Weak trade persists; CAD data eyed

Indian equities trimmed losses but continued their weak trade in the late afternoon session on account of selling in front line counters and taking cues from European counterparts. The sentiments were on pessimistic mood after RBI governor Raghuram Rajan’s comment that RBI is still worried about high inflation, even when taking out volatile food prices. Investors also continued to sit on sidelines ahead of CAD number, which will be released by Reserve Bank of India (RBI) later in the day, which may have widened to 4% of GDP in the first quarter due to a surge in gold imports and a deteriorated trade gap. Traders were seen piling positions in IT, Health Care and TECK stocks, while selling was witnessed in Capital Goods, Metal and PSU sector stocks. In scrip specific development, SpiceJet was trading in red after the company’s auditor raised concern over the firm’s net worth. Multi Commodity Exchange of India (MCX) was locked at lower circuit limit after index provider MSCI excluded the Indian exchange operator from its small cap indices. Tech Mahindra was trading in green after foreign brokerage firm UBS upgraded the company to buy from sell and raised its target price citing potential earnings upside, cheap valuations. Mangalore Chemicals and Fertilisers (MCF) was trading in green on report that Deepak Fertilizer and Zuari may jointly make an open offer for controlling stake in Vijay Mallya’s MCF.

On the global front, all the Asian markets were trading in red barring Shanghai Composite while the European markets were too trading on pessimistic note. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 5,800 and 19,500 levels respectively. The market breadth on BSE was negative in the ratio of 792:1274 while 118 scrips remained unchanged. 

The BSE Sensex is currently trading at 19482.08 down by 245.19 points or 1.24% after trading in a range of 19651.31 and 19421.78. There were 8 stocks advancing against 22 declines on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.36%, while Small cap index also down by 0.57%.

The gaining sectoral indices on the BSE were IT up by 1.10%, Health Care up 0.48% and TECK up by 0.42% while, Capital Goods down by 2.63%, Metal down by 2.51%, PSU down by 2.31%, Bankex down by 2.27% and Power down by 2.20% were the top losing indices on BSE.

The top gainers on the Sensex were Wipro up by 1.86%, Sun Pharma up by 1.22%, Hindustan Unilever up by 1.19%, Infosys up by 0.98% and Cipla up by 0.63%. On the flip side, Tata Steel down by 6.27%, BHEL down by 4.76%, Coal India down by 3.89%, ICICI Bank down by 3.80% and L&T down 3.21% were the top losers on the Sensex.

Meanwhile, as per the Reserve Bank of India (RBI) report based on abridged financial results of 2,768 listed non-government non-financial (NGNF) companies, listed non-financial private companies posted a decline of 10.9 percent in net profit in the first quarter of the current fiscal, reflecting slowdown in the economy. Indian economy’s growth slowed down to four year low at 4.4 percent in the April-June quarter, FY13. Meanwhile, the decline in net profit was 10.7 percent in the first quarter of last fiscal.

The report highlighted that in the April to June quarter, sales growth of NGNF fell by 2.6 percent on YoY basis, while, total expenditure also declined by 2.2 percent mainly due to the contraction in raw material expenses. Further, sales contraction was spread across most of the industries include steel, cement, coke and refined petroleum products, motor vehicles, iron and steel and electrical machinery and apparatus industries among other. Referring to the manufacturing sector, it added that sales growth remained stagnant with a growth of only 0.8 per cent in the first quarter. 

By adding further, RBI’s report said that operating profits grew marginally by 1.1 percent in the reported period against near stagnation seen in the previous quarter with some industries like cement, iron & steel and construction witnessed significant contraction in the operating profit. Meanwhile, apex bank mentioned that coverage of companies in different quarters varies to some extent, depending on date of declaration of quarterly results, but it does not alter the aggregate position significantly.

The CNX Nifty is currently trading at 5,763.85 down by 69.35 points or 1.19% after trading in a range of 5,810.20 and 5,744.45. There were 14 stocks advancing against 36 declines on the index.

The top gainers of the Nifty were HCL Tech up by 1.85%, Wipro up by 1.70%, Lupin up by 1.41%, Hindustan Unilever up by 1.26% and Sun Pharma up by 1.04%. On the flip side, Tata Steel down by 6.09%, NMDC down by 4.58%, BHEL down by 4.52%, JP Associates down by 3.96% and Coal India down by 3.89% were the major losers on the index.

Most of the Asian equity indices were trading in red; Straits Times down by 0.99%, Jakarta Composite down by 2.03%, Seoul Composite down by 0.74%, KLSE Composite down by 0.04%, Taiwan Weighted down by 0.69%, Hang Seng down by 1.50% and Nikki 225 down by 2.06%, while Shanghai Composite up by 0.68%.

The European markets were trading in red; France’s CAC 40 was down 0.93%, Germany’s DAX lost 0.77% and UK’s FTSE 100 dropped 0.66%.