Benchmarks snap five days gaining streak ahead of IIP and CPI data

Snapping five days gaining streak, Indian equity benchmarks ended Tuesday’s session in the red with cut of around half a percentage point, as investors opted to book some profit ahead of IIP data for the month of January to be announced on Wednesday, which is likely to extend its contraction of -0.6 per cent in December to -1.10 per cent in January. Traders also awaited consumer price inflation numbers, which is expected to ease at 8.10 per cent in February, as compared to 8.79 per cent registered in the month of January.

Indian equity benchmarks failed to extend their initial gains and entered into red terrain after the economy received a sudden jolt, as the country’s merchandise exports declined once again after a span of seven months. Exports came down by 3.67% at $25.68 billion in February compared to $26.66 billion in the same month last year significantly weakening chances of meeting the export target of $325 billion in the present fiscal. Though, trade deficit for February narrowed to $8.13 billion compared to $9.92 billion recorded in January. It was $14.12 billion in the same period last year. Meanwhile, imports were at $33.81 billion compared to $36.49 billion month-on-month. They were down 17% on a y-o-y basis. Oil imports for Feb were at $13.7 billion as against $14.13 y-o-y.

Selling got intensified after European markets made a sluggish opening, as investors remained concerned over the Ukraine crisis sapping appetite for risk. However, Asian equity indices ended in the green, but gains on the up-side remained capped on concerns over China’s economy, following the fall in exports during February weighed on investor sentiment.

Back home, markets continued reeling under pressure as Indian rupee, after hitting a seven-month high of 60.5925 earlier in the session, fell marginally and was trading at 60.87/88 at the time of equity markets closing versus its previous close of 60.85/86 after government sources said plans for inclusion in a global bond index have been put on hold. Sentiments also remained dampened after shares of metal companies remained under pressure for second day in a row after LMEX, a gauge of six metals traded on the London Metal Exchange (LME), hit seven-month low on February 10, 2014, after latest data showed China's exports slumped in February 2014.

On the flip side, stock related to power space edged higher after the Appellate Tribunal of Electricity (ATE) asked the Delhi Electricity Regulatory Commission (DERC) and private power distribution companies in the city to lay out a roadmap for liquidation of ‘regulatory assets’ worth up to Rs 8,000 crore. Regulatory assets are non-cash assets that have been put on the books of discoms in cases where the regulator did not raise power tariffs to compensate for higher costs for discoms. Tyre stocks, viz MRF, Ceat, JK Tyre etc too remained on buyers’ radar after rubber prices slipped to multi years low in international market.

The NSE’s 50-share broadly followed index Nifty declined by over twenty five points to end below the psychological 5,550 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex crumbled over hundred points to close below the psychological 21,850 mark. Broader markets too struggled to get any traction today and ended the session mixed. The market breadth remained in favour of decliners, as there were 1,248 shares on the gaining side against 1,546 shares on the losing side, while 170 shares remained unchanged.

Finally, the BSE Sensex lost 108.41 points or 0.49%, to settle at 21826.42, while the CNX Nifty was down by 25.35 points or 0.39% to settle at 6,511.90.

The BSE Sensex touched a high and a low of 22018.52 and 21772.11, respectively. The BSE Mid cap index was down by 0.29%, while the Small cap index gained 0.02%.

The top gainers on the Sensex were Tata Power up by 4.12%, ONGC up by 1.07%, Hindustan Unilever up by 0.73%, Tata Motors up by 0.56% and BHEL up by 0.51%, while Tata Steel down by 5.52%, Hindalco Inds down by 3.69%, SSLT down by 3.63%, Maruti Suzuki down by 2.67% and Sun Pharma down 2.63% were the top losers in the index.

On the BSE Sectoral front, Realty up by 2.24%, Power up by 0.69% and IT up by 0.14% were the only gainers, while Metal down 3.44%, Healthcare down by 0.99%, Capital Goods down by 0.64%, Auto down by 0.64% and Oil & Gas down by 0.58% were the top losers in the space.

Meanwhile, in order to meet the rising energy needs of the country and to import oil and gas from the US, India is going to ask the US to ease restrictions on exporting gas to non-FTA countries. At present, India does not have an FTA (free trade agreement) with the US. On the other hand, the gas-surplus US has allowed conditional export of liquefied natural gas (LNG) from five of its projects to nations with which the US does not have a free trade agreement, so-called ‘non-FTA’ countries. 

India would discuss the issue of LNG exports to non-FTA nations at the Indo-US Energy Dialogue. The US can use five terminals such as Sabine Pass, Freeport, Lake Charles Exports, Dominion Cove Point LNG and Cameron LNG LLC terminal in Louisiana to export LNG to non-FTA countries. Indian companies led by state-owned GAIL have already signed agreements with the US firms to buy as much as 3.5 million tonnes a year of LNG.

India is likely to become world's third largest energy consumer by 2020. Currently, India imports around 80 percent of its oil needs and around 25 percent of its gas requirement. Meanwhile, the government is also taking measures to increase the domestic production of oil and gas. Presently, only 0.93 million sq km area in India is held under exploration and production in 19 basins as compared to total estimated sedimentary area of 3.14 million square kilometers, comprising 26 sedimentary basins. Meanwhile, the Oil Ministry has formulated a roadmap for cutting India's dependence on imports to meet its energy needs. The Ministry wants imports of domestic crude reduced to 50 percent by 2020 and by 25 percent in 2025 through intensive exploration and exploitation of untapped reserves.

The CNX Nifty touched a high and low of 6,562.85 and 6,494.25 respectively.

The top gainers of the Nifty were DLF up by 3.88%, Tata Power Company up by 3.66%, Grasim Industries up by 2.68%, IDFC up by 2.63% and IndusInd Bank up by 1.92%. On the other hand, Tata Steel down by 5.78%, Hindalco Industries down by 4.02%, GAIL (India) down by 2.91%, SSLT down by 2.91% and Maruti Suzuki India down 2.73% were the top losers.

Most of the European markets were trading in red, France's CAC 40 was down by 0.14% and United Kingdom's FTSE 100 was down by 0.07%, while Germany's DAX was up by 0.14%.

The Asian markets concluded Tuesday’s trade in green with Hong Kong closing flat, as an early rally fuelled by bargain hunting fizzled out in the afternoon. China’s yuan and money market rates fell after exports shrank last month, indicating the central bank may take measures to support trade and curb interest arbitrage. Japan’s economy grew at a slower pace than initially thought in the last quarter of 2013, underscoring concerns about the pace of recovery under Prime Minister Shinzo Abe’s policy blitz. The fresh figures will turn the focus onto Bank of Japan policymakers as they start a two-day meeting, with speculation they could unveil further monetary easing measures to counter a possible slowdown from a sales tax rise next month. The Bank of Japan board has decided by a unanimous vote to leave the bank’s policy target unchanged while noting weaker exports and slightly higher business investment and factory output. Japan’s Economy Watchers Current Index fell to a seasonally adjusted 53.0, from 54.7 in the preceding month.