Benchmarks end lower for fifth straight day on weak global cues

F&O expiry session turned out to be another disappointing session for the Indian equity indices which got pounded by over half percentage point. Indian barometer gauges, prolonging their southward journey for fifth consecutive session, snapped the day’s trade with over half a percent cuts on extremely large volumes on feeble global cues. Selling was both brutal and wide-based as, barring consumer durables and auto; none of sectoral indices on BSE could manage a green close. Counters, which featured in the list of worst performers, include banking, realty and metal. Though, the benchmark equity indices went on to stage a swift recovery in the last leg of trade on Thursday after suffering hefty pounding through the first half.

The key gauges even breached the psychological 6,030 (Nifty) and 20,350 (Sensex) levels in the noon session as selling pressure got aggravated after the European markets made a negative opening. The Asian peers too ended in the red, as sentiments remained dampened after US Federal Reserve announced plans to scale back its bond purchases by another $10 billion to $65 billion a month. Moreover, weak data on Chinese manufacturing activity too spooked sentiments to a notable extent.

Back home, sentiments remained dampened with Reserve Bank Governor Raghuram Rajan saying that inflation is both a monetary and political issue and wanted the political establishment to understand the importance of curbing rising prices. Weakness in Indian rupee against dollar too dampened the investors’ confidence. The rupee was trading at 62.79 per dollar at the time of equity markets closing as compared to previous close of 62.42 per dollar.

Selling in metal counter also spooked sentiments, as stocks like, Nalco, Sesa Sterlite, JSW Steel etc edged lower after weak Chinese manufacturing data. Moreover, stocks related to public oil marketing companies (OMC), viz. BPCL and HPCL ended lower on the Union Cabinet’s decision of approving a proposal to raise the quota of subsidized LPG cylinders from 9 to 12 per household in a year.

However, covering of hefty short positions, in the late hours of trade, ensured that the benchmarks recover over a percentage points from the low points of the day and settled above their crucial 6,050 (Nifty) and 20,450 (Sensex) bastions. Some support also came after fertilizer stocks, like Chambal Fertilisers & Chemicals, Rashtriya Chemicals & Fertilizers (RCF) and National Fertilizers gained after Group of Ministers okayed the proposal to hike fixed cost of Urea by Rs 350 per tonne.

The NSE’s 50-share broadly followed index Nifty declined by over forty points to end below its psychological 6,100 support level, moreover Bombay Stock Exchange’s Sensitive Index -- Sensex shed by around one hundred and fifty points to end below its psychological 20,500 mark. Broader markets too struggled to get some traction and ended the session with a cut of over a percentage point. The market breadth remained in the favour of decliners, as there were 865 shares on the gaining side against 1,715 shares on the losing side, while 129 shares remained unchanged.

Finally, the BSE Sensex plunged by 149.05 points or 0.72%, to settle at 20498.25, while the CNX Nifty lost 46.55 points or 0.76% to settle at 6,073.70.

The BSE Sensex touched a high and a low of 20528.41 and 20343.78, respectively. The BSE Mid cap index was down by 1.13%, while the Small cap index lost 1.47%.

The top gainers on the Sensex were Tata Motors up 2.66%, Bharti Airtel up 2.24%, BHEL up 1.29%, Gail India up 1.01% and Mahindra & Mahindra up by 0.88%, on the flip side SBI down 3.56%, Hero MotoCorp down 3.43%, SSLT down 3.38%, Hindalco Inds down 3.35%, and Tata Steel down by 3.20% were the top losers on the index.

On the BSE Sectoral front Consumer Durables up by 1.73% and Auto up by 0.27% were the only gainers, while Bankex down by 2.67%, Realty down by 2.60%, Metal down by 2.52%, PSU down by 1.44% and Oil & Gas down by 1.08% were the top losers on the sectoral front.

Meanwhile, the Cabinet Committee on Economic Affairs (CCEA) is expected to consider Food Ministry’s proposal soon to give a cash subsidy of Rs 2,000 per tonne to the beleaguered sugar industry for export of four million tonnes of raw sugar for a period of two years. Total subsidy outgo has been pegged at Rs 800 crore that will be adjusted from the Sugar Development Fund (SDF). India, world's second biggest sugar producer but largest consumer, only makes white sugar for domestic consumption and does not manufacture raw sugar. Meanwhile, raw sugar segment presents a lot of exports opportunities for the country. The government had already given subsidy of Rs 1,450 per tonne in 2007-08 to export six million tonnes of sugar and the current incentive is being worked on the procedure.

However, there are differences of opinion among the various ministries on the quantum of cash subsidy as Agriculture Minister Sharad Pawar is in favour of a reasonable subsidy not less than Rs 3,500 per tonne in order to provide major boost to the exports of raw sugar. Furthermore, the industry body Indian Sugar Mills Association (ISMA) has also suggested same incentive of Rs 3,500 per tonne on raw sugar export in view of weak global prices.

It could be a difficult task for India to export raw sugar as global prices are ruling much lower as against the domestic production cost of Rs 26,500 per tonne. Further, domestic sugar mills are facing cash crunch as sugar prices have come down below the cost of production in view of surplus supplies. Meanwhile, the government has been taking measures to improve cash flow of sugar mills. Recently, it has announced interest subsidy on bank loans to mills for paying cane farmers.

The CNX Nifty touched a high and low of 6,082.85 and 6,027.25 respectively.

The top gainers on the Nifty were Tata Motors up by 3.26%, Bharti Airtel up by 2.22%, GAIL (India) up by 1.45%, HCL Technologies up by 1.24%, and Mahindra & Mahindra up by 1.06%. On the other hand, PNB down by 4.29%, Bank of Baroda down by 4.22%, DLF down by 4.15%, State Bank of India down by 3.53%, and Hero MotoCorp down by 3.36% were the top losers.

The European markets were trading in red, France's CAC 40 was down by 0.27%, Germany's DAX was down by 0.14% and United Kingdom's FTSE 100 was down by 0.23%.

The Asian markets, barring Jakarta Composite and KLSE Composite concluded Thursday’s trade in red, extending a global rout on renewed fears about emerging economies after the US Federal Reserve pressed ahead with its stimulus reduction and central banks in Turkey and South Africa jacked up interest rates. Indonesia’s rupiah headed for its second weekly drop and government bonds fell after the Federal Reserve pressed ahead with stimulus cuts that have spurred outflows from the nation’s assets.

China’s manufacturing activity declined for the first time in six months in January. The HSBC China Manufacturing Purchasing Managers’ Index fell to a final reading of 49.5 in January from 50.5 in December. A reading below 50 in the gauge of nationwide manufacturing indicates a contraction from the previous month and above indicates expansion. The final reading was slightly lower than HSBC’s preliminary January PMI of 49.6 published on January 23. Japan’s retail sales fell to a seasonally adjusted annual rate of 2.6%, from 4.0% in the preceding month.

Taiwan stock exchange was closed on account of ‘Lunar New Year’s Eve’ holiday while South Korea market was closed due to ‘Seollal Holiday’.