Benchmarks snap three days gaining streak on feeble global cues

Snapping three days gaining streak, Indian equity benchmarks ended Thursday’s trade in the red with a cut of over half a percent and frontline gauges declining below their psychological 6,500 (Nifty) and 21,800 (Sensex) levels on feeble global cues. Sentiments  remained dampened since start of the trade, as US Fed cut monthly purchases of Treasuries to $55 billion and investors remained concerned about the Fed statement that the time between the end of bond-buying and rate increases could be on the order of ‘six months’. Moreover, depreciation in Indian rupee too dampened investors’ sentiments. Indian rupee hit one week low as compared to dollar, reacting to the hawkish stance of the US Federal Reserve Chairwoman Janet Yellen, signaling Fed may raise US interest rates from the middle of next year.

Selling got intensified after European markets made a sluggish opening with CAC, DAX and FTSE all trading lower in early deals ahead of the US reports on jobless claims and housing. Moreover, most of the Asian equity indices ended lower on concern of capital outflows from emerging markets back into the US after the indication of rise in rate.

Back home, metal stocks like JSW Steel, Sesa Sterlite, Tata Steel, Hindalco etc all edged lower, as concern deepened that the Chinese economy is slowing. Additionally, public sector oil marketing companies (OMCs) too traded choppy on reports that the finance ministry wants oil marketing companies to absorb a much higher share of under recoveries this fiscal. It was reported that the OMCs will have to absorb as much as Rs 5,000 crore as against Rs 900 crore in FY13. Among stocks that pulled benchmark indices significantly lower were banking and financials. Mortgage lender HDFC and banking stocks such as HDFC Bank, ICICI Bank, SBI and Axis Bank collectively pulled the benchmark lower.

However, the losses remained capped as traders continued betting big on the upcoming general election outcome. Some support came from software and technology counters which gained around a percentage point with the industry body Nasscom admitting that the domestic story has not been good in the country and saying that though US market is looking up, the industry should open up new fronts such as China, Japan, South Korea and Africa.

The NSE’s 50-share broadly followed index Nifty dipped by over forty points to end below its psychological 6,500 level, while Bombay Stock Exchange’s Sensitive Index -- Sensex declined by over ninety points to end below the psychological 21,750 mark. Broader markets too struggled to get any traction and ended the session mixed. The market breadth remained in favour of decliners, as there were 1,269 shares on the gaining side against 1,534 shares on the losing side, while 137 shares remained unchanged.

Finally, the BSE Sensex declined by 92.77 points or 0.42%, to settle at 21740.09, while the CNX Nifty lost 40.95 points or 0.63% to settle at 6,483.10.

The BSE Sensex touched a high and a low of 21853.25 and 21704.66, respectively. The BSE Mid cap index was down by 0.36%, while the Small cap index gained 0.06%.

The top gainers on the Sensex were TCS up by 3.28%, Hindustan Unilever up by 2.01%, Wipro up by 1.09%, Infosys up by 0.96% and Sun Pharma up by 0.91%, while BHEL down by 2.74%, Gail India down by 2.67%, HDFC down by 2.12%, L&T down by 2.12% and Axis Bank down 2.11% were the top losers in the index.

On the BSE Sectoral front, IT up by 1.69%, Teck up by 1.23% and Healthcare up by 0.17% were the only gainers, while Realty down 2.23%, Capital Goods down by 1.94%, Power down by 1.62%, Bankex down by 1.36% and Metal down by 1.20% were the top losers in the space.

Meanwhile, the National Association of Software and Service Companies (Nasscom) has suggested the Indian IT firms to diversify business in countries including China, Japan, South Korea and Africa instead of keeping focus on the US market. Admitting that domestic market has remained sluggish for industry with stagnant growth in the last two years, Nasscom President R Chandrashekar highlighted that it has become imperative for domestic IT firms to prepare country-specific strategies to tap the Asian and African markets. 

Nasscom projects Indian IT-BPO industry growth at 13-15 percent for 2014-15 and exports at same rate of 13-15 percent from $86 billion for 2013-14 to $97-99 billion by the next fiscal year. The size of the IT-BPO industry would grow from $108 billion in 2012-13 to $118 billion in 2013-14 with a stagnant $32-billion domestic market contribution.

R Chandrashekar further added that there is a downturn in the domestic market, generating a growth of only 10% in rupee terms. Further, political uncertainty, slowdown in policy and decision-making and macro- economic issues are the major challenges that the IT-BPO industry is facing. Meanwhile, in order to boost domestic IT market, Nasscom is focusing on some areas that needed immediate attention. On global front, Nasscom is stepping up efforts to improve business ties with China amid expectations of increasing IT spending by the Chinese government in order to make a major dent in the Chinese information technology (IT) market.

The CNX Nifty touched a high and low of 6,523.65 and 6,473.25 respectively.

The top gainers of the Nifty were TCS up by 3.31%, Hindustan Unilever up by 2.03%, Cipla up by 1.31%, Wipro up by 1.27% and Sun Pharmaceuticals Industries up by 0.97%. On the other hand, DLF down by 3.91%, BPCL down by 3.90%, Ambuja Cements down by 3.64%, Jaiprakash Associates down by 3.09% and Power Grid Corporation of India down 3.03% were the top losers.

The European markets were trading in red, France's CAC 40 was down by 0.96%, Germany's DAX was down by 0.92% and United Kingdom's FTSE 100 was down by 0.97%.

The Asian markets, barring KLSE Composite concluded Thursday’s trade in red, with Indonesia’s rupiah falling the most in three months, after the head of the Federal Reserve suggested US interest rates could start to rise from early next year . Japan’s annual export growth in February was short of market expectations, and a Bank of Japan policy-maker warned about the outlook as the world’s third-largest economy faces a sales tax hike next month that could dent economic activity. The exports rose 9.8% in February from a year earlier, following a 9.5% gain in the previous month, as shipments of cars to China and Asia recovered from a Lunar New Year slowdown.

The median monthly wage of Hong Kong employees rose across the board last year for the benchmark period of May-June. The median monthly wage was $14,100, up 5.2% over a year earlier and higher for both male and female employees and for all age groups, educational attainment levels, occupational groups and industry sections. Hong Kong’s inflation eased in February. The consumer price index rose 3.9% in February from a year back, after growing 4.6% in January.