Benchmarks end near intraday low; Sensex shut below 17,700 mark

Indian equity markets kick started the August F&O expiry week on a rough note with Sensex breaching crucial 17,700 mark and snapping the day’s trade near their intraday lows. The markets traded in the blues throughout the session in the absence of any positive trigger, both in domestic as well global markets. The sentiments mainly got butchered in the noon session due to political deadlock over the comptroller and auditor general (CAG) reports. Selling got intensified in power and infra space after opposition party, besides hitting out at Prime Minister’s statement on coal controversy, sought cancellation of allocated coal block.

The market-men also remained cautious ahead of GDP data schedule to be released on August 31, 2012. Rate sensitive sectors like, banking, realty and capital goods once again remained the top laggard as hopes of a rate cut by the central bank faded as inflation continues to remain way above its comfort zone of 5%. The sentiments also remained under pressure after the Reserve Bank of India (RBI) said that growth deceleration in Indian economy have been led primarily by a 46% dip in new investments in large projects. Metal shares were down on concerns that demand would be lower on the back of weakening economic scenario in China after government data showed that profits of major industrial enterprises declined by 5.4% in July.

On the global front, the looming recession across the euro zone kept European shares and the single currency under pressure on Monday, but moves were capped ahead of a meeting of central bankers at the end of the week, which could signal fresh stimulus measures. Asian stocks were mostly lower on Monday after the latest data showed a 5.4% decline in profit from China's major industrial enterprises for July compared to the year-ago period.

Back home, the sentiments also remain dampened as public sector undertaking BPCL, HPCL and IOC all edged lower after international crude oil prices went higher on supply worries due to likely interruption of US offshore oil production in the Gulf of Mexico by Tropical Storm Isaac. Moreover, the rupee dropped to 1-week low in low volumes, with pair at 55.60/61 versus Friday’s close of 55.49/50. It rose to as much as 55.63 in trade, the highest since August 20. However, losses remain capped as some respite came from FMCG pack, which edged higher on reports of revival of monsoon rains this month. Rainfall up to August 22, 2012 was 14% below normal, reflecting a significant improvement from 29% below normal at end-June and 19% below normal at end-July.

The NSE’s 50-share broadly followed index Nifty, declined by about forty points but managed to hold crucial 5,400 level while Bombay Stock Exchange’s Sensitive Index - Sensex lost over a hundred points to finish below its crucial 17,700 mark. Moreover, the broader markets too were completely lackluster and snapped the session with a cut of about a percent.

The markets fell on weak overall volumes of over Rs 1.65 lakh crore while the turnover for NSE F&O segment remained on the lower side as compared to that on Friday at over Rs 1.15 lakh crore. Moreover, the market breadth remained in favor of declines as there were 1,020 shares on the gaining side against 1,786 shares on the losing side while 130 shares remained unchanged.

The BSE Sensex lost 104.40 points or 0.59% to settle at 17,678.81, while the S&P CNX Nifty declined by 36.45 points or 0.68% to close at 5,350.25.

The BSE Sensex touched a high and a low of 17,820.07 and 17,662.21 respectively. However, the BSE Mid cap index was down by 1.02% and Small cap index down by 0.96%.

Mahindra & Mahindra up by 1.35%, Reliance up by 0.68%, Sun Pharma up by 0.67%, Bajaj Auto up by 0.63% and Bharti Airtel up by 0.44% were top gainers on the Sensex, while Jindal Steel down by 5.16%, BHEL down by 2.70%, SBI down by 2.58%, ICICI Bank down by 2.12% and Tata Motors down by 1.99% were top losers on the index.

The major gainers on the BSE sectoral space were, Oil & Gas up by 0.34% and FMCG up 0.22%, while Realty down 2.42%, Bankex down 1.81%, Capital Goods down 1.61%, Metal down 1.39% and Power down 1.27% were major losers on the BSE sectoral space.  

Meanwhile, amid poor power generation in India, the Power Ministry has confirmed that major initiatives were taken to improve the situation after the worst blackout last month. The major initiatives of the government include de-licensing of thermal generation, introduction of Ultra-Mega Power Projects (UMPP), investor friendly New Hydro Policy 2008.

With de-licensing of thermal generation, it is expected that market forces would weed out excess and inefficient capacity. The UMPP, each with a capacity of 4,000 MW or more, are being developed with the aim of bridging the gap in generation. The New Hydro Policy 2008 was designed to involve the private sector in developing the hydro-electric power sector and reduce dependence on thermal energy, which accounts for 84% of the country's power generation.

Other initiatives include, augmentation of domestic manufacturing capacity of power plant equipment, adoption of supercritical technologies, liberalization of mega power policy, enhancing availability of skilled and trained manpower etc. The centre also affirmed to supplement the efforts of the State Governments by establishing power plants in the Central Sector through Central Public Sector Undertakings (CPSUs).

The S&P CNX Nifty touched a high and low of 5,399.15 and 5,346.65 respectively.

The top gainers on the Nifty were M&M up by 1.45%, PowerGrid up by 1.02%, Cairn up by 0.82%, Cipla up by 0.72% and HUL up by 0.72%. On the flip side, Jindal Steel down by 5.00%, PNB down by 5.00%, JP Associates down by 3.66%, IDFC down by 3.51% and Axis Bank down by 3.45% were the major losers.

The European markets were trading in green, France's CAC 40 up by 0.20%, Germany's DAX was up by 0.16% , FTSE100 remains shut on account of UK Summer Bank holiday.

Most Asian markets went home with red mark as investors were tired of waiting for central banks in China and the US to take some measures to support business activity in the world's largest economies. Meanwhile, Apple’s court victory in a high-stake patent dispute sent shares of Samsung Electronics and its affiliates into a tailspin, which also pressurized the markets. However, Japan's Nikkei share average inched higher on Monday, rebounding from the previous session's sharp loss, on hopes that US Federal Reserve will soon launch further stimulus, while Hong Kong shares ended down.