Markets end lower as rate cut hopes fade

Weak macro data and FIIs turning net sellers compound market weakness

Markets ended lower on Tuesday, weighed down by financial shares, as the spike in whole-sale-price inflation to 3-month highs in March could lead to a delay in policy rate cuts by the central bank in the near to medium term.

The wholesale price index-based inflation rose to a three-month high of 5.70% in March from a nine-month low of 4.68% in February.

Further, market sentiment were dampened after foreign investors turned net sellers on Friday. As per the provisional data on the stock exchanges, FIIs were net sellers in Indian equities to the tune of Rs 362 crore on Friday.

The 30-share Sensex ended down 144 points at 22,485 and the 50-share Nifty ended down 43 points at 6,733.

In intra-day trade, the BSE benchmark index had hit a low of 22,416 and the Nifty slipped to a low of 6,712.

The broader markets slipped with the small and midcap indices down 0.3-0.4%, as compared to the 0.6% cut seen on the BSE benchmark index.

Sectors & Stocks

On the sectoral front, BSE Bankex, Realty, Metal and Auto indices plunged 1-2% followed by counters like Power, Oil & Gas, Health Care and Consumer Durables, down 0.4-1.3% each.

However, BSE IT and TECK indices gained nearly 2% each. FMCG index up 0.3% was the only other sectoral index in green for the day.

Metal and mining stocks edged lower as China's broadest measure of new credit fell 19% in March from a year earlier and money supply grew at the slowest pace since 2001. Hindalco, Sesa Sterlite and Tata Steel down 3-5% were the major losers.

Shares of information technology companies were firm after Infosys surprised the Street with a 4.1% q-o-q rise in its net profit for the fourth quarter ended March 2014 (Q4) at Rs 2,992 crore. Infosys, Wipro, Tata Consultancy Services added 0.7-4%.

Hero MotoCorp, NTPC, HUL, Bharti Airtel and Dr Reddy’s Labs up 0.1-2.3% were the only other stocks in green among Sensex-30.

Axis Bank, HDFC, Tata Motors, BHEL, HDFC Bank, Mahindra & Mahindra, Tata Power, Sun Pharma, SBI and Gail India up 1.5-3.5% were the other notable losers.

The market breadth was negative on BSE. 1,455 stocks declined while 1,326 stocks advanced.

Smart Moves

Clariant Chemicals (India) soared 6% to Rs 700 after the company said it has sold about 87 acres land located in Thane, near Mumbai to Lodha Developers for a total consideration of Rs 1,154 crore.

Multi Commodity Exchange of India (MCX) surged 4% to Rs 584 on the back of heavy volumes.

Gruh Finance rallied 14% to Rs 358 after the board of housing finance company recommended the issue of bonus shares in the ratio of 1 equity share for every 1 equity share held.

United Spirits and United Breweries Holdings surged after Diageo Plc has made an offer to acquire an additional stake in United Spirits at price of Rs 3,030. United Spirits rallied 12% and UB Holdings surged 20%.

Global Markets

Japanese stocks rebounded from six-month lows on Tuesday after strong US retail sales data helped calm nerves amid the backdrop of an escalating crisis in Ukraine, pulling the yen down and supporting exporters.

The Nikkei share average ended 0.6% higher to 13,996.81, crawling back from previous day lows last visited in early October.

The broader Topix rose 0.3% to 1,136.09, and the new JPX-Nikkei Index 400 advanced 0.3% to 10,342.16.

Risk appetite faded on financial markets on Tuesday, with shares weaker and bonds firmer as investors weighed up tensions between Russia and Ukraine, downbeat sales reports and signs of slowing growth in China.