development in the Philippines.