Post Session: Quick Review

Indian equity markets after a day of consolidation capitulated on Thursday and lost some of their gains from recent rallies. There was cautiousness ahead of the industrial production and consumer price index data to be released later after the markets hours and traders preferred to remain on sidelines. Though, it was expected that IIP despite being in contraction mood will come better than last month’s figure of -2.2 per cent, while the index of consumer price inflation too was expected to come marginally lower in August as compared to 9.64 per cent registered in the month of July. However the markets drifted lower as the profit booking in the bluechip stocks continued for the second straight day.

The global cues were not very supportive with lingering concern about the US intervention in Syria despite the nation agreeing a Russian proposal to hand over its chemical weapons. The US markets ended mixed, while most of the Asian markets made a positive closing. However, the domestic market sentiments were weighed down by the weak start of the European bourses, though they recovered ahead of the euro-area production data.

Back home, the market mood remained somber since beginning, though the benchmarks started in green and flickered to their high points of the day in early trade, but soon profit booking started and took the markets lower, thereafter there was no serious recovery attempt and the markets kept on grinding lower. The traders looked concerned with credit rating agency Crisil trimming India's economic growth estimate to 4.8 percent for the current fiscal 2013-14 from its earlier estimate of 5.5 percent. Market sentiments were slightly impacted by the rupee depreciation too, which after surging for last couple of days showed sign of fatigue on increasing demand from importers. Even Reserve Bank of India Governor Raghuram Rajan’s statement was unable to soothe the sentiments, he said that India's slowing economy and its massive current account and fiscal deficits are not structural problems and can be fixed with modest reforms. The selling intensified in the last hour of trade and markets plunged to their lowest levels, as the broader markets too lost their traction and declined and at one point of time barring realty, all the sectoral gauges were in red though some recovery appeared in the dying hours and helped the benchmarks recoup some of their losses, still closing lower by about a percent for the day. 

The market breadth on the BSE remained negative; advances and declining stocks were in a ratio of 1176: 1179, while 148 scrips remained unchanged. (Provisional)

The BSE Sensex lost 211.82 points or 1.06% to settle at 19785.63.The index touched a high and a low of 20052.05 and 19676.49 respectively. Among the 30-share Sensex pack, 7 stocks gained, while 23 stocks declined. (Provisional) The BSE Mid cap index ended lower by 0.09% and Small cap index ended higher by 0.27%. (Provisional)

On the BSE Sectoral front, FMCG up by 0.54% and Realty up by 0.31% were the only gainers, while Metal down by 2.49%, Oil & Gas down by 2.00%, Auto down by 1.90%, Bankex down by 1.81% and PSU down by 1.70% were the top losers. (Provisional)

The top gainers on the Sensex were ITC up by 2.52%, Tata Power up by 2.48%, Gail India Bank up by 1.68%, HDFC up by 0.58% and NTPC up by 0.51%, while, Tata Steel down by 4.40%, Hero MotoCorp down by 3.90%, BHEL down by 3.85%, ONGC down by 3.65% and Maruti Suzuki down by 3.22% were the top losers in the index. (Provisional)

Meanwhile, concerned over the scarcity of gas for power plants and rising gas prices, the power ministry has moved a draft note to Cabinet Committee on Economic Affairs (CCEA) with a proposal of about Rs 11,000 crore payout to subsidise costlier power.The proposal is for averaging the price of cheaper domestic gas with costlier imported liquid gas or LNG to have a uniform rate for all gas-based electricity generation stations and the Power ministry has urged the CCEA to consider the approved pricing formula of natural gas.

Earlier, in June, the government had approved the pricing of all domestically produced gas at an average of international hub rates and cost of imported LNG. Such averaging pricing will raise the effective gas price to $11.43 per million British thermal unit (mmBtu) from $4.2 per mmBtu, leading to cost of electricity generation of Rs 10.47 per unit. The power ministry has argued that such a high cost of electricity cannot be absorbed by consumers and so the government should subsidise any cost over and above Rs 5.50 per unit.

India’s total installed power generation capacity is 225,793 MW, of which 18,714 MW or nearly 8 percent, is gas-based. At present, power plants in the country get just 17.25 million standard cubic metres per day of gas from domestic fields as against an allocation of 71.29 mmscmd on account of declining gas supplies from Reliance Industries' eastern offshore KG-D6 fields. However, in August, the Empowered Group of Ministers (EGoM) decided that any surplus natural gas left after meeting the needs of urea plants would be supplied to fuel-starved electricity generating stations.

India VIX, a gauge for markets short term expectation of marginally lost 0.13 % at 29.71 from its previous close of 29.67 on Wednesday. (Provisional)

The CNX Nifty lost 62.70 points or 1.06% to settle at 5,850.45. The index touched high and low of 5,932.00 and 5,815.80 respectively. 12 stocks advanced against 37 declining, while one stock remains unchanged on the index. (Provisional)

The top gainers on the Nifty were Tata Power up by 3.80%, IDFC up by 2.66%, ITC up by 2.32%, Gail up by 2.03% and Ranbaxy up by 1.18%.

On the other hand, JP Associate down by 11.98%, IndusInd Bank down by 5.65%, Tata Steel down by 4.48%, BHEL down by 4.12% and ONGC down by 3.98%.

The European markets were trading in red; France’s CAC 40 down by 0.39%, Germany’s DAX down by 0.25% and the United Kingdom’s FTSE 100 down by 0.39%.

Most of the Asian markets barring Nikkei 225 concluded Thursday’s trade in green. China’s stocks rose for a fifth day, the longest stretch of gains in a month, as banks and brokerages rallied on Premier Li Keqiang’s financial reform plans. Dismissing concerns of hard landing of China’s economy due to slowdown, Chinese Premier Li Keqiang reassured the world about the health of China’s economy saying the world’s second largest economy will reach the official target of 7.5% growth this year. Japan’s prime minister has decided to hike the nation’s sales tax next year, but will soften the blow with a $50-billion stimulus package aimed at protecting a budding economic recovery. Shinzo Abe, who has spearheaded a drive to turn around years of tepid growth, will press on with a plan to lift taxes to 8% from the current 5% in April.

Bank Indonesia raised interest rates by 25 basis points, defying market expectations and continuing a swift phase of hikes that has seen the central cost of borrowing increased four times in as many months. The rate now stands at 7.25%. South Korea’s central bank chief stated that the bank’s decision to keep the policy interest rate unchanged at 2.50% for a fourth straight month was made in a unanimous vote. The central bank last cut the benchmark rate by 25 basis points in May, and has left it unchanged since.