Post session - Quick review

In sync with global equity markets, Indian markets too staged a dismal show. However, this was for the fourth consecutive session that the benchmark indices were lost in the sea of red. Meanwhile, recovery efforts that were witnessed in the dying hours of trade, failed to yank the benchmark indices higher in green. However, drawing some good, benchmark indices with the succor of slender recuperation, were able to end above their 15300 (Sensex) and 4600 (Nifty) bastions respectively.

Continuing to fret about cooling economic growth amidst lack of any progress in resolving the European debt crisis, local investor’s from the start of the trade pressed the sales button. However, the pessimistic global milieu just went on adding the woes of Indian investor’s, which in the previous session were highly disappointed by the central bank's hesitance over policy action.

Taken aback on the death of mercurial North Korea's leader Kim Jong-iI, Asian pacific markets from the start of the trade showed unconvincing moves only to end in red. Further, warnings of downgrade from six euro zone countries along with France also startled investor’s, which dumping risky asset class like equities boarded a flight of safety. Moreover, Belgium’s credit rating cut by two notches by Moody’s Investors Service also dented investor’s sentiment. Moody’s lowered Belgium’s debt rating to Aa3, the fourth- highest investment grade, from Aa1, with a negative outlook. The action followed Standard & Poor’s one-step downgrade of Belgium to AA on November25.

Meanwhile, some comfort came to the equities markets with European shares. Supported by defensive stocks, European shares edged higher on Monday. However, the gains in the European market too looked vulnerable as investors were likely to take profits on any gains later in the day, with no real solution yet to the euro zone debt crisis. Back on the home turf, clearance of food security bill also failed to cast any significant impact on the mind of vigilant investor’s. However, short covering that came into blue chip stocks in the wee hours of trade did some good to benchmark indices. 30 share barometer index- Sensex-despite offloading over 100 points ended above 15300 level. Similarly, 50 share index- Nifty-too declining over 25 points ended above 4600 mark. More harm came to the markets in the way of broader indices which went home with a loss of over2% each. The market breadth on the BSE ended negative; advances and declining stocks were in a ratio of 744:2048 while 91 scrips remained unchanged.

The BSE Sensex lost 142.70 points or 0.92% and settled at 15,348.65. The index touched a high and a low of 15,440.10 and 15,190.74 respectively. 6 stocks advanced against 24 declining ones on the index (Provisional)

The BSE Mid-cap index lost 1.99% while Small-cap index was down by 2.49%. (Provisional)

On the BSE Sectoral front, Oil & Gas up 1.00%, FMCG up 0.68% and Auto up 0.06% were the gainers while Capital Goods down 3.47%, Bankex down 3.40%, Realty down 3.12%, PSU down 1.64% and Power down 1.53% were the top losers. (Provisional)

The top gainers on the Sensex were Tata Motors up 4.44%, RIL up 1.80%, Coal India up 1.59%, HUL up 1.26% and ITC up 1.13%. (Provisional)

On the flip side, L&T down 4.29%, Jindal Steel down 3.74%, DLF down 3.39%, SBI down 3.24% and HDFC Bank down 3.15% were the top losers on the index. (Provisional)

Meanwhile, the Union Cabinet cleared the much-awaited draft Food Security Bill, paving the way for subsidized food grains to poor. The food security Bill, which seeks to give legal privilege of cheaper food to 75% of rural and 50% of urban population, will cost an additional subsidy of Rs 27,663 crore.

Under the Bill, each person of the priority household, similar to Below Poverty Line (BPL) families under current Public Distribution System (PDS), would be supplied seven kg of rice, wheat and coarse grains per month at the rate of Rs 3, Rs 2 and Rs 1 per kg respectively. Accordingly the implementation of this would result in higher food subsidy by Rs 27,663 crore taking the overall figure to about Rs 95,000 crore.

Food minister K V Thomas said a meeting of the cabinet that cleared the Bill also decided to introduce it in the current session of Parliament. By adding further he said, ‘the objective is to provide access to nutrition at affordable rates to citizens. The Bill will also bring within its fold a number of ongoing schemes’. The draft was passed ‘unanimously’ with all ministers approving to the proposals.

At present, the targeted PDS provides subsidized grains to around 6.52 crore BPL families and almost 11.05 crore above the poverty line (APL) families. Once the Bill is in operation under the PDS, the government would require 61 million tonnes of food grains to provide food security as against 55 million tonnes.

It was in July that an empowered Group of Ministers cleared the draft food bill, following which major changes like incorporating a provision for providing free meals and an allowance of Rs 1,000 per month for six months to pregnant women and lactating mothers were included - at the firmness of Congress President Sonia Gandhi.

The draft Bill also faced rigorous opposition from the states largely on the back of a high cost burden that the states would have to bear. According to food ministry officials, the Bill would increase the expenditure burden by just Rs 51,000 crore annually, but an agriculture ministry official said the actual expenditure of running the programme would be more than Rs 200,000 crore, as it has to include enhanced budget provision of the agriculture ministry which needs to raise farm production to meet the obligations under the Bill.

India VIX, a gauge for market’s short term expectation of volatility gained 2.99% at 30.58 from its previous close of 29.69 on Friday. (Provisional)

The S&P CNX Nifty lost 46.55 points or 1.00% to settle at 4,605.05. The index touched high and low of 4,623.15 and 4,555.90 respectively. 14 stocks advanced against 36 declining ones on the index. (Provisional)

The top gainers on the Nifty were Tata Motors up 4.41%, Cairn India up 4.06%, SAIL up 3.48%, Coal India up 1.98% and RIL up 1.96%. (Provisional)

 On the other hand, Axis Bank down 5.91%, L&T down 4.13%, PNB down 4.05%, RCOM down 3.58% and Jindal Steel down 3.49% were the top losers. (Provisional)

The European markets are trading in green, with France's CAC 40 up 0.38%, Germany's DAX up 0.78% and FTSE 100 up 0.35%.

Asian stocks resumed the declining trend on Monday and snapped the session on a daunting note. Most indices in the region settled with large cuts in the range of 1-4% in the session as sentiments not only got dented from discouraging developments from the European front but also reports of the death of mercurial North Korea's leader Kim Jong Il added to uncertainties facing markets in the region. Earlier in the session, reports that Moody’s slashed the Belgium’s credit rating to Aa3 with a negative outlook, from Aa1, undermined sentiments which led investors to flee from risky asset classes like equities. Investors also took profits off the table ahead of EU finance ministers’ talk on the region’s debt crisis, scheduled later in the day.

Seoul shares got thrashed by around three and half a percent, after North Korean state television said North Korean leader Kim Jong-il had died, sending most heavyweight stocks including Samsung Electronics tumbling. Tokyo stocks too closed sharply lower after falling over a percentage points.