Weak global cues pull markets lower for tenth time in last eleven sessions

Pressurized by feeble global cues, key domestic benchmarks once again ended the volatile day of trade in the red terrain extending their previous session’s losses. The benchmark got off to a flat but positive opening, shrugging the somber sentiments prevailing in Asian markets. However, the indices slipped and entered into the negative territory, even went on to test important psychological 18,550 (Sensex) and 5,500 (Nifty) levels. The key gauges got solid support around those intraday low levels as they convalesced from thereon. The indices tried hard to move back into the positive territory and even got there but only for a brief period as investors took the opportunity to cash in on the bounce back. The bourses finally extended the declining run for the tenth time in previous eleven sessions but finished way above the session’s lows.

The investors mainly resorted to the profit booking due to feeble global cues as sentiment across the globe remained dampened on uncertainty about when the Federal Reserve will start to reduce stimulus, keeping a leash on market bulls. Asian markets too ended mostly in the red with Japanese Nikkei tumbling near three percent to a one-week low, as exporters were hammered after the dollar fell to a six-week low against the yen. Moreover, weak opening in European counterparts too hurt the sentiments as investors remained on the sidelines ahead of Bank of England’s quarterly inflation report.

Back home, some revival was seen in the late hour of trade when the frontline counters paring all their intraday losses turned into the green terrain amid expectations that the government may soon announce measures to curb currency drop. Some respite also came in from report that foreign institutional investors (FII) bought Rs 2.13 billion worth of local shares on August 6, 2013, while domestic institutions were net sellers of Rs 3.24 billion of shares. However, the recovery proved short lived as local bourses once again dipped into the red, sentiments got clobbered out of shape as Indian rupee today depreciated by 27 paise to 61.04 against the US dollar at the time of closing of equity markets due to heavy demand for the US currency from importers.

Market mood remained subdued on the back of disappointing Q1 numbers from Tata Motors and NMDC. Tata Motors, on consolidated basis, posted a fall of 23.11% in its net profit at Rs 1,726.07 crore for Q1 FY14 as compared to Rs 2,244.91 crore for the same quarter in the previous year. While, NMDC reported 17.51% decline in its net profit at Rs 1572.19 crore for the quarter, as compared to Rs 1906 crore for the same quarter in the previous year.  Total income of the company has decreased marginally by 0.02% to Rs 3391.53 crore for the quarter under review as compared to Rs 3392.49 crore for the quarter ended June 30, 2012.

The NSE’s 50-share broadly followed index Nifty declined by over twenty points to end below the psychological 5,550 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex dropped around seventy points to end below the psychological 18,700 mark.

However, broader markets traded with traction today and snapped the day’s trade in the green with a gain of around a percentage point. The market breadth remained in favour of advances, as there were 1,249 shares on the gaining side against 1,042 shares on the losing side, while 141 shares remained unchanged.

Finally, the BSE Sensex lost 68.16 points or 0.36% to settle at 18,664.88, while the CNX Nifty declined by 23.15 points or 0.42% to end at 5,519.10.

The BSE Sensex touched a high and a low of 18,811.46 and 18,551.35, respectively. The BSE Mid cap index was up by 0.67% and Small cap index was up by 1.27%.

The top gainers on the Sensex were, Tata Power up by 7.85%, Sterlite Industries up by 5.04%, Tata Steel up by 4.58%, SBI up by 4.44% and Jindal Steel up by 4.30%, while, Tata Motors down by 2.96%, HDFC down by 2.95%, TCS down by 2.72%, Sun Pharma down by 2.56% and ITC down by 2.30% were the top losers in the index.

The top gainers on the BSE Sectoral space were, Realty up 5.04%, Metal up 3.31%, Power up 2.82%, Oil & Gas up 2.76% and PSU up 2.40%, while IT down by 1.60%, Auto down by 1.46%, FMCG down by 1.37%, TECk down by 1.16% and Capital Goods down by 0.48% were the top losers on the sectoral space.

Meanwhile, Chief Economic Advisor Raghuram G. Rajan said that there is no magic wand to pull the country instantly out of challenges being faced by the economy. Rajan said that the prevailing economic slowdown has posed many challenges to Indian economy and the government and the Reserve Bank of India (RBI) are working together to address these challenges.

After the announcement of his appointment as the new RBI governor, Rajan said that he was looking forward to work with the many dedicated employees of the RBI and expressed hope to deal with the existing economic slowdown. Raghuram Rajan will be the 23rd Governor of the Reserve Bank and will succeed Duvvuri Subbarao who will leave office on September 4.

Rajan will take new RBI governor position at a time when the domestic economy is struggling with slowdown. All the macro-economic indicators have deteriorated with current account deficit (CAD) widened to a record high of 4.8 per cent of GDP in the previous fiscal and also rupee value depreciated to a record low of over 60 against the US dollar. Further, Indian economic growth also slowed down to decade low of 5 percent in the previous fiscal.

The CNX Nifty touched a high and low of 5,561.45 and 5,486.85 respectively. 

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 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 Pharma down by 3.01% and Asian Paints down by 2.82% were the top losers.

The European markets were trading in red; Germany’s DAX down by 0.39% and the United Kingdom’s FTSE 100 down by 0.77%, while France’s CAC 40 down by 0.05%.

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’.