Benchmarks end lower on profit booking in software counter

Thursday turned out to be a disappointing session of trade for the Indian stock markets, as frontline indices ended the session near their intraday low, falling over half a percent. Profit booking in software and technology counters mainly played spoilsport with investors opting to offload stocks like TCS and Infosys after recent gains post encouraging second quarter earnings. Though, markets traded tad above their neutral lines for most part of the day as some support came in from the Reserve Bank of India’s governor Raghuram Rajan’s statement that India’s economy will pick up by year-end mainly due to the start-up of billions of dollars worth of stalled resource projects and a good monsoon season that will bolster agricultural production. Some strength also came in after Planning Commission estimated that the current account deficit for 2013-14 will be around 2.5 percent of GDP, much lower than Finance Minister P. Chidambaram’s target of 3.7 percent of GDP.

Adding strength to the bourses, Indian rupee gained sharply on the back of dollar sale by exporters. The rupee was trading at Rs 61.40 per dollar mark at the time of equity markets closing as compared with previous close of Rs 61.85 per dollar on October 15, 2013. However, gains on the up-side remained capped as investors remained concerned after the World Bank revised India’s economic growth forecast downwards for the current financial year to 4.7 percent from 6.1 percent projected in April, citing two consecutive months of negative business sentiment and higher interest rates.

Supportive cues from US markets and Asian markets too provided some support to local markets and sentiments remained up-beat after the US senate reached an agreement to increase the debt limit and ended the 16-day government shutdown. However, disappointing cues from European market took toll on domestic sentiments in late trade and dragged the frontline gauges below the psychological 6,050 (Nifty) and 20,500 (Sensex) levels. Investors mainly resorted to profit booking following the decline in European markets.

Back home, sentiments also got dampened after selling was witnessed in banking counter on report that foreign institutional investors (FIIs) reduced their shareholding in banking stocks during July-September quarter on concerns of margin stress due to slowdown in the economy, rising non-performing assets and higher cost of funds. Bucking the trend, Axis Bank edged higher on reporting better than expected Q2 numbers. The bank has reported a rise of 21.25% in its net profit at Rs 1362.31 crore for the quarter ended September 30, 2013 as compared to Rs 1123.54 crore for the same quarter in the previous year.

The NSE’s 50-share broadly followed index Nifty declined by over forty points to end below the psychological 6,050 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex tumbled by over one hundred and thirty points to finish well below the psychological 20,500 mark.

However, broader markets traded with some traction and ended the session in the green terrain. The market breadth was evenly divided; as there were 1,222 shares on the gaining side against 1,240 shares on the losing side while 146 shares remain unchanged.

Finally, the BSE Sensex plunged 132.11 points or 0.64%, to settle at 20415.51, while the CNX Nifty declined by 43.20 points or 0.71% to settle at 6,045.85.

The BSE Sensex touched a high and a low of 20629.80 and 20375.42, respectively. The BSE Mid cap index gained 0.13% and Small cap index was up by 0.12%.

The top gainers on the Sensex were Bharti Airtel up 2.85%, ONGC up 2.24%, Bajaj Auto up 1.92%, ITC up 1.63% and Reliance Industries (RIL) up 1.45%, on the flip side, TCS down 4.98%, Tata Motors down 4.03%, L&T down 3.73%, Wipro down 3.00%, and Infosys down 2.34%, were the top losers on the index. 

On the BSE Sectoral front, Consumer Durables up by 1.71%, Oil & Gas up by 1.36%, FMCG up by 1.18%, and PSU up by 0.10%, were the only gainers, while IT down by 3.59%, TECK down by 2.61%, Capital Goods down by 2.30%, Auto down by 1.20%, and Realty down by 0.90%, were the top losers on the sectoral front.

Meanwhile, amid rising concerns over the prevailing economic downturn, the World Bank has lowered India’s economic growth forecast to 4.7 percent for the current fiscal from 6.1 percent growth projected earlier.  The World Bank in its report ‘India Development Update’ has said that negative business sentiment coupled with rising inflation and higher interest rates could adversely impact the economy’s growth in the current fiscal.

By adding further, World Bank said that India's growth potential remains strong, but its macroeconomic vulnerabilities such as an elevated current account deficit (CAD), rising pressure on fiscal balances, rupee depreciation and high headline inflation could impact the speed of economic recovery. Therefore, there is a need for prudent macroeconomic policies and continued reforms in order to set strong foundations for accelerated growth.  At present, Indian economy is struggling with slowdown and its growth has slowed down to four year low at 4.4 percent in April-June quarter, 2013.

Regarding the growth in second quarter in current fiscal, it added that tighten liquidity and negative consumers sentiments are likely to curb the potential for recovery in the Q2 FY14 even after manufacturing output rebounded in July. Meanwhile, growth is expected to rebound strongly in the second half of current fiscal on the back of declining core inflation, strong agriculture growth on the back of better than expected monsoon and rising domestic exports.

Referring to medium term outlook, the World Bank states that growth is expected to accelerate to 6.2 percent by 2014-15 as strengthening exports support a recovery in industrial activity and new investment projects come on stream. The World Bank further added that pressure on inflation is likely to moderate and cut its projection for wholesale price index (WPI) inflation to 5.3 percent for the current financial year as against 6.7 percent projected earlier.

The CNX Nifty touched a high and low of 6,110.75 and 6,032.55 respectively.

The top gainers on the Nifty were Jaiprakash Associates up by 6.11%, Bharti Airtel up by 2.92%, ONGC up by 2.27%, ITC up by 1.76% and BPCL up by 1.49%. On the other hand, HCL Technologies down by 7.09%, TCS down by 5.25%, IndusInd Bank down by 4.66%, Larsen & Toubro down by 4.11%, and Tata Motors down by 3.82%, were the top losers.

The European markets were trading in red, France’s CAC 40 was down by 0.33%, Germany’s DAX was down by 0.48%, and United Kingdom’s FTSE 100 was down by 0.09%.

Most of the Asian markets barring Shanghai Composite and Hang Seng concluded Thursday’s trade in green after Washington lawmakers voted to reopen the US government and raise the debt ceiling. Foreign investment in China gained 6.2 percent to $88.6 billion in the first nine months of 2013. The country attracted $8.8 billion of foreign direct investment in September-- up 4.9% on the year. The government however warned that the world’s number two economy still faced domestic and external headwinds. The commerce ministry stated that China’s trade will face challenges in coming months due to slowing demand from emerging markets.

The Bank of Japan is preparing a plan to extend three special loan facilities that have backed more than $81 billion in lending over the past three years, a step intended to nudge Japan’s risk-averse banks to start creating credit. The unemployment rate in Hong Kong remained unchanged last month. The Census and Statistics department stated that Hong Kong Unemployment Rate remained unchanged at a seasonally adjusted 3.3%, from 3.3% in the preceding month. The government expects the unemployment rate to remain at low levels in the near term, given the generally positive hiring attitude in the corporate sector.