Equity markets nose-dive to day’s low on aggressive selling pressure

Indian equity markets have nose-dived to-day’s low in absence of any positive catalyst and amidst continued selling by funds and retail investors on hawkish comments from the Reserve Bank of India governor Raghuram Rajan that inflation continued to remain high. Markets after getting a fine start, have turned weak as sentiments got dampened after global credit rating agency Moody’s has said that uncomfortably high inflation coupled with supply constraints is impacting India’s growth that has slowed to 4.4 percent in the April-June quarter this year. Sentiments also remained down-beat after the RBI’s governor Raghuram Rajan has questioned central banks across the globe, whether current ultra-low interest rates are the right way to return to growth after the financial crisis, sending jitters back home. Now trading at day’s low, Sensex and Nifty are trading below the psychological 19,800 and 5,850 levels respectively, with loss of over half a percent. On the global front, shrugging off positive Asian counterparts, European stocks have got off to a negative start, with ongoing U.S. budget and debt negotiations keeping indexes in a tight trading range.

Closer home, Oil & Gas, Information Technology and Health Care counters are the top performing sectoral indices, while those from Banking, Metal and Realty counters  are witnessing maximum brunt of profit-booking. Bank stocks declined after Reserve Bank of India (RBI) governor Raghuram Rajan said on Thursday, September 26, 2013, that the RBI is still worried about high inflation, even when taking out volatile food prices. The overall market breadth on BSE is in the favour of advances which have thumped declines in the ratio of 1066:956; while 130 shares remained unchanged.

The BSE Sensex is currently trading at 19787.82, down by 106.03 points or 0.53% after trading in a range of 19,981.57 and 19781.24. There were only 7 stocks advancing against 23 declines on the index.

The broader indices too pared down its gains; the BSE Mid cap and Small cap indices were trading up by 0.25% and 0.59% respectively.

The gaining sectoral indices on the BSE were Oil and Gas up by 0.71 %, IT up by 0.46%, Health Care up by 0.36%, Auto up by 0.27% and TECK up by 0.19%. While Bankex down by 1.62%, Metal down by 0.83%, Realty down by 0.64%, FMCG down by 0.37% and Power down by 0.27% were the losing indices on BSE.

The top gainers on the Sensex were HeroMoto Corp up by 2.32%, Sun Pharma up by 1.52%, TCS up by 0.56%, Bajaj Auto up by 0.48% and Reliance Industries up by 0.46%. On the flip side, ICICI Bank down by 2.98%, BHEL down by 2.59%, Tata Steel down by 2.20%, Bharti Airtel down by 1.97% and HUL down by 1.89% were the top losers on the Sensex.

Meanwhile, in a move to develop the country’s infrastructure sector, the National Highways Authority of India (NHAI) has set an expenditure target of Rs 11,885 crore for the current fiscal, which also includes flagship road building scheme programme National Highways Development Project (NHDP). The NHAI has to implement various road projects of about 50,000 kms, entailing a total expenditure of about Rs 2 lakh crore, half of which has already been spent for the preparation and widening of about 21,000 km roads.

On the other hand, NHDP, setting up to rehabilitate, upgrade and widen major highways in India to international standards has set a target to build 34,108 km roads in four phases. So far, NHDP has completed widening of 7,501 km road projects while work is in progress on 11,459 km. At present, government is concerned over the slow progress of projects under NHDP and had recently suggested the road ministry to take measures for expediting projects to attract private investment.

Referring to North-South & East-West Corridors road project, NHAI said that 611 km of the project is under construction and only 372 km has been left for award of work, while the major chunk of 6,159 km has already been completed. The total length of the NS-EW network is 7,142 km as North-South (NS) Corridor connects Srinagar with Kanyakumari, while the East-West (EW) corridor connects Porbandar with Silchar. Earlier, the NS-EW project was scheduled to be completed in 2009 but was delayed due to various hurdles like land acquisition and environment clearances.

Infrastructure development is today recognised as essential to sustain India’s economic growth. Within infrastructure segments, roads development is seen as one of the important initiatives to boost the country’s economy. Roads are the dominant mode of transportation in India today as they carry almost 90 percent of the country’s passenger traffic and 65 percent of its freight. Meanwhile, for the 12th Five Year Plan (2012-17) the government has set the $1-trillion investment target for the infrastructure sector.

The CNX Nifty is currently trading at 5,849.05, down by 33.20 points or 0.58% after trading in a range of 5,909.20 and 5,846.40. There were 14 stocks advancing against 35 declines on the index, while 1 stock remained unchanged.

The top gainers of the Nifty were BPCL up by 8.15%, HCL Tech up by 2.40%, Hero Moto Corp up by 2.00%, Sun Pharma up by 1.51% and Ranbaxy up by 1.08%. On the flip side, ICICI Bank down by 3.02%, BHEL down by 2.72%, Tata Steel down by 2.37%, Bharti Airtel down by 2.02% and HUL down by 1.98% were the major losers on the index.

The Asian equity indices were trading in green; Straits Times up by 0.65%, Jakarta Composite up by 0.70%, Seoul Composite up by 0.22%, KLSE Composite up by 0.25%, Taiwan Weighted up by 0.56%, Hang Seng up by 0.77% and Shanghai Composite up by 0.29%. While, Nikki 225 down by 0.26% was the lone loser amongst Asian pack.

European markets have got off to a  negative start; with CAC 40 declining by 0.22%, DAX sliding by 0.02% and FTSE 100 trading lower by 0.17%.