Benchmarks add losses; Bankex, Capital Goods drag

Indian equities added losses to continue their weak trade in the late afternoon session on account of selling in frontline blue chip counters, while taking cues from European counterparts. The sentiments were on negative note from the early trade on worries over global tensions and investors have started keeping an eye on a vote in Crimea this weekend where citizens will decide whether to stay with Ukraine or join Russia. The market paid no heeds towards annual rate of inflation, based on monthly WPI, which cooled off to nine-month low at 4.68% for the month of February, 2014 as compared to 5.05% in January. Traders were seen piling positions in HealthCare and Realty stocks while selling was witnessed in Bankex, Capital Goods and Consumer Durables sector stocks. In scrip specific development, Financial Technologies (FTIL) and Multi Commodity Exchange (MCX) were both trading in red for the second straight session after the CBI registered a Preliminary Enquiry (PE) against Jignesh Shah-founded FTIL and MCX, former SEBI Chairman C B Bhave and ex-member K M Abraham, among others. Ranbaxy Laboratories was trading in red after Supreme Court issued a notice to the government and the company on a public-interest litigation seeking a CBI probe against the company for allegedly supplying adulterated drugs in the country.

On the global front, the Asian markets barring Jakarta Composite were trading in red, while the European markets were too trading on pessimistic note. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 6,450 and 21,700 levels respectively. The market breadth on BSE was negative in the ratio of 888:1653 while 156 scrips remained unchanged.

The BSE Sensex is currently trading at 21630.19 down by 144.42 points or 0.66% after trading in a range of 21714.44 and 21573.48. There were 9 stocks advancing against 20 declines while 1 stock remained unchanged on the index.

The broader indices were too trading in red; the BSE Mid cap index was down by 0.67% and Small cap index was down by 0.72%.

The only gaining sectoral indices on BSE were, HealthCare up by 0.72% and Realty up 0.24%, while Bankex down by 1.84%, Capital Goods down by 1.15%, Consumer Durables down by 0.87%, TECK down by 0.55% and PSU down by 0.43% were the top losers on the sectoral index.

The top gainers on the Sensex were Dr. Reddy’s Lab up by 1.68%, Cipla up by 1.41%, Gail India up by 1.06%, Sun Pharma up by 0.87% and Tata Steel up by 0.83%. On the flip side, Axis Bank was down by 3.01%, Bharti Airtel down by 2.48%, Wipro was down by 2.31%, ICICI Bank was down by 2.19% and HDFC Bank down by 1.87% were the top losers on the Sensex.

Meanwhile, in order to boost the infrastructure development in the country, the government relaxed the norms for import of steel and its products. The Directorate General of Foreign Trade (DGFT) has notified that an exporter needs to provide quality certification from any international standard certifying body.

India mainly imports flat steel products which find application in the automotive and fast-moving consumer durable sectors. China, Japan, South Korea, the US and Europe are the major suppliers to India. Over the past few years, domestic steel industry has been struggling with increased input cost, leading to decline in steel production. Further, low iron ore production, a main raw material for steel production, mainly in Karnataka has not only hampered the capacity utilization of various steel players, but also led to significant rise in the cost of iron ore in the domestic market due to limited supplies. Since 2007-08, India has been a net importer of steel.

The demand of finished steel is a key indicator of the health of an economy. However, the domestic demand also remained subdued owing to the prevailing economic slowdown. Indian economic growth has slowed down to around 4.6% during first nine month of current fiscal. Import of total finished steel declined by 28.3 percent y-o-y in April-November at 3.65 MT. In the last fiscal, India imported only 7.9 million tonnes (MT) steel. Meanwhile, it is expected that country's steel imports may increase to 50 MT to meet the anticipated 200 MT demand by 2020.

The CNX Nifty is currently trading at 6,447.60 down by 45.50 points or 0.70% after trading in a range of 6,472.95 and 6,432.70. There were 17 stocks advancing against 33 declines on the index.

The top gainers of the Nifty were NMDC up by 2.34%, DLF up by 2.26%, Dr. Reddy’s Laboratories up by 1.99%, Cipla up by 1.24% and Gail India up by 1.23%. On the flip side, Ranbaxy Laboratories down by 3.94%, Axis Bank down by 3.23%, Kotak Bank down by 2.79%, Bharti Airtel down by 2.69% and HCL Tech down by 2.64% were the top losers on the index.

The Asian equity indices were trading in red barring Jakarta Composite which was up by 2.02%; while Nikkei 225 was down by 3.30%, Hang Seng dropped 1.00%, Straits Times descended by 0.37%, KLSE Composite slipped 0.54%, Shanghai Composite inched lower by 0.73%, Seoul Composite slipped 0.75% and Taiwan Weighted was down by 0.69%.

The European markets were trading in red; France’s CAC 40 was down 0.70%, Germany’s DAX dropped 0.69% and UK’s FTSE 100 slipped 0.28%.