Benchmarks remain in bear grip; tumbles eighth day in a row

Indian benchmarks seems to be trapped in bears grip with frontline gauges once again ending the session in the red, prolonging their southward journey for eighth straight session. Both the benchmark indices tumbled below their crucial 5,700 (Nifty) and 19,200 (Sensex) levels as selling pressure was witnessed in rate-sensitive shares after investors turned uncertain as to when the central bank will rollback its short-term rate hike aimed to curb rupee’s fall. Though, the domestic bourses made a gap-up opening as sentiments remained firm after Indian government further relaxed foreign direct investment norms in the retail sector to attract overseas investments with the Cabinet headed by Prime Minister Manmohan Singh diluting the mandatory 30 percent local sourcing norms for multi-brand retailers and permitted states to include cities with population less than 1 million for allowing multi-brand retailing.

However, after the initial one hour of trade markets started moving southward and never looked in recovery mood till end, as investors turned cautious on Reserve Bank of India (RBI) governor D Subbarao’s statement that maintaining a stable exchange rate is important for growth, last day the central bank has further tightened norms of hedging for foreign institutional investors. Sentiments got clobbered out of shape after the rupee fell on higher demand for the US currency from importers, even as RBI took more measures to curb the domestic unit’s fall. At the time of close of Indian equity markets, the partially convertible currency was trading at 61.05 per US dollar compared to yesterday’s close of 60.43.

Investors also shrugged off firm global cues with most of the European counters trading in green in early deals, ahead of the release of the key monthly US jobs report. Moreover, Asian markets rallied following a record-setting session on Wall Street overnight, triggered by some better than expected economic announcements. Meanwhile, Japanese Nikkei share average rose to a one-week high as weakening yen buoyed sentiment, lifting exporters like auto makers and electronics manufactures.

Back home, selling in public sector oil marketing companies too dampened the sentiments. Stocks of BPCL, HPCL and IOC tumbled as higher crude oil prices and weakness in rupee raised concerns about increased costs of importing oil. Meanwhile, Financial Tech extended the losses and dropped by over 20%. National Spot Exchange (NSEL), a group firm, suspended trading in all contracts except ‘e-series’ until further notice, shares of Financial Technologies (FT) and Multi-Commodity Exchange (MCX) on Thursday had tanked on the BSE and continued the same trend on Friday.

The NSE’s 50-share broadly followed index Nifty declined by around fifty points to end below the psychological 5,700 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex dropped over one hundred and fifty points to end below the psychological 19,200 mark.

Moreover, broader markets too struggled to get some traction during the trade and snapped the session in the red. The market breadth remained in favour of decliners, as there were 775 shares on the gaining side against 1,491 shares on the losing side, while 141 shares remained unchanged.

Finally, the BSE Sensex lost 153.17 points or 0.79% to settle at 19,164.02, while the CNX Nifty declined by 49.95 points or 0.87% to end at 5,677.90.

The BSE Sensex touched a high and a low of 19,451.70 and 19,078.72, respectively. The BSE Mid cap index was down by 0.40% and Small cap index was down by 1.32%.

The top gainers on the Sensex were, TCS up by 1.66%, Infosys up by 1.04%, Reliance up by 0.84%, Wipro up by 0.58% and Tata Motors up by 0.45%, while, Jindal Steel down by 7.29%, Coal India down by 5.84%, Tata Power down by 3.93%, Sterlite Industries down by 3.92% and Tata Steel down by 3.74% were the top losers in the index.

The top gainers on the BSE Sectoral space were, Consumer Durables up by 5.38%, IT up by 0.96%, TECk up by 0.55% and Oil & Gas up by 0.08%, while Realty down by 4.01%, Power down by 3.77%, Metal down by 3.65%, PSU down by 2.64% and Capital Goods down by 1.55% were the top losers on the sectoral space.

Meanwhile, Indian engineering exports fell by 7 percent in the April-June quarter in the current fiscal mainly due to the slowdown in the US and European Union markets. The chairman of Engineering Export Promotion Council (EEPC) Aman Chadha said that owing to the prevailing slowdown in the US and European countries, it has become imperative to search new markets for engineering exports. The US and Europe together account for around 60 per cent of the country’s total engineering exports. 

Disappointed over the Reserve Bank of India's decision of not undertaking rate cuts in its monetary policy, EEPC’s chairman said that we need to make Indian exports competitive in tough global markets where we face competition from aggressive exports from China and other emerging economies. Engineering goods exports which include exports of goods, transport equipment, capital goods, other machinery/equipment and light engineering products like castings, forgings and fasteners, constitute around one-fourth of the country's total merchandise shipments.

While, the government and the exporters are making renewed efforts to diversify and explore new markets, also trying to increase share of exports in Latin America's Pacific Alliance which holds good prospects for Indian engineering products. Recently, domestic exporters have found new markets in Africa and Latin America, but remained cautious due to reasons such as fear of payment default. Meanwhile, in order to boost the country’s export, the government, in the annual foreign trade policy, had announced a slew of measures include sops for Special Economic Zones (SEZs) and extension of the popular the Export Promotion Capital Goods (EPCG) scheme to all sectors to boost shipments.     

The CNX Nifty touched a high and low of 5,761.85 and 5,649.00 respectively. 

The top gainers on the Nifty were Ranbaxy up by 4.06%, Cairn up by 2.60%, ACC up by 2.29%, Ambuja Cement up by 2.21% and Lupin up by 2.08%. On the other hand, PowerGrid down by 11.52%, JP Associates down by 9.09%, Jindal Steel down by 8.08%, DLF down by 6.86% and Bank of Baroda down by 5.84% were the top losers.

The European markets were trading mixed; Germany’s DAX up by 0.07% and the United Kingdom’s FTSE 100 down by 0.10%, while France’s CAC 40 up by 0.15%.

All most all Asian markets concluded Friday’s trade in green; Shanghai Composite Index gained for a fourth straight day, as property developers advanced on signs of easing control on their refinancing. The home prices in China climbed for another month in July, extending strength for the 14th straight month. The average price of new houses in 100 Chinese cities rose 0.87% from June to 10,347 yuan ($1,688) per square meter. That compared with June’s growth of 0.77%. The country earlier had also reported a surprising rise in manufacturing and the government vowed to boost domestic demand to support economic growth.  The country’s consumer sentiment fell sharply last month to the lowest level in 18 months, as confidence in household finances and business conditions dropped. The overall monthly measure of China’s consumer confidence dropped to 87.8 in July from 97.3 in June, Market News International, a unit of Deutsche Boerse Group, stated in a report.

Hong Kong shares rose following upbeat US data and after official figures showed a rare increase in Chinese manufacturing activity in July. Indonesia’s economy grew at its slowest rate for almost three years in the second quarter, adding to concerns that one of Asia’s most vibrant economies is losing some of its steam. The statistics bureau announced that GDP growth in the April-June period was 5.81%, it’s lowest since the third quarter of 2010. The latest quarter was the fourth straight one in which the growth pace slipped. The government is targeting 6.3% this year, but the central bank last month trimmed its own forecast to 5.8-6.2% from 6.2-6.6%.

South Korean exports grew far less than expected last month and a measure of manufacturing activity dropped to the lowest in nearly a year, suggesting global demand has yet to turn to underwrite a firm recovery in Asia’s fourth-largest economy. Overseas shipments by the world’s seventh-largest exporter rose by 2.6% in July in annual terms, better than a 1% fall in June but far below the median forecast of 5% growth from a survey.