Markets fell on global concern; Nifty drifts below 6100

Indian markets finally gave up on Thursday, snapping their four days gaining streak and the benchmarks lost around a percent for the day. It was almost the reversal of the last day’s trade when major indices after showing a range bound trade albeit in red, slumped for the worst in the final hours. Once started in red, market never looked gaining any strength and kept on slipping lower, which aggravated in the final moments of trade, dragging the benchmarks near the lows with Nifty losing its psychological level of 6100. Broader markets that showed some resistance in early trade too could not do much and ended flat.

The market started weak on sluggish global cues, as the US markets turned lower overnight after release of minutes from Federal Reserve’s recent meeting where members agreed for further reduction in the pace of asset purchases. The Asian markets too ended in red and the Chinese index after much resistance also succumbed to the pressure with decline in Chinese Purchasing Managers’ Index to 48.3 in February compared with January’s final figure of 49.5. The final blow came with an extremely weak start of the major European bourses that further dragged the domestic markets lower.

Back home, Indian markets fared badly and lost more than double what they have garnered in last session, falling first time in last five sessions. The high flier of the last couple of trades, banking sector suffered severe selling pressure and all the major banks posted considerable losses in the range of 2-4%. SBI the country’s largest lender too lost about 2% despite being on verge of finalising a plan to improve profitability by tightening the belt on asset quality and boosting its fee income stream. The continuous weakness in rupee on dollar demand from oil importers amid weakness in emerging Asian currencies, too kept weighing the sentiments of the market. Meanwhile, traders also remained concerned on report that India recorded an average annual economic growth rate of 8 per cent during the 11th Five Year Plan (2007-12) compared to targeted 9 per cent. Sectorally, barring some resistance in Power and Capital Goods all other indices ended in red for the day. Telecom stocks were particularly under pressure as the guidelines for mergers and acquisitions of telecom companies are expected to be in place within 10 days which may disappoint phone companies because the government has refused to concede the demand that they shouldn't be required to pay market-linked prices for spectrum that comes with any acquisition. Bharti Airtel lost 1.98%, Idea was down by 1.87%, while Reliance Communication lost 1.39% on the BSE.

The market breadth remained in favor of decliners, as there were 1,192 shares on the gaining side against 1,480 shares on the losing side while 148 shares remained unchanged.

Finally, the BSE Sensex plunged by 186.33 points or 0.90%, to settle at 20,536.64, while the CNX Nifty lost 61.30 points or 1.00% to settle at 6,091.45.

The BSE Sensex touched a high and a low of 20662.66 and 20522.04, respectively. The BSE Mid cap index ended flat with positive bias, while the Small cap index ended lower by 0.16%.

The top gainers on the Sensex were Dr Reddys Lab up by 1.82%, Bajaj Auto up by 1.15%, Tata Power up by 0.90%, BHEL up by 0.27% and L&T up by 0.21%, while, ICICI Bank down by 2.15%, Bharti Airtel down by 1.98%, SBI down by 1.80%, Tata Steel down by 1.80% and HDFC down by 1.63% were the top losers in the index.

On the BSE Sectoral front, Power up by 0.24% and Capital Goods up by 0.12% were the only gainers, while Bankex down by 1.63%, PSU down by 1.05%, Metal down by 1.01%, FMCG down by 0.91% and Oil & Gas down by 0.89% were the top losers in the space.

Meanwhile, after the CNG prices were cut earlier this month, Oil Minister M Veerappa Moily has ordered city gas distribution (CGD) firms to display break-up of fuel price to consumers, which would include cost of gas to the CGD entity, supply and distribution cost, company's margin, excise, VAT and any other tax - to their customers.

This move which would ensure the benefit of cheaper domestic gas passed onto the end users and would also lead to transparency in pricing.  The Oil Minister has also asked all CGD companies to furnish the break-up of CNG and PNG price to the Ministry on annual basis by April 30 each year, which includes the data for 2013-14 to be furnished by April 30, 2014, non-compliance to which lead to cancellation of domestic gas allocation for CNG and PNG.

Compressed natural gas or (CNG) sold to automobiles and natural gas piped to household kitchens, will be the first fuel where consumer will get invoices providing break-up of price. Notably up-till now, no break-up of price of petrol, diesel, LPG or kerosene has ever been provided to consumers.

Earlier in February, the oil ministry decided to give city gas distribution (CGD) companies’ cheaper domestic gas to meet all their requirements for CNG and piped natural gas (PNG) supplies to households compared with the previous limit of 80% for most states. This development led to a steep Rs 14.90 per kg cut in price of compressed natural gas or CNG and Rs 5 per kg reduction in rates of cooking gas piped into kitchens in Delhi. Similar cuts in rates were expected in all states, except Maharashtra and Haryana, as city gas distributors stop buying higher-priced LNG and shifted entirely to domestic gas.

The CNX Nifty touched a high and low of 6,129.10 and 6,086.45 respectively.

The top gainers of the Nifty were JP Associate up 5.47%, Dr. Reddy's Laboratories up by 1.88%, Bajaj-Auto up by 1.54%, Tata Power up by 1.42% and L&T up by 0.50%.  On the other hand, Bank of Baroda down by 3.47%, Kotak Bank down by 2.43%, Grasim down by 2.24%, IndusInd Bank down by 2.15% and ICICI Bank down by 2.12% were the top losers.

The European markets were trading in red; France’s CAC 40 was down 0.38%, Germany’s DAX was down 0.96% and UK’s FTSE 100 was down 0.20%.

All the Asian markets barring Jakarta Composite concluded Thursday's trade in red following a weak lead from Wall Street. Minutes of the US Federal Reserve's latest policy-setting meeting released overnight pointed out that the Fed was on track to cut its bond-buying stimulus in coming months as long as the economy continues to grow as expected. The sentiments remain dampened as disappointing Chinese manufacturing data underlined concerns over the strength of the region’s largest economy. China’s Shanghai Composite fell from a two-month high as a bigger-than-estimated decline in a manufacturing gauge. The HSBC and Markit Economics revealed that the PMI came in with a score of 48.3, touching a seven-month low and well shy of forecasts for a score of 49.5.

Japanese stocks declined as traders continued to monitor movements in the currency market with firmer yen amid worries about emerging markets. Japan’s Ministry Finance reported that country’s trade deficit in January widened to 2.79 trillion yen against the expectation of 2.489 trillion yen. Exports grew 9.5% to 4,798.57 billion yen from a year earlier, while imports surged 25.0% to 6,432.11 billion yen. Now the Bank of Japan will have to take appropriate measures to counter downside risks and make adjustments as appropriate.