Markets turn cautious; loses direction in final hour to end in red

The Indian markets lacked vigor on Monday and the major indices traded in a tight range, coming in and out of the red zone throughout the day. The initial enthusiasm that was generated by the gains in global market faded in the very first hour and mood of the markets turned cautious with HSBC’s composite emerging markets index of manufacturing and services purchasing managers’ surveys slipping for the second straight month to 51.4 in January, the slowest pace in four months. There was no serious attempt of taking the markets higher and benchmarks after a good surge in the last session totally looked in a defensive mood.

The global cues mostly remained good, as majority of the Asian markets ended in green, with some even gaining around two percent for the day, heading for their longest stretch of gains this year. The European markets too made a good start and some of the equities markets rebounded from their worst start to a year since 2010, amid buzz that euro zone probably notched up a third quarter of growth at the end of 2013.

Back home, the market mood after remaining in a tight range faltered during the final hours, taking the benchmarks lower by around a quarter percent. The Indian markets that had held their neutral levels whole day supported by weak US jobs data and as government estimated GDP to grow at 4.9% in the fiscal year ending 31 March against 4.5% a year earlier, lost their way and benchmarks ended near their psychological levels of 20300 (Sensex) and 6050 (Nifty).The decline in the market was also induced by the weakness in domestic currency, which after a good start turned soft in latter part of the day. Also, there was concern of foreign fund outflow as the provisional data showed that overseas investors sold Rs 267 crore worth of Indian shares on Friday, extending their selling streak to a seventh day. Sectorally the day remained of realty, led by the surge in heavyweight DLF that moved up by around 3 percent  after reporting that DLF Global Hospitality (DGHL) completed the sale of 100% equity stake in Silverlink Resorts (SRL), the owner of Aman resorts to Aman Resorts Group. On the other hand banking stocks turned up to be one of the worst performers after Standard & Poor's Ratings Services in its latest report stated that growth, profitability, and asset quality of Indian banks are likely to remain subdued for the next 12 months, despite a likely uptick in economic growth. Telecom stocks too came under pressure on reports of intense bidding by the telecom companies crossing and total bid of Rs. 56000 crore mark. Traders are now eyeing inflation and industrial output data due later in the week for further direction.

The market breadth remained in favor of advances, as there were 1,328 shares on the gaining side against 1,246 shares on the losing side while 152 shares remain unchanged.

Finally, the BSE Sensex declined by 42.29 points or 0.21%, to settle at 20,334.27, while the CNX Nifty lost 9.75 points or 0.16% to settle at 6,053.45.

The BSE Sensex touched a high and a low of 20,434.50 and 20,312.21, respectively. The BSE Mid cap index was up by 0.05%, while the Small cap index was up by 0.18%.

The top gainers on the Sensex were Dr Reddys Lab up by 2.10%,  Sun Pharma up by 1.68%, Maruti Suzuki up by 1.41%, L&T up by 1.27% and ONGC up by 1.02%, while, Bharti Airtel down by 2.57%, TCS down by 2.32%, Hindustan Unilever down by 2.22%, HDFC down by 2.21% and Gail India down by 1.67% were the top losers in the index.

On the BSE Sectoral front, Consumer Durables up by 1.53%, Realty up by 1.15%, Oil & Gas up by 0.67%, Capital Goods up by 0.60% and Healthcare up by 0.56% were the top gainers, while Teck down by 0.84%, Bankex down by 0.53%, Metal down by 0.51%, IT down by 0.42% and Power down by 0.23% were the top losers in the space.

Meanwhile, adding optimism to the economy’s advanced growth estimate by the Central Statistics Office (CSO), the Prime Minister's Economic Advisory Council Chairman (PMEAC) C Rangarajan has stated that the decline in Indian economic growth has bottomed out and there is probability that gross domestic product (GDP) growth figure for 2013-14 will be revised upwards. PMEAC expects Indian economic growth at around 5.3 percent for the current fiscal.

The CSO pegged economic growth rate for 2013-14 at 4.9 percent which was tad higher than the general expectation of a growth of 4.7-4.8 percent. Rangarajan further added that as per the CSO estimate, the growth in second quarter of current fiscal will be more than 5 percent as Indian economy grew by 4.6 percent in the April-September period. Agriculture sector is likely to add significantly to country’s economic growth as CSO has projected a growth rate of 4.6 percent in agriculture and allied sectors in current fiscal. 

Indian economy’s growth slowed down to a decade low of 4.5 percent in the previous fiscal on account of low investment, weak domestic demand, rupee depreciation and global economic turmoil. Rising inflation too has become a hurdle for Indian economic growth as it has been eroding consumers and business confidence in the country.

The CNX Nifty touched a high and low of 6,083.05 and 6,046.40 respectively.

The top gainers of the Nifty were DLF up 2.86%, Dr. Reddy's Laboratories up by 1.90%, Sun Pharma up by 1.58%, HCL Tech up by 1.42% and L&T up by 1.37%. On the other hand, JP Associate down by 3.23%, HDFC down by 2.48%, Hindustan Unilever down by 2.42%, TCS down by 2.42% and Bharti Airtel down by 2.39% were the top losers.

The European markets were trading in green, France's CAC 40 was up by 0.28%, Germany's DAX was up by 0.27% and United Kingdom's FTSE 100 was up by 0.06%.

All the Asian markets, barring Hang Seng and Jakarta Composite concluded Monday’s trade in green with Japan’s Nikkei share average rising to a one-week high as softer yen underpinned sentiment and traders shrugged off somewhat weak US jobs data. Investors were however cautious before new Fed Chair Janet Yellen’s testimony scheduled this week. Japan posted its smallest current account surplus on record last year, throwing the spotlight back on Tokyo’s ability to service its huge debt and exposing a danger point in an economy starting to find its feet after years of underperformance. For 2013, Japan’s current account recorded a 3.3 trillion yen surplus. This was the smallest surplus in comparable data available from 1985. In December, the deficit stood at 638.6 billion yen ($6.25 billion), against a median forecast for 707.7 billion yen.