Markets extend losing streak to seventh straight day

Thursday’s trading session was a big disappointing session of trade for the Indian stock markets as key equity benchmarks snapped the volatile session once again in the negative terrain, extending their losing streak to seventh day. Though, both the frontline gauges re-conquered their crucial 5,800 (Nifty) and 19,500 (Sensex) bastions in initial trade after Prime Minister Manmohan Singh stated that our strategy must not only aim at faster growth but must also ensure that the growth processes are more inclusive. He further stated that there is no reason to be disheartened over the decline in growth rate. But, market failed to sustain the positive momentum as sentiments took a hit after slowdown in factory activity deepened in July as order books shrank by the most in over four years. The HSBC Manufacturing Purchasing Managers’ Index (PMI), compiled by Markit, edged down to 50.1 in July from 50.3 in June.

Sentiments also got clobbered out of shape after growth rate of eight core industries slowed down to four-month low of 0.1 percent in June, as against 7.9% in the same month of previous year, mainly due to declining output of crude oil, coal, power and natural gas. The eight industries - crude oil, petroleum refinery products, natural gas, fertilisers, coal, electricity, cement and finished steel - have a weightage of 37.9% in the overall Index of Industrial Production (IIP). Rise in inflation for industrial workers too dampened the sentiments. The year-on-year inflation measured by monthly Consumer Price Index-Industrial Workers (CPI-IW) stood at 11.06 per cent for June, 2013 as compared to 10.68 per cent for the previous month and 10.05 per cent during the corresponding month of the previous year.

On the global front, most of the Asian equity indices rallied with Chinese markets surging over one and a half percent after the nation’s official manufacturing activity data came in better than expected, easing some concerns of a sharp slowdown in the world's second-largest economy. The country’s purchasing managers’ index (PMI) increased to 50.3 from June’s 50.1. A reading above 50 indicates expanding activity while a figure below that level points to a contraction. European markets too traded jubilantly with CAC, DAX and FTSE all edging higher in early deals after the US Federal Reserve kept its multibillion-dollar bond-buying program in place.

Back home, Financial Technologies hogged the limelight with the stock plunging 65% today. The stock was hammered after suspension of all contracts except ‘e-series’ by the National Spot Exchange, in which it has majority stake, raising concerns about liquidity crunch and settlement defaults at the exchange. Sentiments also remained down-beat after metal and mining stocks reversed intraday gains triggered by data showing that China’s official version of the manufacturing Purchasing Managers' Index (PMI) has unexpectedly risen in July. China is the world's largest consumer of copper and aluminum. However, the losses remained capped as some solace came in from report that foreign funds remained net buyers of Indian stocks on July 31, 2013. Foreign institutional investors (FIIs) bought shares worth a net Rs 142.87 crore on the same day.

The NSE’s 50-share broadly followed index Nifty declined by over ten points to end below the psychological 5,750 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex dropped around thirty points, but managed to hold the psychological 19,300 mark.

Moreover, broader markets were butchered badly and snapped the session with a cut of over one and a half percent. The market breadth remained in favour of decliners, as there were 784 shares on the gaining side against 1,431 shares on the losing side, while 140 shares remained unchanged.

Finally, the BSE Sensex lost 28.51 points or 0.15% to settle at 19,317.19, while the CNX Nifty declined by 14.15 points or 0.25% to end at 5,727.85.

The BSE Sensex touched a high and a low of 19,569.20 and 19,170.46, respectively. The BSE Mid cap index was down by 1.67% and Small cap index was down by 1.20%.

The top gainers on the Sensex were HDFC Bank up by 3.67%, Hindustan Unilever up by 3.37%, HDFC up by 2.18%, Gail India up by 1.14% and Jindal Steel up by 1.00%, while, BHEL down by 4.80%, Mahindra & Mahindra down by 4.42%, Coal India down by 3.94%, ONGC down by 3.64% and Hindlalco down by 3.00% were the top losers in the index.

The only gainer on the BSE Sectoral space was, Bankex up by 1.20%, while Realty down by 3.98%, PSU down by 2.76%, Oil & Gas down by 2.60%, Metal down by 1.84% and Auto down by 1.51% were the top losers on the sectoral space.

