Sell-off in last leg of trade propel benchmarks to end flat

Key Indian stock indices surrendered almost the entire intraday gains in the final hour of trade, with the BSE’s Sensex and the NSE’s Nifty snapping the session near their pre-close level. The bourses exhibited strong run for most part of the day’s trade on hope that the government will go forward with the reform measures as Vice Presidential elections are over. Moreover, comments from Union Finance Minister P Chidambaram early this week that he intends to shortly unveil a path of fiscal consolidation, aided gains on the domestic bourses as the barometer indices hit their highest level in more than 20 weeks. But, the markets witnessed brutal turnaround in last leg of trade which came in the wake of a sharp reversal in the European markets.

The European stocks fell from a four-month high and the euro weakened on the back of earning disappointment and German exports dropped more than expected. German exports fell 1.5% in June from the previous month. Though, overnight the US stocks rose for a third straight day, pushing the S&P above 1,400 for the first time since early May while, most of the Asian markets made a positive close on better corporate earnings report from US that boosted the outlook for the economy. The Japanese market has surged by over a percent ahead of Bank of Japan’s two-day policy meeting starting today.

Back home, sentiments remained subdued after rating agency CRISIL cut India’s Gross Domestic Product (GDP) growth forecast to 5.5 percent for financial year 2012-13 from 6.5 percent earlier. In addition, Citigroup and CLSA also slashed their outlook for growth to 5.4 percent and 5.5 percent respectively in the fiscal year ending March. Furthermore, a weak monsoon, high interest rates, increasing twin deficits, stubborn inflation and policy impasse at the Centre too dampened the sentiments. The regular disruption of the Parliament on the first day of monsoon session also created doubts over the government’s ability to push through key economic bills.

The downside of the bourses in today’s trading session remained capped mainly on account of uptick of market bellwether Reliance Industries, which amassed gains of over half a percent after management committee for the D6 field in Krishna-Godavari (KG) basin on August 7 conditionally approved the budget and work programmes for the field that have been pending for the last three years. Strength in index bellwethers such as M&M, Hindalco, Sterlite Industries, HUL, Infosys, Reliance Industries and Tata Motors has more than offset weakness in Bharti Airtel, GAIL, ICICI Bank, TCS, L&T and ONGC.

On the earnings front, Bharti Airtel disappointed the street, leading to over six and half a percent fall in its stock price. The company, on consolidated basis, reported a decline of 37.28% in its net profit at Rs 762.20 crore for Q1FY13 as compared to Rs 1215.20 crore for Q1FY12. On the other hand, M&M shares spurted, by about four percent, after the company announced better-than-estimated first-quarter results.

The markets fell on weak overall volumes of over Rs 1.69 lakh crore while the turnover for NSE F&O segment too remained on the lower side as compared to that on Tuesday at over Rs 1.16 lakh crore. Moreover, broader markets too ended marginally in the red after trading in the positive terrain for most part of the day’s trade while, the market breadth remained in favor of declines as there were 1,245 shares on the gaining side against 1,606 shares on the losing side while 115 shares remained unchanged.

The BSE Sensex lost 1.22 points or 0.01% to settle at 17,600.56, while the S&P CNX Nifty declined by 1.30 points or 0.02% to close at 5,338.00.

The BSE Sensex touched a high and a low of 17,726.64 and 17,582.66 respectively. However, the BSE Mid cap and Small cap index ended down by 0.20% and 0.38% respectively.

Mahindra & Mahindra up by 3.92%, Hindalco up by 2.23%, Sterlite Industries up by 1.29%, Hindustan Unilever up by 1.20% and Infosys up by 1.16% were top gainers on the Sensex, while Bharti Airtel down by 6.60%, Gail India down by 2.87%, ICICI Bank down by 1.62%, TCS down by 1.11% and L&T down by 0.73% were top losers on the index.

The major gainers on the BSE sectoral space were, Auto up by 1.20%, PSU up by 0.82%, Metal up by 0.81%, IT down 0.37% and FMCG up 0.36%, while Realty down by 2.01%, TECk down 0.81%, Capital Goods down 0.61%, Bankex down 0.54% and Consumer Durables down by 0.26% were major losers on the BSE sectoral space.  

Meanwhile, considering deficient monsoon rains and its impact on rural areas in India, the Reserve Bank of India (RBI) has come up with a breather to the farmers by easing repayment norms for Kisan Credit Cards (KCC). The apex bank has omitted the clause pertaining to mandatory repayment of loans by card holders within a year and has permitted banks to fix the repayment period based on the anticipated harvesting and marketing period for the crops for which loan has been granted.

The decision is expected to benefit over 10 crore KCC holders. RBI notified that KCC could now also be used for making mandatory crop insurance, while continuing with the existing options of withdrawing money from ATMs and getting benefits of asset insurance, personal accident insurance scheme and health insurance. The Finance Ministry confirmed that aids for farmers in replanting alternate crops as well as supply of drinking water and fodder will be assured to tide over the difficult situation.

Monsoon is the life-line of the agriculture sector as only 40 percent of the cultivable area is irrigated. Rain has been 20 percent lower during June-July 2012; affecting kharif crops mainly coarse cereals and pulses. Karnataka, Gujarat, Maharashtra and Rajasthan are facing drought-like situation. Last week, Empowered Group of Ministers (EGoM) on drought had approved diesel subsidy of 50 percent to farmers for saving standing crops and Rs 2,000 crore package for states affected by drought-like situation.

The government had launched KCC Scheme in 1998-99 with a view to provide adequate and timely support from the banking system to the farmers for their cultivation needs including purchase of inputs in a flexible and cost effective manner.

The S&P CNX Nifty touched a high and low of 5,377.60 and 5,331.05 respectively.

The top gainers on the Nifty were M&M up by 3.87%, BPCL up by 3.02%, Hindalco up by 1.98%, Grasim up by 1.73% and Ranbaxy up by 1.67%. On the flip side, Bharti Airtel down by 6.43%, GAIL down by 3.02%, DLF down by 2.07%, PNB down by 1.86%, and ICICI Bank down by 1.68% were the major losers.

The European markets were trading in red, France's CAC 40 down up 0.61%, Germany's DAX was down 0.40% and United Kingdom’s FTSE 100 was down 0.47%.

Most of the Asian markets ended higher on the third consecutive session on Wednesday, on the back of continued hopes for a new round of stimulus from the US and European central banks. However, Hong Kong listed Standard Chartered's shares dropped for a second day, as the bank was accused by US regulators of hiding sanction-busting multi-billion-dollar trades with Iran. Meanwhile, oil prices fell after racing up to a 12-week high on Tuesday on expectations of further economic stimulus.