Sensex ends below 28,000; IT stocks drag Nifty

Markets finished the session on a weaker note, snapping a two-day winning streak, weighed down by IT shares even as auto stocks rallied amid good June sales.

The strength in the US labour market for the month of June, indicating a possibility of a Fed rate hike in September, also dampened sentiment.

The S&P barometer Sensex ended below 28,000 at 27,945.80 down 75 points or 0.27% and the Nifty was below 8,450 at 8,444.90 down by 8 points or 0.1%.

The broader markets, however, outperformed their larger peers with BSE Mid-cap and Small-cap indices ending at 0.4% and 0.5%, respectively. The overall health of the market was strong with 1,518 gainers and 1,228 losers on the BSE.

Meanwhile, investors are keenly watching the developments in Greece.

On the currency front, the rupee has given up on its initial losses and is trading firm, up by 8 paise at 63.54 levels amid dollar sales by banks and exporters.

MARKETS & ECONOMY

The growth in eight core sectors increased to 4.4% in May versus a decline of 0.4% in the month of April.

The growth was recorded after two consecutive months of decline, thus indicating a recovery in the industrial output. Some support also came after India Meteorological Department reported better than normal monsoon figure in the month of June.

"The outlook for inflation has improved in recent weeks, thanks to the strong start to monsoon season.

"Rains have been 16% above normal in June, resulting in an improvement in sowing patterns for major crops (pulses and oilseeds).

"While authorities still warn of weak rainfall in July, a crucial month in the season, the good start has improved reservoir levels which are likely to aid agricultural production," said Pranjul Bhandari, chief India economist at HSBC.

"The fall in both PMI input prices and prices charged is a positive indication and coupled with the strong start to monsoons, should provide the RBI more comfort around its 6% CPI target of January 2016," he adds.

Analysts say that the recent rebound in markets despite global uncertainty clearly depicts participants giving more weightage to domestic cues as expected.

"It’s too early to say that the scenario would prevail if global volatility increases in days to come.

"Hence, we reiterate our advice to maintain positive yet cautious approach as Nifty has almost reached near to crucial hurdle of 8,500 mark and sustainability above the same will trigger fresh upside momentum, otherwise profit taking will resume," said Jayant Manglik, President, Retail Distribution, Religare Securities in a note.

SECTORS & STOCKS

Sectorally, BSE Oil and Gas index finished with 0.8% gains followed by FMCG and Auto sectors. The downward trend was led by BSE IT, Metals, and Consumer Durables indices.

Shares of public sector oil marketing companies swell as US crude prices dropped the previous day.

Lower prices in crude oil reduce the under-recoveries on local sales of LPG and kerosene at controlled prices.

HPCL and IOC finished between 5-6% on the Sensex while BPCL, OIL gained between 0.5-1.5%. ONGC ended lower by 1%.

IT stocks finished lower after reports that global IT spending is going to decline this year.

Also, the on-going development in Greece has raised caution. Infosys and TCS ended lower by 1% and 0.4% respectively, while Wipro is up 1.1%

Auto pack has gained on the back of strong June sales figures. M&M, Bajaj Auto, and Hero Motocorp, all gained between 0.5- 2% each on the Sensex.

Bharti Airtel is set to launch full mobile number portability from tomorrow, which will allow customers to retain their numbers across the country.

The stock soared over 2% on the Sensex.

Reliance Industries gained 0.5% on the BSE after the company decided to invest over Rs 250,000 crore in the digital space.

Reliance Group would invest about Rs 10,000 crore over the next few years’ digital, cloud computing and telecom space. Reliance Communication surged 3% on BSE.

Auto pack has gained on the back of strong June sales figures. M&M, Bajaj Auto, and Hero Motocorp have all gained between 0.5- 2% each on the Sensex.

Tata Motors registered a 6 per cent increase in total sales at 40,870 units vehicles in June as compared to 38,574 units in the same month last year. The stock witnessed profit-booking, and finished nearly 2% down.

FMCG stocks gained on hopes that normal monsoon rains would help boost rural volumes. HUL and ITC gained between 0.3-0.5% on the Sensex.

Other major laggards are Hindalco, HDFC Bank, Vedanta and Cipla, all ended down by 1-2% on the BSE.

Among other movers,Ramco Systems surged 20% on the BSE after the Australian coffee manufacturer FreshFood signed a pact with the company to replace its legacy systems with mobile-based ERP systems.

TVS Motors was in focus today after the company registered strong sales for the month of June. The stock finished 4.7% up.