Indian benchmarks recede for yet another session; settle with moderate losses

It turned out to be an unenthusiastic start of the week for the Indian benchmark which prolonged the lull for the third straight session and continued to oscillate in a very tight range. Market participants remained on the sidelines lacking conviction amid the persistent worries over global financial stability as the global economic outlook got dimmed by aggravating sovereign debt troubles across the western nations, after a weak US consumer confidence which hit a near 2-1/2-year low in early July and stalling US manufacturing output in June. The European markets traded with grave losses of over a percent after European bank stress test did little to reassure investor confidence in the continent's shaky financial sector, revealing that eight out of 90 European banks flunked tests aimed at revealing how they would fare in another recession. While the Asian peers exhibited subdued trends and kept local investors out of action. Back home, the session largely remained characterized by choppiness as the aimless indices moved only sideways in a narrow range lacking domestic triggers to break the pattern. Investors are awaiting the RBI's next policy announcement due on July 26 for further direction amid expectations that inflation and interest-rate cycle would peak out soon. The indices drifted closer towards the psychological 5,550 and 18,500 levels as profit booking in rate sensitive Automobile and information technology counters outweighed the gains in high beta Real Estate and Metal pockets. Marketmen also anticipated some key policy decisions from the government like passing of legislation on foreign direct investment in retail in the monsoon session of the parliament, raising of infrastructure spending and speeding up of project execution, which would provide the much needed boost to domestic markets.

Back on Dalal Street, the benchmark got off to a flat start in the morning session. However, after hitting intraday highs, the key indices failed to regain those levels and gradually kept on loosing traction. Losses for the key gauges widened after European markets opened on a bleak note. Eventually the indices snapped the session in the red territory with moderate losses. The NSE's 50-share broadly followed index Nifty, shed a quarter percent and closed above the crucial 5,550 support level while Bombay Stock Exchange's Sensitive Index, Sensex slipped by over fifty points and closed above the psychological 18,500 mark. However, the broader markets traded on a positive note though with marginal gains. On the sectoral front, it was the rate sensitive Auto counter that languished at the bottom of the table with 1.04% losses as majors like Tata Motors and Mahindra & Mahindra plunged 1.94% and 1.71% respectively. The Information Technology pack too remained under pressure on concerns over their first quarter earnings amid the worsening debt troubles for US and Europe - the major importers of their services. On the other hand, the high beta Realty pocket went home with good gains after bellwethers like Unitech and DLF gained 1.62% and 0.82% respectively. The oil marketing PSUs like IOC, HPCL and BPCL advanced in the session as international crude oil prices plunged overnight on dampening global economic outlook amid speculations that the International Energy Agency may decide whether to draw further on emergency oil stocks like it did in June by releasing 60 million barrels. The markets consolidated on weak volumes of over Rs 0.93 lakh crore while the turnover for NSE F&O segment also remained on the lower side compared to Friday at over 0.82 lakh crore. The markets breadth remained positive as there were 1546 shares on the gaining side against 1322 shares on the losing side while 144 shares remained unchanged.

Finally, the BSE Sensex declined by 54.88 points or 0.30% to settle at 18,507.04, while the S&P CNX Nifty lost 14.05 points or 0.25% to close at 5,567.05.

The BSE Sensex touched a high and a low of 18,622.56 and 18,469.53, respectively. The BSE Mid cap and Small cap index was up by 0.22% and 0.37% respectively.

The top gainers on the Sensex were Hindalco Inds up 3.09%, BHEL up 2.70%, Tata Power up 2.37%, HDFC Bank up 1.06% and HDFC up 0.99%.

On the flip side, TCS down 1.97%, Tata Motors down 1.94%, Cipla down 1.90%, Mahindra & Mahindra down 1.71% and Reliance Communication down 1.67% were the top losers on the index.

The top gainers on the BSE sectoral space were Realty up 0.89%, Consumer Durables (CD) up 0.70%, Metal up 0.48%, Power up by 0.43% and PSU up 0.24%, While Auto down 1.04%, IT down 0.81%, Health Care (HC) down 0.80%, TECk down 0.60% and Oil & Gas down 0.32% was the top losers on the BSE sectoral space.

Meanwhile, the foreign institutional investors (FIIs) infused around Rs 8,000 crore or $2 billion in the domestic stock and debt market so far this month, experts have the opinion that investment from FIIs will continue to increase in the coming months.

As per the information available with market regulator SEBI, the FIIs, in July made gross investment of around Rs 43,994 crore in equities and debt securities, however, they also sold shares and bonds worth around 36, 195 crore, resulting of net investment of Rs 7,799 crore. Experts say, this increase in FII flows is due to moderation in crude oil prices and inflation. FIIs were quite optimistic on the equity market; they invested around Rs 6,475 crore in equities and Rs 1,324 crore in securities market.

Investors had avoided the stocks markets in emerging countries such as India in the first six months of the 2011 as these countries battled inflation. Besides, high interest rate was also considered as a risk to these countries. However, foreign investors were interested in the debt market during the same period of time, FII invested around Rs 9,948 crore in debt market whereas they invested around Rs 2,670 crore in stock markets. Market experts believe that, FIIs will remain bullish in the remaining six months of the current financial year, and investment from FIIs is expected to increase.

During 2010, FIIs purchased stocks and bonds worth around Rs 10 lakh crore, in the same period, Foreign investors also sold shares and bonds worth around Rs 7,80,000 crore, which resulted into net investment of Rs 1.75 lakh crore for the year, which is a record. During the same year, the number of FIIs registered with SEBI marginally increased to 1,728 as of July 2011 from 1,718 at the end of 2010. 

The S&P CNX Nifty touched high and low of 5,596.60 and 5,550.95, respectively.

The top gainers of the Nifty were Hindalco up 3.60%, BHEL up 2.65%, Tata Power up 2.54%, GAIL up 1.98% and IDFC up 1.40%.

On the flip side, Cipla down 2.16%, Mahindra & Mahindra down 2.14%, RCOM down 2.14%, NTPC down 2.05% and TCS down by 2.01% were the top losers on the index.

The European markets were trading in red. France's CAC 40 plunged 1.56%, Britain's FTSE 100 declined by 1.10% and Germany's DAX down by 1.29%.

Most of the Asian equity indices finished the day's trade in the negative territory on Monday despite Friday's better-than-expected European bank stress-test results, as investors continued to fret over euro-zone sovereign debt while, debt problems in the US too dampened the sentiments in the region. Chinese index Shanghai Composite edged lower in the trade, weighed down by energy shares on news reports the government may broaden taxes to protect natural resources. Moreover, Japanese financial markets remained closed on Monday on account of public holiday.

Asian Indices	Last Trade	Change in Points	Change in %
Shanghai Composite	2,816.69	-3.48	-0.12
Hang Seng	21,804.75	-70.63	-0.32
Jakarta Composite	4,032.97	9.77	0.24
KLSE Composite	1,562.58	-14.67	-0.93
Straits Times	3,078.95	-5.29	-0.17
Seoul Composite	2,130.48	-14.72	-0.69
Taiwan Weighted	8,538.57	-36.34	-0.42
Nikkei 225	-	-	-

 

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