Markets suffer massive profit booking on weak global cues

Indian markets followed the global market trends on Thursday and gave up more than what they have garnered in the last 6-7 sessions. Apart from the negative global setup, disappointing macro data from the domestic economy front too weighed on the sentiments. Also, there were some earnings disappointment that took their toll on the traders sentiment. Markets kept on declining right from the beginning and stopped only with the closing of the trade, at the lowest point of the day and benchmarks lost their crucial support levels, while Nifty intraday breached 6000 level and barely managed to hold it in last.

The global cues remained weak, while the US markets ended mostly in red, the Asian markets made a soft close and some of the indices, losing their six days gaining streak suffered cuts of 0.50-1.50% for the day amid uncertainty about the near-term global economic outlook. The European markets too made a soft start and pressured the domestic markets.

Back home, the local markets made a positive start but soon relinquished gains, as the euphoria of the retail inflation slowing down to a two-year low in January to 8.79 percent fizzled out and the traders turned cautious with the rise in core retail inflation to 8.11% from 8.08% in the previous month, that raised concerns that RBI in its upcoming policy review on April 1, 2014 may go for another rate hike, as it has deemed the core inflation above 8% uncomfortably high. Traders also remained concerned about the third straight month of contraction in industrial production by 0.6 per cent in December 2013, presenting a gloomy picture of the industrial scenario in the country. The weakness in rupee too pressured the markets mid way, the domestic currency after a good start faltered on fresh dollar demand from banks and importers. Barring modest gains in the realty index, none of the sectoral indices showed any resilience and most of them ended lower by over a percent, with banking and capital goods suffering the maximum beating. One spot that remained in green since morning was sugar sector after the Cabinet Committee on Economic Affairs (CCEA) finally approved a subsidy of Rs 3,333 per tonne for exports of raw sugar. There was weakness in some heavyweights that dragged the markets lower; Cipla plunged around 8% after reporting over 16% fall in its net profit at Rs 284.31 crore for the quarter ended December 31, 2013, as compared to Rs 340.31 crore for the same quarter in the previous year. Coal India was down by over 3% on reporting below expectations numbers. ONGC too slumped by around 4% after the Supreme Court put a stay on Gujarat High Court order asking it to pay Rs 10,000 crore in past royalty dues. The broader markets too lost in tandem to their larger peers, while the volume was on higher side with total turnover of 1.70 lakh crore.

The market breadth remained in favor of decliners, as there were 921 shares on the gaining side against 1,661 shares on the losing side while 150 shares remained unchanged.

Finally, the BSE Sensex plunged by 255.14 points or 1.25%, to settle at 20,193.35, while the CNX Nifty lost 82.90 points or 1.36% to settle at 6,001.10.

The BSE Sensex touched a high and a low of 20503.86 and 20164.67, respectively. The BSE Mid cap index was down by 0.83%, while the Small cap index lost 1.05%.

The top gainers on the Sensex were TCS up by 1.42%, Mahindra & Mahindra up by 1.16%, SSLT up by 0.69% and Sun Pharma up by 0.60%, while, Cipla down by 7.70%, BHEL down by 3.50%, Coal India down by 3.39%, ONGC down by 3.29% and Hindalco down by 3.19% were the top losers in the index.

On the BSE Sectoral front, Realty up by 0.39% was the only gainer, while PSU down by 2.50%, Bankex down by 2.11%, Capital Goods down by 2.06%, Oil & Gas down by 1.84% and Metal down by 1.81% were the top losers in the space.

Meanwhile, India Inc has given thumbs up to Interim Rail Budget 2014, wherein no populist measures were announced. Appreciating government's focus on modernization and expansion of the country's vast rail network without touching passenger fares and freight rates, India Inc termed ‘Railway Budget 2014’ - a step in the right direction.

It noted that government’s focus was rightly attracting huge investments to upgrade, modernizing and expanding railways as per aspirations of people and attempting to bring in foreign direct investment (FDI). It further stated that increasing private participation, as rightly noticed by the government, seems to be the way of future development.

In the interim budget for four months in the Lok Sabha, Railway Minister Mallikarjun Kharge announced to set up an independent Rail Tariff Authority to rationalize fares. He also highlighted that there was a proposal to expand dynamic pricing of tickets in line with the airline industry.

Further, the minister announced the launch of 17 new premium trains, 39 express trains and ten passenger trains in the coming year and providing rail connectivity to Katra and Vaishnodevi in Jammu and Kashmir, and Meghalaya and Arunachal Pradesh in the Northeast.

The CNX Nifty touched a high and low of 6,094.40 and 5,991.10 respectively.

The top gainers of the Nifty were TCS up 1.54%, DLF up by 1.28%, M&M up by 1.14%, SSLT up by 0.53% and Sun Pharmaceuticals up by 0.48%. On the other hand, Cipla down by 7.70%, Bank of Baroda down by 5.88%, Grasim down by 4.57%, BHEL down by 4.23% and IDFC down by 3.88% were the top losers.

The European markets were trading in red; France’s CAC 40 was down 0.23%, Germany’s DAX was down 0.16% and UK’s FTSE 100 was down 0.60%.

All the Asian markets barring Straits Times, concluded Thursday’s trade in red on account of profit-taking following a weak lead from Wall Street. Japan’s Corporate Goods Price Index fell to a seasonally adjusted annual rate of 2.4%, from 2.5% in the preceding month. Bank Indonesia in its monthly monetary policy meeting decided to keep its benchmark interest rate unchanged. The key policy rate was kept unchanged at 7.50%. The Bank of Korea too held its policy interest rate steady at 2.5% as widely expected, citing contained inflation and continued economic recovery. The central bank hasn’t changed the benchmark rate since May of last year.

Malaysian GDP rose to a seasonally adjusted 5.1%, from 5.0% in the preceding month. Malaysia trimmed its fiscal deficit to 3.9% of gross domestic product last year, after cutting government spending and state subsidies to avert a credit-rating downgrade. Prime Minister Najib Razak narrowed the shortfall from 4.5% of GDP in 2012, beating the government’s 4% deficit target for last year. The country wants to further reduce the budget gap to 3.5% this year and achieve a balanced budget by the end of this decade.