Markets in bearish grip of inflation woes, FII outflows

Key indices at lowest in almost 3 weeks

Key benchmark indices on Wednesday edged lower after private weather forecaster Skymet said the previous day that it expects the June-September monsoon to be below normal this year. The forecast of below normal rains triggered worries that food price inflation will edge up.

In effect, the markets on Wednesday lost their way in the post-noon session due to caution surrounding FII outflows and higher-than-expected inflation data released on Tuesday.

Increase in global crude oil prices also hit sentiment on the domestic bourses adversely as the barometer indices, S&P BSE Sensex and CNX Nifty, settled at their lowest closing levels in almost three weeks.

Market breadth, indicating the overall health of the market was weak. The BSE Small-Cap and Mid-Cap index were both off more than 1 per cent each.

With this, domestic stocks declined for the third day in a row as the Sensex has declined 438.10 points, or 1.92 per cent in three trading sessions from a recent high of 22,715.33 on April 10, 2014. The Sensex has declined 109.04 points or 0.48 per cent so far this month.

The Sensex has gained 1,106.55 points or 5.22 per cent in calendar year 2014. From a 52-week low of 17,448.71 on August 28, 2013, the Sensex has risen 4,828.52 points or 27.67 per cent.  The Sensex is off 515.26 points from its record high of 22,792.49 on April 10.

The IndusInd Bank stock rose after good fourth quarterly (Q4) results. Interest rate sensitive real estate stocks dropped. Capital goods stocks also edged lower. IT major Tata Consultancy Services (TCS) fell ahead of its Q4 results, while Infosys declined after the company’s American Depository Receipt (ADR) dropped on the New York Stock Exchange after the company announced its Q4 results and issued a lower guidance for the 2014-2015.

Metal and mining stocks edged higher as China reported data on economic growth for the January-to-March period which was better than estimates. Increase in crude oil prices triggered concerns about India’s current account and fiscal deficits.

Further, the BSE Sensex was down 207.70 points or 0.92 per cent to 22,277.23, its lowest closing level since March 27, 2014. The index declined 237.54 points at the day’s low in late trade and rose 48.69 points at the day’s high in early trade.

CNX Nifty at NSE was down 57.80 points or 0.86 per cent to 6,675.30, its lowest closing level since March 27, 2014. The index hit a low of 6,665.15 in intraday trade, its lowest level since April 7, 2014. The index hit a high of 6,748.65 in intraday trade.

The BSE Mid-Cap index lost 79.23 points or 1.08 per cent at 7,232.76, while the BSE Small Cap index shed 83.28 points or 1.11 per cent at 7,418.22. Both these indices underperformed the Sensex.

Market breadth, indicating overall health of the market was weak — 1,732 shares on BSE declined and 1,119 scrips gained, while 136 stocks were unchanged. Total turnover on BSE amounted to Rs 2649 crore, lower than Rs 2875.18 crore on Tuesday.