Meanwhile, retail inflation for industrial workers increased in June due to rise in prices of food items, cigarette, electricity charges, doctor's fee, medicines and petrol. The year-on-year inflation measured by monthly Consumer Price Index-Industrial Workers (CPI-IW) stood at 11.06 per cent for June, 2013 as compared to 10.68 per cent for the previous month and 10.05 per cent during the corresponding month of the previous year. For the period of May and June, the retail inflation for industrial workers increased by 1.32 per cent as compared to 0.97 per cent in the same period of previous year.

The largest upward pressure to the change in current index came from food group contributing 2.98 percentage points to the total change. Food inflation in June stood at 14.86 per cent against 13.24 per cent of the previous month and 10.45 per cent during the corresponding month of the previous year. However, the prices of wheat, groundnut oil and mustard oil decline in the month under review.

On city wise, Pune, Bhilai and Guntur centres recorded the highest increase of 8 points each in index followed by Jalpaiguri, Asansol, Mumbai, Bokaro, Siliguri, Kanpur (7 points each) and Warangal and Vijaywada (6 points each). On the contrary, a decline of 1 point each was recorded in Amritsar and Coimbatore centres. The indices of 39 centres are above All-India Index and other 38 centres’ indices are below the national average.

The CNX Nifty touched a high and low of 5,808.50 and 5,676.85 respectively. 

The top gainers on the Nifty were Axis Bank up by 5.62%, HDFC Bank up by 3.85%, HUL up by 3.19%, Kotak Bank up by 2.44% and PowerGrid up by 2.23%. On the other hand, JP Associates down by 9.82%, Bank of Baroda down by 8.61%, DLF down by 8.51%, Ranbaxy down by 8.29% and BPCL down by 6.19%.

Most of the European markets were trading in green; Germany’s DAX up by 1.17% and the United Kingdom’s FTSE 100 up by 0.31%, while France’s CAC 40 down by 0.40%.

All the Asian markets barring Taiwan Weighted, concluded Thursday’s trade in green. Chinese shares rallied after an official gauge signaled an improvement in the manufacturing sector, while Japanese Nikkei stocks were aided by a string of strong earnings reports, including from two of the nation’s largest banks. For a third month in a row, the Chinese government’s data on the country’s manufacturers differed with a privately-compiled survey on whether activity was growing or contracting. China’s official Purchasing Managers’ Index (PMI) registered a surprise gain for July, rising to 50.3 from 50.1 the previous month. Any reading above 50 indicates activity is expanding, and the result beat expectations for a drop to 49.8. However, a separate China manufacturing PMI published by HSBC and Markit stated that activity was contracting, with the index sinking to an 11-month low of 47.7, down from June’s final reading of 48.2. The data marked the third straight month the HSBC gauge registered contraction, and also the third month the two PMIs differed on whether factory activity was rising.

Indonesia’s Jakarta Composite too ended in green. Manufacturing output in Indonesia stagnated in July as input costs soared and export orders fell, HSBC Markit’s purchasing managers’ index survey showed. Overall manufacturing business conditions improved, but just a little, the survey concluded. Its July index for Indonesian manufacturing was 50.7, compared with the previous reading of 51.0. The survey added that manufacturing output stagnated after four months of expansion. Additionally, consumer prices rose 3.29% in July following the government’s increase in the price of subsidized fuel, the highest inflation level since 2008, which also followed a subsidy cut. Separately, the Central Bureau of Statistics (BPS) stated that Indonesia’s trade balance for June showed a $846.6 million-deficit, bringing the cumulative deficit figure for the first half of the year to $3.31 billion.

Taiwan’s gross domestic product (GDP) posted a 2.27% annual growth in the second quarter of this year, beating an earlier estimate of a 1.98% increase. The better-than-expected Q2 GDP growth reflected higher-than-anticipated exports and a mild recovery in private consumption, the Directorate General of Budget. Besides, Bank of America Merrill Lynch has maintained its forecast for Taiwan’s GDP growth in 2013 at 2.7%, despite better-than-expected economic growth in the second quarter.