Benchmarks trade lower on profit booking

Indian equity markets, after a flat start, traded in the red with a cut of around a percentage in early morning deals, with Nifty tumbling below its crucial 5,500 mark as investors opted to cash out some of their profits garnered in previous three sessions of rally. Sentiments remained dampened after rupee got depreciated in early trade today. The partially convertible rupee was trading at 66.80 per dollar against the yesterday’s close of 66.02 against the dollar on the Interbank Foreign Exchange. Investors also remained sideline awaiting any fresh measures with Raghuram Rajan taking over the reins of Reserve Bank of India (RBI) as the new governor on September 5.

However, global cues remained supportive as risk-appetite remained on the positive side after robust China’s manufacturing data signalled hopes of growth recovery in world’s second-biggest economy. China’s economy strengthened after a two-quarter slowdown, with a manufacturing gauge rising to a 16-month high in August. Meanwhile, Japanese Nikkei surged over two and a half percent as yen weakened 0.1 per cent against the US dollar.

Back home, losses remained capped up to certain extent as some support came in from the core sector data that rose 3.1% in July, lower than the 4.5% expansion in July 2012 but much higher than the 0.1% growth in June. Core sector accounts for nearly 40% of the index of industrial production (IIP), and the better number will boost the expectation of recovery in industrial activity. On the sectoral front, auto witnessed the maximum gain in trade followed by public sector undertaking and metal, while banking, fast moving consumer goods and oil and gas remained the top losers on the BSE sectoral space. The broader indices too were struggling to get some traction, while the market breadth on the BSE was negative; there were 551 shares on the gaining side against 590 shares on the losing side while 60 shares remain unchanged.

The BSE Sensex opened at 19002.77; about 116 points higher compared to its previous closing of 18886.13, and has touched a high and a low of 19007.31 and 18684.47 respectively.

The index is currently trading at 18704.88, down by 181.25 points or 0.96%. There were 11 stocks advancing against 19 declines on the index.

The overall market breadth has made a weak start with 45.88% stocks advancing against 49.13% declines. The broader indices were trading mixed; the BSE Mid cap index down by 0.16% and Small cap index up by 0.14%. 

The top gaining sectoral indices on the BSE were, Auto up by 0.20%, PSU up by 0.13%, Metal up by 0.12% and Realty up by 0.03%, while Bankex down by 1.42%, FMCG down by 0.97%, Oil & Gas down by 0.93%, Health Care down by 0.82% and Power down by 0.40% were the top losers on the sectoral index.

The top gainers on the Sensex were Tata Motors up by 2.25%, Tata Motors up by 2.07%, ONGC up by 1.29%, Tata Steel up by 0.98% and Coal India up by 0.87%. On the flip side, HDFC was down by 3.44%, Hero MotoCorp was down by 3.17%, RILwas down by 2.02%, HDFC Bank was down by 1.58% and ICICI Bank was down by 1.54% were the top losers on the Sensex.

Meanwhile, the International Monetary Fund (IMF) said that India's large fiscal and current account deficits (CAD) have impacted market confidence. In the previous fiscal, India’s CAD widened to a record high of 4.8 percent of GDP, while, fiscal deficit stood at 4.89 percent of the country’s GDP.

IMF said that high and persistent inflation, sizable un-hedged corporate foreign borrowing and reliance on portfolio inflows are longstanding vulnerabilities that have now been elevated as global liquidity conditions tighten, and thus clearly affecting the investors’ confidence. Overseas investors have pulled out nearly $2.5 billion from the Indian capital markets in August. Meanwhile, in June, Foreign Institutional Investors (FIIs) had pulled out a record $ 7.5 billion from the Indian capital markets.

By adding further, IMF said that Indian economy is also battling with depreciating rupee, which has dropped over 23 percent since April and had recently touched a low of 68.80 to a dollar. The current economic situation of the country presents a challenge to the government, but also reflects an opportunity for it to continue with its policy efforts on a variety of fronts, it added. In the April to June quarter of current fiscal, the country’s economic growth slowed down to 4.4 percent, lowest in four years.

The CNX Nifty opened at 5,574.70; about 23 points higher as compared to its previous closing of 5,550.75, and has touched a high and a low of 5,580.95 and 5,482.30 respectively.

The index is currently trading at 5,489.55, down by 61.20 points or 1.10 %. There were 14 stocks advancing against 36 declines on the index.

The top gainers of the Nifty were Tata Motors up by 2.00%, BHEL up by 1.99%, ONGC up by 1.29%, DLF up by 0.91% and Coal India up by 0.76%. On the flip side, HDFC down by 3.74%, Hero MotoCorp down by 3.29%, IndusInd Bank down by 2.86%, Reliance Industries down by 2.40% and Asian Paints down by 2.15% were the major losers on the index.

Most of the Asian equity indices were trading in green; Shanghai Composite rose 10.48 points or 0.50% to 2,108.93, Hang Seng surged 234.97 points or 1.06% to 22,410.31, Jakarta Composite soared 61.16 points or 1.49% to 4,162.39, KLSE Composite strengthened 7.77 points or 0.45% to 1,725.33, Nikkei 225 zoomed 360.96 points or 2.66% to 13,933.88, Seoul Composite jumped 10.00 points or 0.52% to 1,934.81 and Taiwan Weighted was up by 45.46 points or 0.57% to 8,084.32.

On the flip side, Straits Times was down by 2.16 points or 0.07% to 3,053.56.