Benchmarks snap five-day winning streak on geo-political concern

Indian equity benchmarks, snapping five days winning streak, ended the session in the red on the back of sluggish global cues on geo-political tension over Ukraine. Selling was both brutal and wide-based as, barring consumer durables and oil and gas; none of sectoral indices on BSE could manage a green close. Counters, which featured in the list of worst performers, were healthcare, software, power and auto. Sentiments remained down-beat since morning after India’s gross domestic product (GDP) for the third Quarter (October-December) of 2013-14 recorded sub 5% growth for the fifth consecutive quarter, as it came in a shade lower than expectation at 4.7% at Rs 14.8 lakh crore as against  Rs 14.1 lakh crore in the same quarter a  year ago.

Sentiments also remained dampened after the output of eight core industries slowed down to a three-month low of 1.6% in the month of January against 2.1% in December on account of poor output of coal, petroleum refinery products and natural gas. The growth of core industries sector in the reported month was much lower than 8.3% growth recorded in the same month last year. Market participants also remained concerned about a survey by industry body CII and ASCON findings that industrial activity in the October-December 2013 quarter remained subdued and grim, treading along the growth path of the previous quarter.

Global cues too remained sluggish with European markets opening with a deep cut of over a percentage point, as investors reacted to a Russian decision to send troops into Ukraine. The crisis in Ukraine has deteriorated as Russian President Vladimir Putin won parliamentary backing to send troops into its southern neighbor. Asian markets too ended mostly in the red led by the Japanese market that is lower by around two percent. Moreover, sentiments also remained dampened after an official gauge of Chinese manufacturing dropped to an eight-month low.

Back home, investors overlooked better factory output numbers. The HSBC Purchasing Managers’ Index (PMI), a headline index designed to measure the overall health of the manufacturing sector, rose to 52.5 in the month of February as against 51.4 in January. Sentiments also remained dampened as Indian rupee was trading lower at 62.03/04 per dollar at the time of equity markets closing, versus Friday’s close of 61.75/76. Global risk aversion on geopolitical tensions in Ukraine is weighing on most Asian currencies.

Meanwhile, stocks related to Aviation space declined after the price of jet fuel or aviation turbine fuel was hiked by 1% effective March 1, 2014. On the flip side, stocks of companies associated with the railways edged higher on reports that the government is likely to take up new norms for liberalising the foreign direct investment (FDI) regime in railways.

The NSE’s 50-share broadly followed index Nifty declined by over fifty points and ended below the psychological 6,250 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex tumbled by over one hundred and seventy points to finish below the psychological 21,000 mark. Broader markets too were struggled to get traction and ended mixed. The market breadth remained in favor of decliners, as there were 1,204 shares on the gaining side against 1,480 shares on the losing side while 120 shares remain unchanged.

Finally, the BSE Sensex plunged by 173.47 points or 0.82%, to settle at 20946.65, while the CNX Nifty declined by 55.50 points or 0.88% to settle at 6,221.45.

The BSE Sensex touched a high and a low of 21140.00 and 20920.98, respectively. The BSE Mid cap index was down by 0.30%, while the Small cap index gained 0.06%.

The top gainers on the Sensex were RIL up by 0.53%, Tata Steel up by 0.39%, Hindalco Industries up by 0.38%, ITC up by 0.35% and Coal India up by 0.14%, while Dr Reddys Lab down by 2.97%, BHEL down by 2.81%, Sun Pharma down by 2.75%, Mahindra & Mahindra down by 2.22% and Cipla down by 1.99% were the top losers in the index.

On the BSE Sectoral front, Consumer Durables up by 1.74% and Oil & Gas up by 0.24% were the only gainers, while Healthcare down by 1.55%, IT down by 1.25%, Power down by 1.18%, Auto down by 1.18% and Capital Goods down by 1.04% were the top losers in the space.Meanwhile, in order to boost the growth of Micro, Small and Medium Enterprises (MSME), Prime Minister Manmohan Singh asked industry chambers and associations to come up with innovative solutions to address problems of the MSME sector and provide inputs for policy formulation.

Manmohan Singh stressed that the MSME sector is vital to the national economy and participation of the private sector and civil society is needed to make government's initiatives for the success of the sector. Prime Minister expressed the need to address constraints that still hinder the development of the MSME sector adding that only a fraction of enterprises in India has the skills, risk appetite and resources to avail of the opportunities offered by globalisation. Further, Manmohan Singh added that the government has taken several steps for the development of the MSME sector including the MSME Development Act, 2006, Prime Minister's Employment Generation Programme and setting up a six-member inter-ministerial panel which will suggest measures to boost the MSME exports.

The MSME sector contributes around 8% of the country's GDP, 45% of the manufactured output, 43% of country’s exports and provides employment to over 8 crore persons engaged in over 3.6 crore units. In the 12th Five-Year Plan, the government has increased Budget allocation for the sector to Rs 24,124 crore from Rs 11,500 crore in the previous five-plan period.The CNX Nifty touched a high and low of 6,277.75 and 6,212.25 respectively.

The top gainers of the Nifty were NMDC up by 1.18%, IDFC up by 1.17%, Jindal Steel & Power up by 1.09%, Cairn India up by 1.02% and Reliance Industries up by 0.54%. On the other hand, HCL Technologies down by 4.55%, Jaiprakash Associates down by 3.70%, Sun Pharmaceuticals Industries down by 3.07%, BHEL down by 3.07% and Dr. Reddy's Laboratories down by 2.69% were the top losers.

The European markets were trading in red, France's CAC 40 was down by 1.80%, Germany's DAX was down by 2.29% and United Kingdom's FTSE 100 was down by 1.21%.

The Asian markets barring Shanghai Composite concluded Monday’s trade in red, triggered by geopolitical worries over Ukraine and after both the official and HSBC versions of China’s monthly manufacturing survey showed the sector weaker last month than it was in January. The recent reversal in China’s currency has caught many off guard as it appears to be policy-led moves to curb an extended yuan carry trade. The National Bureau of Statistics and China Federation of Logistics and Purchasing stated that Chinese Manufacturing PMI fell to an eight-month low of 50.2 in February from 50.5 in the preceding month. The PMI for February came in at 48.5, up slightly from the earlier flash reading of 48.3, and down from January’s 49.5 reading. Japanese capital spending rose to an annual rate of 4.0%, from 1.5% in the preceding quarter while Indonesian Inflation fell to a seasonally adjusted 7.75%, from 8.22% in the preceding month.