Markets decline on caution ahead of the Union Budget

The markets ended lower amid volatile trading session as the domestic and global investors turn cautious ahead of the Union Budget to be presented by the Finance Minister tomorrow in the Parliament.

The Economic Survey failed to bring any cheer for the market participants. In addition, weak global cues dampened the sentiments of the investors.

The Sensex ended at 25,445 levels lower by 137 points and the Nifty ended at 7,585 mark down by 38 points.

Tracking the momentum, the BSE Midcap and Smallcap indices plunged 1.3% and 1.8%, each

Expert View

Shshank Mehta, Independent Derivatives Strategist says, "My view on the Nifty Futures is bearish below 7650. I also see strong resistance at 7725 levels.

"Traders with bearish view can average by adding to their short position in case of any recovery in market. I would remain bearish unless Nifty Futures give a decisive close above 7725."

Economic Survey

The government in the economic survey estimated the FY15 GDP growth at 5.4-5.9%, adding that it is likely to be on the lower side of the projection.

FY15 current account deficit may be limited to about $45 bn or 2.1% of GDP, according to the survey.

Saying that inflation limits the scope for RBI to cut rates, the survey added that a formal monetary policy framework was needed for targeting CPI inflation.

WPI inflation is likely to moderate by 2014-end, it added.

The survey also called for a new Fiscal Responsibility and Budget Management (FRBM) Act with teeth.

Local Currency

The rupee is trading at 59.75 on heavy dollar selling by foreign banks. But further fall is likely to be averted ahead of the budget on Thursday.

Sectors & Stocks

On the sectoral front, BSE Auto was the biggest losing index down by 25 followed by Power, Capital goods and Realty indices.

On the other hand, BSE Oil and Gas was the top gaining index up by 0.8% followed by FMCG and Consumer Durables indices.

Heavy selling was evident in the technology pack. TCS, Wipro and Infosys lost between 1-2%.

Weak and uncertain monsoon rains casted its shadow on the Auto stocks. M&M, Bajaj Auto, Hero Motocorp, Maruti Suzuki and Tata Motors declined between 1.8-4%.

According to Society of Indian Automobile Manufacturers (SIAM ) survey, domestic passenger car sales increased 14.76% to 1,60,232 units in June as compared to 1,39,624 units in the year-ago month.

In addition, motorcycle sales last month climbed 9.63% to 8,76,196 units from 7,99,254 units a year earlier.

Also, The total two-wheeler sales in June rose 12.99% to 12,61,589 units and sales of commercial vehicles were down 9.03% to 51,119 units in June.

The Power space ended in the negative territory with NTPC and Tata Power down between 2-3%.

Shares of Tata Power dropped on reports that Tata Power and Reliance Power are betting big on renewable energy and will are willing to spend about Rs 1,500 crore each on clean energy projects.

Sun Pharma which zoomed yesterday lost 1.4% on profit taking. In addition, Cipla and Dr reddy’s Lab added 1% each to the decline.

Some of the other notable losers were L&T, Coal India and BHEL down between 0.5-3.5%

The banking shares witnessed the selling pressure. HDFC twins, Axis Bank and ICICI Bank declined between 0.05-1%.

On the flip side, Oil and Gas majors RIL and ONGC gained between 0.5-1.6%. GAIL added 1.6%.

Shares of oil and gas companies ended in the positive zone in otherwise volatile market after Brent crude fell below $109 a barrel as Libya restarted an oilfield.

ONGC Videsh raised US$2.23bn from global markets through long term bonds to refinance loans for acquiring stake in oil field in Mozambique.

Shares of Hindalco closed 0.8% higher after US rival reported better-than-expected earning. Its unit Novelis directly competes with Alcoa in the North American markets.

FMCG shares gained with the survey saying that social sector schemes such as MNREGA, NRHM, SSA, need a complete revamp. ITC ended nearly 2% up and Hindustan Unilever was up 0.8%.

Among other shares, Claris Life sciences ended 5.4% up to Rs 168 on BSE after sterile injectables manufacturer on Tuesday after market hours said US health regulator has found its manufacturing facility acceptable after an inspection.

Railway-related stocks continued to remain under pressure for the second straight day, falling by over 30% in two days on the BSE, following Railway Minister Sadananda Gowda unveiling his maiden Budget.

Global Markets

World stocks fell on Wednesday as cooling Chinese inflation overnight added to weak European industrial data earlier in the week, pointing to slowing global growth and eclipsing a positive start to the US earnings season.

Miner Alcoa Inc reported results after Wall Street closed that beat analysts' expectations, but that was not enough to help European equities recover after posting their biggest fall in three months on Tuesday.

Major currencies and bond markets were steady ahead of two potentially major monetary policy events later in the day. The U.S. Federal Reserve will release minutes of its latest policy meeting and European Central Bank President Mario Draghi is scheduled to speak.

The market breadth ended weak on the BSE with 2,086 shares declining and 893 shares advancing.

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