Bumpy start to June; Nifty sheds 80 pts to close below 4850

It's been a rough start for the June series as the Nifty shed 80 points to close below 4850 dragged down by rate sensitives, commodity, utilities and technology stocks. A slew of bad economic cues from across the globe didn't help Indian equities either. Reports of monsoon rains over India's mainland will be delayed by about four days also weighed on sentiment.

China's official purchasing managers' index fell to 50.4 in May from April's 13-month high of 53.3, and a separate HSBC PMI survey showed a seventh consecutive month of contraction in the manufacturing sector.

Back home, from "gasping elephant" to "stagflation", analysts have panned India's quarterly growth of 5.3% with some ominous language. After yesterday's GDP shocker, all big brokerages slashed India's FY13 targets. Morgan Stanley cuts it down to 5.7%, while JP Morgan revised it to 6.3%. CLSA warned it may revise its forecast of 6.3% to around 6%.

Meanwhile, India's exports rose 3.23% year-on-year to $24.5 billion in April, while imports grew 3.83% on year to $37.9 billion, government data showed on Friday.

The Sensex closed below psychological mark of 16000 at 15965.16 down 253.37 points or 1.56%. The Nifty ends at 4841.60 down 82.65 points or 1.68%. The breadth of the market was negative with Advance Decline ratio at 1:2. About 836 shares advanced, 1820 shares declined, and 768 shares remain unchanged.

It was a long list of losers today. Asian Paints, Cairn India, Siemens, Ranbaxy Labs, Bank of Baroda were top losers. GAIL, ITC, Sun Pharma and Coal India were only stocks in the Nifty50 that managed to end in the green.

Sectoral Check

Automobile and hotel stocks were down across the board after the government announced a series of austerity measures aimed at controlling unproductive expenditure.
 
These include ban on conducting conferences and seminars in five-star hotels, and the purchase of vehicles.

Oil Marketing Companies reversed intraday losses after Brent Crude fell to its lowest level since October 2011 on Friday to just below USD 100 a barrel. The reports of petrol prices may be cut down by Rs 1.50-1.60 a litre led to sharp fall in stocks in the morning trade.

The rupee traded at 55.89-55.90 per dollar, above its previous close of 56.08-56.09, helped by dollar-selling from two large foreign banks on what was seen as custodian flows, as well as from a mid-sized infrastructure company.

Traders say a sharp fall in global oil prices was also prompting oil firms to stay out of the market. Dealers estimate if oil prices stay around current levels, it would reduce dollar demand by oil firms by nearly USD 2 to USD 3 billion per month.

Software services exporters fell as worries about the global economy intensified over euro zone woes and ahead of US jobs data later in the month. Infosys lost over 2%, while TCS fell 1.7%.

Stock Impact

Indraprastha Gas shot up 26% after the Delhi High Court ruled in favour of the company. The order states that government regulator Petroleum and Natural Gas Regulatory Board (PNGRB) does not have the authority to fix gas tariffs and the decision making on tariffs will remain with the company. Gas utility stocks like Gujarat Gas and GSPL also locked double digit gains.

Fresenius Kabi was down another 17% today after 20% fall on Thursday. The foreign parent's company proposed offer for sale through stock exchanges to increase the public holding in the company. This move was contrary to market expectations of a delisting offer from the parent company.

BEML was down 3% after reporting a weak set of numbers. The bottom line loss comes in at Rs 14 crore versus PAT of Rs 70 crore last year. Net sales were down 17% at Rs 774 crore compared to Rs 933 crore in the same period last year.

Pantaloon Retail was down 8% as shareholders okay convertible debenture issue to Aditya Birla Nuvo. The former will issue Rs 800 crore debentures to AB Nuvo.

Speciality Restaurants touched a high of Rs 177 in trade today. The stock was up 16% from its issue price of Rs 150 since its debut on Wednesday.

Aviation companies like Kingfisher and SpiceJet rebound as oil companies reduced jet fuel prices by 2%, the fourth straight reduction in rates since April on back of slippage in international crude prices. The average ATF prices now stand at Rs 65670/kl.

Lacklustre Sales

India's top car makers posted lacklustre sales in May as an excise tax hike and rising fuel prices hit demand, casting more gloom over the country's economic outlook.

Maruti Suzuki, the biggest car maker with a 45% market share, said passenger car sales fell 5.9% from a year earlier. Tata Motors, the country's No.3, posted a 6% increase.

Mahindra & Mahindra, India's biggest SUV and jeep manufacturer, said passenger car sales rose 27% in May, mainly thanks to its all-diesel range.

Demand for diesel vehicles has doubled over the past year to account for around 40% of India's new sales because of state subsidies that make the fuel more than 50% cheaper than petrol.

Monday Blues

At 04: 20 PM IST, the European markets were down in the range of 0.5-2%. Dow Futures also indicate scratchy start for the US markets on Friday. European and US markets close today will set the tone for Indian markets on Monday, next week.