New Delhi, India (BBN)-Benchmark share indices failed to extend the previous day’s pull back and the Nifty breached 8,000 to end near eight-month closing low amid a sharp sell off in PSU bank shares after the RBI on Thursday said that they would need higher -than-budgeted capital infusion
The 30-share Sensex closed after shedding 470 points or 1.75 per cent to 26,371 levels. The 50-share Nifty breached its crucial technical level of 8,000 and closed at 7,965 points, down by 159 points or 1.96 per cent, reports the Business Standard.
A planned $1.2 billion capital infusion by the government into state-run lenders during the fiscal year to March 2016 will not be enough, Reuters said in a report quoting Reserve Bank of India (RBI) Deputy Governor S S Mundra.
The government had budgeted a smaller-than-expected infusion of Rs 7,940 crore ($1.24 billion) to shore up the capital of the state-run banks at the federal budget unveiled in February, the report added
According to K.Subramanyam, co-head – equity advisory at Altamount Capital, “The 8,000 level looked vulnerable and the bounce back yesterday was sold into which was inevitable as sentiments are still weak with monsoons playing truant. The expectation is that a level of 7,200 could be touched by September if corporate results for the June quarter remains disappointing and monsoons continue to remain scarce. Ideally investors should use this opportunity to gradually accumulate quality stocks instead of rushing into the markets.”
The broader markets also succumbed to selling pressure with BSE Midcap and Smallcap indices down by 1.78% and 1.55%, respectively. The market breadth ended negative with 1,855 declines against 784 advances on the BSE.
On the currency front, at 3:30 PM, the Indian rupee was down by 8 paise and was trading at Rs 63.92 against the greenback tracking weakness in the local equities.
KEY MACRO-ECONOMIC EVENTS
On the macro-economic front, India’s current account deficit (CAD) declined sharply to $1.3 billion (0.2 poer cent of gross domestic product) in the quarter ended March from $8.3 billion (1.6 per cent of GDP) in the quarter ended December.
Moreover, on Friday, the government will announce the industrial production data for the month of April 2015. The industrial output was at 2.1 per cent for the month of March from a revised 4.9 per cent for the month of February. Also, the announcement of the consumer price index (CPI) data for the month of May 2015 is scheduled for tomorrow.
Meanwhile, the World Bank forecasts a slower economic growth for the world economies. However, according to its report, it predicts India to emerge as the fastest growing economy in 2015, with India’s growth pegged at 7.5 per cent, outstripping China, which the Bank expects to grow at 7.1 per cent in 2015.
SECTORS & STOCKS
Out of 30 stocks on the Sensex, 29 stocks slipped into the negative zone. On the sectoral front, all the sectoral indices ended in red. Leading the downfall was BSE Bankex and Auto dropped by 2.37 per cent , followed by Power, Consumer Durables and Information Technology indices. CNX PSU Bank was the top loser down 2.7 per cent.
Banking sector bled heavily on account of profit-booking after the central bank on Monday issued fresh guidelines, which would allow banks to take control of debt-laden companies by converting loans into equity. Bank Nifty shed 430 points or 2.3per cent. Among the PSU banks, Punjab National Bank, State Bank of India, IDBI, Union Bank of India declined 2-5 per cent.
Tata Motors slumped over 3.5 per cent on reports that the automobile company is suffering from the effects of a slowdown in the crucial Chinese market.
Index heavyweight Reliance Industries closed down by 3.1 per cent ahead of the annual general meeting, which will be held on 12 June. Mukesh Ambani, chairman and managing director of Reliance Industries, likely to announce plans for telecom subsidiary Reliance Jio Infocomm in its AGM.
Shares of Tata Steel declined by 2.1 per cent after Unions in UK notified plans to take industrial action in dispute over the Tata Steel UK’s proposals to revise the British Steel Pensions Scheme’s contribution and benefits framework.
Shares of Hindustan Unilever declined marginally by 0.1 per centafter the company decided to withdraw its range of Knorr instant noodles from the market awaiting product approval from the Food Safety and Standards Authority of India (FSSAI).
Vedanta was the sole gainer, 1.5 per cent up on the BSE after the reports suggest that the company is all set to announce its merger with Cairn India on Sunday.
SMART MOVERS
AstraZeneca Pharma India was locked at 20 per cent upper circuit on BSE after the company announced the launch of Forxiga (dapaglifozin), a breakthrough treatment for Type 2 diabetes mellitus.
Shares of Surana Solar slumped 20 per cent on BSE after media reports clarified that the bulk deal in the stock was not done by ace investor Rakesh Jhunjhunwala but by his namesake.
BBN/SK/AD
