Indian equities extend downtred; D-Street drifts to one week lows

Indian equity indices once again snapped a choppy session of trade on a dull note as investors largely remained unwilling to pile up hefty long positions and indulged only in stock specific activity amid thinner trading volumes. The frontline indices one again failed to snap the session in the green territory and even drifted towards lowest levels in the week, below the important psychological 18,450 and 5,550 levels. Though some respite was witnessed on the economy front after the commerce ministry released the weekly inflation numbers which eased in the week ended July 9, raising hopes that prices may start cooling from uncomfortably high levels. Finance Minister Pranab Mukherjee said that he expects general inflation between 6%-7% by the time the current fiscal year ends. Meanwhile, heavy rains in the past few days have erased most of an earlier shortfall with total rainfall since the beginning of the June-September season just 1% below normal until Wednesday, data from the weather department showed. Normal monsoon rains are crucial to summer-sown crops and also are expected to gradually cause the easing in prices. However, the marketmen did not pay much heed to the inflation data as they expected that RBI may hike its key policy interest rates by a further 25 basis points next week, which will mark its 11th hike since March 2010. The central bank is expected to hike rate once more by the end of the year, before pausing its policy tightening measures to rein in the inflationary pressure on the economy. Markets across the globe exhibited mixed trends as European stocks wilted after European officials said a selective default for Greece was a live possibility, raising concerns about impact on the banking sector. Most investors remained on sidelines ahead of the EU summit and as nothing have been decided yet on the US debt ceiling issue. Meanwhile, Asian peers too ended on a mixed note after reports from China showed that preliminary HSBC PMI fell to a 28-month low of 48.9 in July from a final reading of 50.1 in June.

Back on Dalal Street, the benchmarks witnessed volatility right from the start of the trading session as the indices lacked courage to confidently move in either direction. After the dilly-dallying for most part of the first half, the indices commenced their journey in the southbound direction despite the drop in weekly inflation numbers and positive European market opening. Thereafter there was no turning back for the key gauges which eventually snapped the second straight session in the negative territory around the session's lowest point. The NSE's 50-share broadly followed index Nifty, slipped close to half a percent and settled below the crucial 5,550 support level while Bombay Stock Exchange's Sensitive Index, Sensex slipped by over fifty points and closed just above the psychological 18,450 mark. The broader markets too failed to show any kind of fervor and settled on a weak note, in tandem with their larger peers. On the sectoral front, it was the Consumer Durables counter that languished at the bottom of the table with 2.20% losses as majors like Titan and Videocon plunged by 3.08% and 1.34% respectively. The rate sensitive Realty and Bankex pockets too remained under pressure, losing 1.43% and 0.98% respectively on expectations of rate hike by RBI next week. On the other hand, Information technology counter managed to settle in the green terrain with marginal gains. In the result corner, stocks like Mindtree, Hindustan Zinc, Coromandel International and Hero Honda got commended while shares of companies like Biocon, Exide Industries and Kotak Mahindra Bank got punished by investors. The markets dropped on weak volumes of over Rs 1.21 lakh crore while the turnover for NSE F&O segment also remained on the lower side compared to Wednesday at over 1.08 lakh crore. The markets breadth remained negative as there were 1187 shares on the gaining side against 1643 shares on the losing side while 127 shares remained unchanged.

Finally, the BSE Sensex declined by 66.19 points or 0.36% to settle at 18,436.19, while the S&P CNX Nifty lost 25.45 points or 0.46% to close at 5,541.60.

The BSE Sensex touched a high and a low of 18,566.99 and 18,415.36, respectively. The BSE Mid cap and Small cap indices were down by 0.43% and 0.45% respectively.

The top gainers on the Sensex were Hero Honda up 1.57%, Tata Motors up 0.71%, Hindustan Unilever up 0.60%, Wipro up 0.58% and Infosys up 0.57%.

On the flip side, Reliance Com down 4.24%, Reliance down 1.66%, Jaiprakash Associate down 1.39%, HDFC Bank down 1.30% and NTPC down 1.16% were the top losers on the index.

The top gainers on the BSE sectoral space were IT up 0.14%, TECk up 0.09%. While Consumer Durables (CD) down 2.20%, Realty down 1.43%, Bankex down 0.98%, Helth Care (HC) down 0.80% and Oil & Gas down 0.78% were the top losers on the BSE sectoral space.

