Infosys’ good set of Q4 numbers failed to infuse any strength at Dalal Street, wherein market-participants made a bee-line to cash out their profits ahead of Retail Inflation i.e. CPI data, slated to be announced later in the day. Squandering a positive start, benchmarks soon succumbed to selling pressure on the back of weakness of rate sensitive counters, while absence of positive global cues also intensified sentiment further. There appeared no sign of recovery as benchmarks kept losing ground steadily, though some buying was witnessed in fag end of trade, but too little to be termed recovery.
Earlier in the day, markets made a positive start after IT bellwether Infosys reported better-than-expected margins and profits for the March quarter, though sales were flat. Country’s second largest outsourcer said its dollar revenues are likely to grow at 7-9% in the current fiscal, sending its shares higher by as much as 4.2% in early deals. This optimism in Infosys stocks was sensed across entire IT space, which provided a floor to bourses’ losses.
However, trade took a turn for worse after annual rate of inflation, based on monthly WPI, accelerated to three months high at 5.70%, from multi month low at 4.68% (provisional) in month of February, 2014, as compared to 5.65% during the corresponding month of the previous year, thereby limiting the ability of RBI to support growth and ease key monetary policy rates. By close of trade, both Sensex and Nifty settled below the crucial 22,500 and 6,750 levels respectively, with loss of around 3/4 of a percent. Meanwhile, broader indices too succumbing to selling pressure ended with loss of over quarter of a percent.
On the global front, nerves got better of Asian share markets on Tuesday as they turned lower after an upbeat US retail sales report was eclipsed by soft data from China, providing a stark reminder to investors of the headwinds facing the world's second-largest economy. Additionally, European shares extended losses on Monday, with a major index slipping to its lowest level in three weeks, as fresh tension in Ukraine prompted investors to shun cyclical sectors such as travel, autos and technology.
Closer home, losses at Dalal Street were most by the stocks belonging to Realty, Metal and banking counters, ending with loss of over 2%. All the rate sensitive counters, Realty, Auto and Banking counters got beaten blue in trade on diminished chances of rate cut post dismal headline inflation data. Meanwhile, high beta metal stocks too took a beating on account of weak Chinese data, which is word’s single largest consumer of base metal. On the flip side, Information Technology (IT) and Technology counters, were the only gainers of the session on the back of good showing of IT bellwether Infosys. The market breadth on the BSE ended negative; advances and declining stocks were in a ratio of 1318: 1466, while 127 scrips remained unchanged. (Provisional)
The BSE Sensex lost 144.03 points or 0.64% to settle at 22484.93. The index touched a high and a low of 22737.31 and 22416.24 respectively. Among the 30-share Sensex, 8 stocks gained, while 22 stocks declined. (Provisional)
The BSE Mid cap and Small cap indices ended lower by 0.36% and 0.29% respectively. (Provisional)
On the BSE Sectoral front, IT up by 2.16%, Teck up by 1.62% and FMCG up by 0.27%, were the only gainers, while Realty down by 2.99%, Metal down by 2.81%, Bankex down by 2.07%, Consumer Durables down by 1.31% and PSU down by 0.98% were the top losers in the space. (Provisional)
The top gainers on the Sensex were TCS up by 4.13%, Wipro up by 3.92%, Hero MotoCorp up by 2.69%, Infosys up by 1.21% and Hindustan Unilever up by 0.84%, while, Hindalco down by 5.16%, SSLT down by 3.68%, HDFC down by 3.45%, Axis Bank down by 3.44% and Tata Steel down by 3.11% were the top losers in the index. (Provisional)
Meanwhile, limiting central bank’s scope for easing policy rates, the annual rate of inflation, based on monthly WPI, accelerated to three months high of 5.70% in March, 2014 from its multi month low level of 4.68% (provisional) seen in February, 2014 and as compared to 5.65% during the corresponding month of the previous year. The figures were higher than street expectation of 5.20%. However, January inflation figures were revised upwards to 5.17% against 5.05% earlier. Meanwhile, build up inflation rate in the financial year so far was 5.70% compared to a build up rate of 5.65% in the corresponding period of the previous year.
The acceleration in headline inflation figure was on account of rise in prices of food articles group, which rose by 1.0 percent to 235.3 (provisional) from 232.9 for the previous month that lifted Primary article index, which occupies 20.12% weight in the overall headline index, higher by 0.7% to 240.2 (provisional) from 238.6 (provisional) for the previous month. The index for Non-Food Articles group declined by 0.1% to 217.2 (provisional) from 217.4 (provisional) for the previous month.
Further, index of Fuel & Power, too contributed to the rise of overall headline inflation number. The group’s index, which has weight of 14.91% in the overall index, rose by 0.2% to 213.1 (provisional) from 212.6 (provisional) for the previous month due to higher price of high speed diesel and petrol (1% each). However, the price of kerosene (2%), bitumen and LPG (1% each) declined.
Additionally, the index of Manufactured Products, which occupies 64.97% of weight in the overall index, rose by 0.5% to 153.5 (provisional) from 152.7 for February.
The latest figure would reduce scope of Reserve Bank of India (RBI) supporting the industries with any rate cuts amid fresh signs of slowdown. India has been battling a prolonged spell of high inflation and low growth, which is expected to remain stubborn as food inflation may yet again see a rise in the coming month with El Nino hitting the monsoon.
India VIX, a gauge for markets short term expectation of volatility gained 9.21% at 31.87 from its previous close of 29.18 on Friday. (Provisional)
The CNX Nifty lost 45.90 points or 0.68% to settle at 6,730.40. The index touched high and low of 6,813.40 and 6,711.75 respectively. Out of the 50 stocks on the Nifty, 12 ended in the green, while 38 ended in the red.
The major gainers of the Nifty were United Spirits up 11.62%, TCS up by 4.18%, Wipro up by 3.94%, Hero MotoCorp up by 2.39% and HCL Tech up by 1.74%.
The key losers were DLF down by 6.41%, Hindalco down by 5.26%, Jindal Steel down by 4.48%, Bank of Baroda down by 3.68% and IDFC down by 3.44%. (Provisional)
European markets were trading in red; France’s CAC 40 was down 0.30%, UK’s FTSE 100 was down 0.29% and Germany’s DAX was down by 0.80%.
The Asian markets concluded Tuesday’s trade mostly in green with major indexes following the US gains while Hong Kong and Shanghai are the standouts, taking a slam from the latest liquidity draining of China’s central bank. China’s foreign exchange reserves rose by $129 billion in the first quarter to $3.95 trillion at the end of March. Shanghai’s Consumer Price Index rose 2.5 percent from a year earlier in March, down from the 2.7 percent gain in February. Food costs remained the biggest contributor as they rose 4.3 percent in March while prices of transport, healthcare and clothing all dropped. The confidence of Chinese households continued to be strong despite China’s economy softening. The China Wealth Index to gauge sentiment among Chinese households remained flat at 130 in April, a similar reading to that in January but it was up from 127 in November of last year. Shanghai’s new home sales fell for the second consecutive week as buyers and developers adopted a wait-and-see stance. The purchases of new homes, excluding government-subsidized affordable housing, shrank 28.7 percent week on week to 146,900 square meters. In Hong Kong, the Exchange Fund’s foreign assets increased by $6.4 billion in March to $2.6308 trillion. The Monetary Base amounted to $1.2557 trillion.
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