Post Session: Quick Review

Wednesday’s trading session turned out to be mere extension of last session’s wreck, whereby benchmark equity indices yet again capitulated to selling pressure. However, the cuts were less brutal, given that local equity markets made modest recovery from four months low level scaled in early deals which took Nifty and Sensex staggering below the crucial 5,500 and 18,600 levels respectively. Initiation of bargain-buying activity at select counters led to partial recovery of the bourses, which in the final hours of trade even broke out in green; however the profit booking during the dying hours of trade erased all the good work of the bourses. By the end of trade, Sensex and Nifty, surrendering around quarter of a percent, settled below the 18,700 and 5,550 psychological levels respectively. However, broader indices showing a degree of outperformance ended with gains of over 3/4 of a percent on BSE.

Subdued trend of bourses in Asian markets mainly got replicated on local equity markets. The selloff was sparked after two Federal Reserve officials said the central bank could start to withdraw its $85 billion-a-month bond-buying program as early as September, reigniting debate over when the central bank will start to taper. Meanwhile, a negative start of European counterparts just added to the selling pressure.

Closer home, prevailing caution on account of Rupee’s depreciation to fresh lows, which fuelled expectation of announcement of more government measures in the coming week, also kept investors on the sidelines. Meanwhile, slew of disappointing earnings too added to the pessimistic milieu. While, Tata Motors lost 3% on reporting 23% decline in Q1FY14 consolidated net profit, Apollo Tyres plunged over 4% on reporting 24% rise in Q1FY14 net profit.

On the BSE sectoral front, Information Technology, Auto and Fast Moving Consumer Goods counters were among the worst performers, while those from Realty, Metal and Power counters were among the best buying bets. The market breadth on the BSE remained positive; advances and declining stocks were in a ratio of 1248: 1043, while 141 scrips remained unchanged. (Provisional)

The BSE Sensex lost 86.74 points or 0.46% to settle at 18646.30.The index touched a high and a low of 18811.46 and 18551.35 respectively. Among the 30-share Sensex pack, 14 stocks gained, while 16 stocks declined. (Provisional)

The BSE Mid cap and Small cap indices ended higher by 0.74% and 1.34% respectively. (Provisional)

On the BSE Sectoral front, Realty up by 4.72%, Metal up by 3.02%, Power up by 2.73%, Oil & Gas up by 2.56% and PSU up by 2.31% were the top gainers, while IT down by 1.63%, FMCG down by 1.52%, Teck down by 1.17%, Auto down by 1.01% and Capital Goods down by 0.44% were the top losers. (Provisional)

The top gainers on the Sensex were Tata Power up by 7.78%, Tata Steel up by 4.83%, SBI up by 4.30%, Sterlite Industries up by 4.20% and Jindal Steel up by 3.94%, while, HDFC down by 3.53%, TCS down by 2.86%, ITC down by 2.51%, Bajaj Auto down by 2.18% and Sun Pharma down by 2.11% were the top losers in the index. (Provisional)

Meanwhile, as part of an all-out effort to hold back the widening current account deficit (CAD), which has sent the rupee into a free fall and further weakened the economy, the Finance Ministry is set to announce a major package next week, comprising of a combination of import compression, long-term external commercial borrowing and foreign capital flow management.

Indian rupee’s further depreciation to fresh lows against dollar on Tuesday, confirmed that emergency measures introduced by the Reserve Bank of India last month to curb volatility had failed. This further built pressure on government to introduce new measures to steam its ongoing freefall.

Given that higher CAD is a direct outcome of export earnings falling short of the import bill leading to shortage of dollars, the customs duty on non-essential commodities such as electronic goods, cars and high-end bikes is likely to go up in order to discourage their import. Meanwhile, the government also expects to contain gold imports to the last year's level of 845 million tonnes to save a considerable amount of foreign exchange, which would help contain CAD.

Further, the finance ministry is also counting on the Reserve Bank of India (RBI) easing interest rates and pumping more liquidity into the system to revive the economy once the rupee stabilises and volatility in the currency market has ebbed.

India’s currency has depreciated around 13% of its value over the past four months, prompting the RBI to introduce a series of reforms in mid-July designed to drain liquidity from the economy, including measures to raise short-term lending rates for banks.

India VIX, a gauge for markets short term expectation of volatility lost 3.03 % at 22.04 from its previous close of 21.35 on Tuesday. (Provisional)

The CNX Nifty lost 29.25 points or 0.53% to settle at 5,513.00. The index touched high and low of 5,561.45 and 5,486.85 respectively. 25 stocks advanced against 25 declining on the index. (Provisional)

The top gainers on the Nifty were Tata Power up by 7.70%, DLF up by 6.79%, BPCL up by 6.12%, NMDC up by 5.43% and Ranbaxy up by 5.24%.

On the other hand, Lupin down by 7.26%, HCL Tech down by 4.67%, HDFC down by 3.46%, Sun Pharmaceuticals down by 3.01% and Asian Paints down by 2.82%.

The European markets were trading in red; France’s CAC 40 down by 0.24%, Germany’s DAX down by 0.76% and the United Kingdom’s FTSE 100 down by 0.97%.

All the Asian markets barring Straits Times concluded Wednesday’s trade in red. Japan’s Nikkei average tumbled 4%, suffering the biggest one-day percentage loss since mid-June as the dollar fell to a six-week low to the yen, while heavyweights were sold off ahead of Friday’s options settlement. The higher yen hit exporters, which have benefitted from a weaker currency. The Bank of Japan on Thursday will announce the outcome of its two-day policy review, and is widely expected to press on with its massive asset-buying program. China too had a choppy trade, led by property companies, while Hong Kong stocks slipped on concerns over China’s slowing economy ahead of Chinese trade data for July. On Friday, China will release consumer and producer price data. The Chinese property sector extended recent gains after official media stated that government may gradually lift restrictions on property developers raising capital in the market. The restrictions were set three years ago to cool home prices.

South Korean shares fell near to two and half week low as regional markets dropped on US stimulus uncertainty. South Korea’s broadest gauge of money supply growth eased in June to its slowest pace since mid-2011 as companies hoarded cash to cushion themselves from uncertain global conditions. The L-money supply measure, which includes all cash, all types of deposits at financial institutions and all money market instruments issued, grew 6.8% in June compared to a year ago, compared to a 7.3% growth in May. Separate data from the Bank of Korea showed bank lending to households inched up by 0.1 trillion won ($89.7 million) in July, compared to a 4.8 trillion won rise in borrowing through June.

Indonesia's Jakarta Composite is closed for a week till August 9 on account of Public Holiday ‘Id-ul-Fitr’.