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Markets ended flat, amid a volatile trading session on Thursday, with Financial Technologies hogging the limelight after the stock plunged 65% today. The stock was hammered after suspension of all contracts except "e-series" by the National Spot Exchange Ltd, in which it has majority stake, raised concerns about liquidity crunch and settlement defaults at the exchange.
The 30-share Sensex ended 29 points lower at 19,317 and the 50-share Nifty ended 14 points down at 5,728.
The broader markets were battered heavily. BSE Mid-caps and Small-caps indices fell between 1-2% on the BSE. The market breadth was negative with 1,431 shares declining and 783 shares advancing.
Goldman Sachs has downgraded its rating on India citing increased risk of foreign institutional “flow reversal" from equities and sluggish growth outlook as the key reasons. The investment bank has cut its 12-month Nifty target to 6200 and does not rule out further downgrades if the rupee weakens further.
GLOBAL MARKETS
Japan's Nikkei share average jumped 2.5% on Thursday, marking its biggest one-day gain in three weeks, as investors zoomed in on better-than-expected Chinese manufacturing data, while a weaker yen and positive earnings helped buoy the market.
The benchmark Nikkei added 337.45 points to 14,005.77, and the broader Topix climbed 2.8% to 1,163.39.
Lenders led the gains, supported by strong April-June earnings results, with the banking sector subindex rising 4.2%
China's factory activity shrank for a third straight month in July to its lowest level in nearly a year as new orders fell, a private survey showed on Thursday, signalling the persistent pressure on the economy has extended into the third quarter.
The HSBC Purchasing Managers' Index (PMI), compiled by Markit Economics Research, fell to 47.7 in July from June's 48.2. It was the weakest reading since August 2012, and matched a preliminary figure published last week.
Stocks in Europe were trading with marginal gains. The CAC, DAX and FTSE were up 0.3-0.6% each.
RUPEE
The RBI intervened in the foreign exchange market on Thursday to stop the rupee's slide toward a record low as its defence of the currency, built around draining cash from money markets, came under rising pressure.
With the Reserve Bank of India struggling to hold the line, investors are skeptical whether the government will take swift, credible action to reduce a gaping current account deficit despite Finance Minister P. Chidambaram's assurances. The rupee was down 43 paise at Rs 60.83 against the US dollar.
SECTORS & STOCKS
BSE Realty index plunged by nearly 4% followed by counters like PSU, Oil & Gas, Metal, Auto, Power, Consumer Durables and Capital Goods, all dropping between 1-3%. However, BSE Bankex gained by 1%.
The main losers on the Sensex were BHEL, M&M, Coal India, ONGC, Hindalco, Tata Steel, RIL, SBI and ITC.
On the gaining side, HDFC Bank, HDFC, GAIL, JSPL and Maruti Suzuki gained between 1-4%.
India's biggest carmaker Maruti Suzuki said on Thursday its July vehicle sales rose for the first time this year, but analysts warned the gain was likely to be short-lived as high ownership costs continue to weaken domestic demand.
Maruti's July sales rose 1% from the same month a year ago largely due to the popularity of its entry-level Dzire sedan. Sales last year were also hit by a plant shutdown due to labour unrest. The gain contrasted with a 21% drop in vehicle sales by Mahindra and Mahindra , India's largest manufacturer of utility vehicles and SUVs, which has been hurt by rising competition and a hike in excise duty.
Faced with a tight liquidity condition, two leading private sector banks -- HDFC Bank and Axis Bank -- have raised fixed deposit rates by up to 4%, a move which may be followed by others.
SMART MOVERS
Financial Technologies stock plunged 64.59% to end at Rs 191.75. “Most of Financial Technologies’ profits came from NSEL since most of the contracts were routed through MCX. With the latest development, this will be impacted and will in turn impact the financial performance of the companies. I don’t think the order/decision will be reversed and the stock has found a base yet. There are better bets available in the market. Stay away from this counter,” said an analyst with a local brokerage.
NSEL has also decided to merge the delivery and settlement of all pending contracts and deferred the same for a period of 15 days. Consequently, the positions outstanding in the contracts will be settled by way of delivery and payment after expiry of 15 days.
Multi-Commodity Exchange slumped 20% to end at Rs 512.
Shares of IRB Infrastructure ended 25% lower after the company decided to withdraw from the Rs 9,360 crore Mumbai Trans Harbour Link (MTHL) citing bad experience on some other infrastructure projects in the state.
