Post Session: Quick Review

It was a disappointing end to the disappointing week, wherein benchmark equity indices squandered the positive start and turned weak in absence of positive catalyst, which otherwise could have encouraged some buying activities at Dalal Street. The first session of fresh F&O series turned out to be quite volatile as every effort of recovery was reciprocated with profit-booking, which in turn led to dismal close of Indian equity markets on Friday. Hawkish comments from the Reserve Bank of India (RBI)’s governor Raghuram Rajan that inflation continued to remain high, also weighed. Sentiments got dampened after global credit rating agency Moody’s said that uncomfortably high inflation coupled with supply constraints was impacting India’s growth that has slowed to 4.4% in the April-June quarter this year. By the close of trade, both Sensex and Nifty, losing over 3/4 of a percent, settled below the psychological 19,800 and 5,850 levels respectively. For the week, both the barometer gauges suffered a sharp cut of over two and half a percent. Meanwhile, broader indices settled mixed, both for the session and the week.

In the global market, while on one hand, Asian shares ticked up on Friday after US jobless claims data pointed to an improving labour market, though the lack of progress in budget and debt negotiations in Washington kept investors on edge. On the other, European shares declined before a report on US consumer sentiment, amid concern that budget wrangling in Washington will lead to a government shutdown.

Closer home, cautiousness ahead of June-quarter current account deficit numbers due on Monday, with street expecting the gap to be higher than the March quarter's $18.1 billion, given the sharp rise in trade deficit and lower remittances during the period, also added to the negative. Meanwhile, intra-day reversal of Rupee, which paring all the morning gains turned weak, also weighed on the sentiment. Further,  with most of the sectoral indices trading in red, only stocks from Fast Moving Consumer Goods, Oil & Gas and Information Technology counters managed to stage resilience, while those from Banking, Metal and Realty counters bore the brunt of profit-booking. Additionally, sentiment towards the end of the trade also took a hit after Barclays lowered India's FY14 GDP forecast for the current fiscal to 4.7 per cent, saying the growth and fiscal health of the country are likely to remain under pressure, with 2014 election dynamics adding to uncertainties. The market breadth on the BSE ended in red; advances and declining stocks were in a ratio of 1150: 1214, while 136 scrips remained unchanged. (Provisional)

The BSE Sensex lost 183.70 points or 0.92% to settle at 19710.15.The index touched a high and a low of 19981.57 and 19674.38 respectively.  Among the 30-share Sensex, 6 stocks gained, while 24 stocks declined. (Provisional)

The BSE Mid cap index ended lower by 0.16% and Small cap index ended higher by 0.33%. (Provisional)

On the BSE Sectoral front, FMCG up by 0.39%, IT up by 0.16%, Health Care up by 0.02% and Oil & Gas up by 0.57%, were the top gainers, while Bankex down by 1.91%, Metal down by 1.90%, Capital Goods down by 1.62%, Realty down by 1.60% and Power down by 1.46% were the top losers in the space. (Provisional)

The top gainers on the Sensex were Sun Pharma up by 1.51%, Hero MotoCorp up by 1.50%,  Coal India up by 1.27%, Bajaj Auto up by 0.07% and TCS up by 0.06%, while, BHEL down by 5.32%, Tata Steel down by 4.17%, Sesa Goa down by 2.92%, Bharti Airtel down by 2.87% and SBI down by 2.79% were the top losers in the index. (Provisional)

Meanwhile, the government is likely to announce 10th round of auction of oil and gas blocks in January, 2014. Oil Minister M Veerappa Moily said that 10th round of auction will be a perfect one as hindrances faced in the previous rounds would be removed as country looks to attract foreign investors to boost domestic production. During the previous nine rounds, the government had awarded 254 blocks for exploration of oil and gas, which had received tepid response with global majors staying away.

In the 10th round of New Exploration Licensing Policy (NELP), Oil Ministry is looking at offering as many as 68 blocks or areas for exploration of oil and gas. Out of 68 blocks considered for offering in NELP-10, 25 blocks are deep water, 20 shallow water and 23 on land blocks. It will be the second highest offering of blocks since the advent of NELP in 1999 and will be free from obstructions facing exploration and production. At present, the Directorate General of Hydrocarbons (DGH) and the Oil Ministry are in process of getting various clearances for offering oil and gas blocks.

As per the government, 10th round of auction is likely to be held on new terms wherein a bidder shall be asked to quote the amount of oil or gas output it is willing to offer to the government from the first day of production. Presently, oil companies are allowed to share the profit with the government only after recovering the entire cost of exploration and production.

Meanwhile, oil ministry has formulated a roadmap for cutting India's dependence on imports to meet its oil needs. India currently imports around 79 percent of its oil needs and the Ministry wants this to be cut to 50 percent by 2020 and by 25 percent in 2025 through intensive exploration and exploitation of untapped reserves. Presently, only 0.93 million sq km area in India is held under exploration and production in 19 basins as compared to total estimated sedimentary area of 3.14 million square kilometres, comprising 26 sedimentary basins.

India VIX, a gauge for markets short term expectation of marginally gained 0.25% at 24.06 from its previous close of 24.00 on Thursday. (Provisional)

The CNX Nifty lost 54.30 points or 0.92% to settle at 5,827.95. The index touched high and low of 5,909.20 and 5,819.30 respectively. Out of the 50 stocks on the Nifty, 12 ended in the green, while 38 ended in the red.

The major gainers of the Nifty were BPCL up 6.03%, HCL Tech up by 2.40%, Sun Pharmaceuticals up by 1.62%, Coal India up by 1.20% and Hero MotoCorp up by 1.05%. The key losers were BHEL down by 5.61%, JP Associate down by 5.59%, Tata Steel down by 4.52%, DLF down by 2.99% and Kotak Bank down by 2.93%. (Provisional)

Most of the European markets were trading in red with, France’s CAC 40 down by 0.23%, the United Kingdom’s FTSE 100 down by 0.64% and Germany’s DAX down by 0.44%.

Most of the Asian markets barring Nikkei 225 concluded Friday’s trade in green. Asian currencies fell this week, led by Indonesia’s rupiah and Malaysia’s ringgit. Indonesia’s government will announce August trade data next week, after imports exceeded exports by an unprecedented $2.3 billion in July. Japan’s core consumer inflation in August hit its highest level in nearly five years, while prices of personal electronics rose for the first time since 1992 - signs Japan may be emerging from 15 years of nagging deflation. The Core consumer prices, which include oil products but exclude volatile prices of fresh food, rose 0.8% in August from a year earlier after a 0.7% increase in July, marking the third straight month of gains. Standard & Poor’s stated that Japan could face a debt downgrade if it does not shrink its budget deficit, which is unlikely to return to primary balance by a fiscal 2020 target even if Prime Minister Shinzo Abe’s policies go well.

The values of Hong Kong’s total goods exports and imports recorded year-on-year dip of 1.3% and 0.2% in August, the Census & Statistics Department stated. The value of total goods exports fell to $307.5 billion. Within this total, the value of re-exports decreased 1.2% to $302.6 billion, while that of domestic exports dropped 10.4% to $4.9 billion. Besides, mortgage loan approvals in August fell 8.5% month-on-month to $14.5 billion. Among the mortgage loans approved, those for primary market transactions rose 44.5% to $1.6 billion and those for secondary market transactions dropped 16.9% to $9.9 billion. The mortgage loans for refinancing increased 5% to $3 billion.