Post Session: Quick Review

Thursday session’s turned out to be nasty one for Indian equity markets, which squandering a positive start and snapping two consecutive sessions gaining streak, ended near three months low below the crucial 20,200 (Sensex) and 6,000 (Nifty) levels, with a colossal loss of over a percent. Local equity markets after getting a positive start, soon reversed trajectory and started grinding lower only to settle at day’s low level. Two year low inflation data of 8.79% in January with in-line in expectation of subdued IIP figure for November, gave investors reason enough to rejoice in early deals, however markets quickly reversed gains after investors came in terms with fact of higher Core CPI figures, which raised concerns over RBI’s stance in its upcoming monetary policy review on April 1,2014. Additionally, subdued regional counterparts also weighed on sentiments.

On the global front, Investors’ profit-taking on Thursday brought Asian markets off three-week highs notched a day earlier on the back of reassuring comments from the Federal Reserve's new chairwoman, Janet Yellen, over the prospects for US growth. There was also an element of caution, with some investors restraining bullish instincts until they see more solid evidence of a strengthening global economy. Additionally, European stocks fell, halting their longest rally this year, on account of disappointing earnings reports from BNP Paribas SA to Nestle SA.

Closer home, investors failed to draw any sense of relief from government’s mid-year economic review, wherein it pegged FY14 GDP at 5%, tad above CSO’s estimate of below 5% figure. In across the board butchery, only stocks from Realty counter managed to get the end in green, rest all the sectoral indices ended in red, with prominent losers being the stocks belonging from PSU, banking and Capital Goods counters. On the flip side, sugar stocks also hogged limelight after (CCEA) finally approved a subsidy of Rs 3,333 per tonne for exports of raw sugar.  The market breadth on the BSE ended negative; advances and declining stocks were in a ratio of 914: 1665, while 149 scrips remained unchanged. (Provisional)

The BSE Sensex lost 277.68 points or 1.36% to settle at 20170.81. The index touched a high and a low of 20503.86 and 20170.55 respectively. Among the 30-share Sensex, 4 stocks gained, while 26 stocks declined. (Provisional)

The BSE Mid cap and Small cap indices ended lower by 0.92% and 1.09% respectively. (Provisional)

On the BSE Sectoral front, Realty up by 0.20% was the only gainer, while PSU down by 2.55%, Bankex down by 2.25%, Capital Goods down by 2.17%, Metal down by 2.02% and Oil & Gas down by 1.86% were the top losers in the space. (Provisional)

The top gainers on the Sensex were TCS up by 1.53%, Mahindra & Mahindra up by 1.19%, SSLT up by 0.53% and Sun Pharma up by 0.48%, while, Cipla down by 7.78%, BHEL down by 4.10%, Hindalco down by 3.48%, Coal India down by 3.22% and ONGC down by 3.18% were the top losers in the index. (Provisional)

Meanwhile, the Reserve Bank of India (RBI) will soon be coming out with a set of norms for a dedicated exchange for trade receivables that can help smaller businesses tide over liquidity issues.The Governor Raghuram Rajan has said that the central bank was discussing with market participants how to do this, and in a very short while, we should have the structure in place through which trade receivables of micro, small and medium enterprises (MSMEs) can be sold in the market.

Elaborating the move, Rajan said the big businesses squeeze the smaller ones when it comes to payments, creating difficulties for the latter and if the small business owner is able to raise money against the receivable, it will be much better for the business. It can also help bring down the cost of such transactions through automation. Once the cost is reduced and volume of business rises, financial inclusion can be achieved.

RBI governor is of view that if trade receivables exchange is set up with fully automated acceptance of bills and auction of bills, then we can reduce the transaction cost considerably. The Receivables Exchange is an auction based marketplace connecting large sellers of trade receivables to a broad network of institutional buyers.India VIX, a gauge for markets short term expectation of volatility gained 2.40% at 17.85  from its previous close of 16.43 on Wednesday. (Provisional)

The CNX Nifty lost 89.10 points or 1.46% to settle at 5,994.90. The index touched high and low of 6,094.40 and 5,991.10 respectively. Out of the 50 stocks on the Nifty, 5 ended in the green, while 45 ended in the red.

The major gainers of the Nifty were TCS up 1.54%, DLF up by 1.28%, M&M up by 1.14%, SSLT up by 0.53% and Sun Pharmaceuticals up by 0.48%. The key losers were Cipla down by 7.70%, Bank of Baroda down by 5.88%, Grasim down by 4.57%, BHEL down by 4.23% and IDFC down by 3.88%. (Provisional)

The European markets were trading in green; France’s CAC 40 was up 0.53%, Germany’s DAX was up 1.31% and UK’s FTSE 100 was up 0.67%.

All the Asian markets barring Straits Times, concluded Thursday’s trade in red on account of profit-taking following a weak lead from Wall Street. Japan’s Corporate Goods Price Index fell to a seasonally adjusted annual rate of 2.4%, from 2.5% in the preceding month. Bank Indonesia in its monthly monetary policy meeting decided to keep its benchmark interest rate unchanged. The key policy rate was kept unchanged at 7.50%. The Bank of Korea too held its policy interest rate steady at 2.5% as widely expected, citing contained inflation and continued economic recovery. The central bank hasn’t changed the benchmark rate since May of last year.

Malaysian GDP rose to a seasonally adjusted 5.1%, from 5.0% in the preceding month. Malaysia trimmed its fiscal deficit to 3.9% of gross domestic product last year, after cutting government spending and state subsidies to avert a credit-rating downgrade. Prime Minister Najib Razak narrowed the shortfall from 4.5% of GDP in 2012, beating the government’s 4% deficit target for last year. The country wants to further reduce the budget gap to 3.5% this year and achieve a balanced budget by the end of this decade.