Meanwhile, giving some relief to the government, India's food inflation measured by wholesale price index (WPI) softened to 7.58% for week ended July 9 from 8.31% in the previous week. This moderation in food inflation came due to the decline in prices of food items like pulses, onions, cereals, milk and Egg, Meat & Fish. However, the inflation in fuel and power remained unchanged at 11.89%.

According to data released by ministry of commerce and industry, the index for 'Food Articles' group, which account for 14.34% of WPI, remained unchanged at its previous week's level of 191.7 (Provisional).  The items for which the index showed increase are ragi (12%), fruits & vegetables (2%), barley, gram, arhar, masur, poultry chicken and tea (1% each). However the index for fish marine (6%), maize (3%), fish inland (2%) and jowar (1%) declined during the week. 

However, the index for 'Non-Food Articles' group, which account for 4.26% of WPI, rose by 0.1% to 175.9 (Provisional) from 175.8  (Provisional) for the previous week due to higher prices of niger seed (20%), gingelly seed and gaur seed (4%), raw rubber, fodder and raw jute (2% each) and flowers and rape & mustard seed (1% each). However, the prices of groundnut seed and soyabean (2% each) and cotton seed, sunflower, mesta, raw cotton, raw silk and castor seed (1% each) declined. Collectively, the index for Primary Articles group, which account for 20.12% of WPI, rose by 0.1 percent to 197.7 (Provisional) from 197.6 (Provisional) for the previous week. Meanwhile, the Index for Fuel and power group, which account for 14.91% of WPI, remained unchanged at their previous week's level of 165.6 (Provisional) and 11.89 % (Provisional) for the week ended 9 June. The annual rate of inflation, calculated on point to point basis, stood at 11.13 % (Provisional) for the week ended 9 June as compared to 11.58 % (Provisional) for the previous week 2 June.

After reaching to two and half month high level, food inflation has seen some moderation. However, this moderation in food inflation is viewed as temporary, and is less likely to affect the anti inflationary stance adopted by the Reserve Bank of India as the headline inflation for June increased to 9.44% from 9.06% in May and it is widely expected that on July 26, the RBI will go for 11th hike in interest rates since March 2010, in order to cool down inflation.    

The S&P CNX Nifty touched high and low of 5,578.90 and 5,532.70, respectively.

The top gainers of the Nifty were Hero Honda up 1.82%, Cairn up 1.45%, Siemens up 1.30%, Sun Pharma up 0.96% and ITC up 0.87%.

On the flip side, RCOM down 4.13%, Kotak Bank down 3.53%, IDFC down 2.67%, Sesa Goa down 2.61% and Reliance down by 2.08% were the top losers on the index.

The European markets were trading in red. France's CAC 40 lost 0.46%, Britain's FTSE 100 down by 0.75% and Germany's DAX slipped by 0.80%.

Asian equity indices recovered from its initial downfall and finished the day's trade on a mixed note on Thursday as investors remained cautious and watched for progress in raising the US government debt limit and talks on Europe's debt crisis. Chinese Shanghai declined over a percent after a weak reading on China's HSBC Manufacturing Purchasing Managers Index renewed concerns that growth in the world's second largest economy may slow in the latter half of the year while, South Korean shares ended down about half a percent in the trade as uncertainty about the global economy and the euro zone's debt crisis hit manufacturing heavyweights such as shipbuilder Hyundai Heavy. However, Taiwan stocks rose 0.13 percent, with chip makers recovering from early dips after Intel Corp's subdued outlook for PC sales and with smartphone maker HTC recovering further from a recent decline.

Asian Indices	Last Trade	Change in Points	Change in %
Shanghai Composite	2,765.89	-28.31	-1.01
Hang Seng	21,987.29	-16.40	-0.07
Jakarta Composite	4,068.07	17.44	0.43
KLSE Composite	1,565.81	3.22	0.21
Nikkei 225	10,010.39	4.49	0.04
Straits Times	3,138.51	11.98	0.38
Seoul Composite	2,145.04	-9.91	-0.46
Taiwan Weighted	8,717.14	10.97	0.13

 

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