Year end profit booking extends for third day; Dec F&O series expires with 2% cuts

December series futures and options expiry turned out to be an extremely disappointing affair for the Indian stock markets as the benchmarks capitulated to the unrelenting selling pressure amid extremely high volatility. The final day of the 2011’s last F&O series saw Indian benchmark indices complete a hat-trick of disappointing performances as the bourses once again closed only after collapsing by over a percentage point. The hefty sell-off since last three sessions has dragged the key indices below the psychological 4,650 (Nifty) and 15,550 (Sensex) levels. Investors resorted to ruthless position squaring from the Oil & Gas, Capital Goods and the high beta Real Estate counters in the last half hour, ahead of the F&O series expiry. The ongoing depreciation in Asia’s worst performing currency - rupee remained another cause of concern for the market participants as weakening rupee multiplied investors’ worries and dampened the outlook for corporate earnings. Meanwhile, investors also overlooked India’s weekly food inflation numbers which plunged for seventh straight week and slipped to near six years low levels to 0.42% for the week ended Dec 17. The sharp moderation in weekly inflation numbers failed to lift investors’ morale despite hopes that the RBI may consider reducing policy rates in its next meet in January. The plunge in domestic indices appeared even shoddier because of the fact that major stock markets across the globe exhibited largely positive trends. European markets traded on a flat note with a positive bias as yields fell at Italy’s bond sale after the ECB’s cheap loans to banks increased cash supply. Back home, SEBI said the entire process for initial public offering of shares is being reviewed while the volatility on the listing day is also being looked at. Stocks of all seven firms which were banned by SEBI from participating in securities market crashed and were locked down in lower circuit on the bourses. On the political front, the Lokpal Bill is being debated in the Rajya Sabha, two day after it was passed in Lok Sabha, with the government trying hard to win the numbers game. Investors of-late have remained concerned on whether a nervous government will be in a position to push through policy reforms.

The NSE’s 50-share broadly followed index Nifty, plummeted over a percent and settled below the psychological 4,650 support level while Bombay Stock Exchange’s Sensitive Index - Sensex sank around two hundred points to close below the psychological 15,550 mark. The broader markets too failed to show any resilience but settled with moderate cuts. On the BSE sectoral front, hefty profit booking was evident in the Oil & Gas index which topped the losers’ space with 2.62% losses followed by Capital Goods and Realty indices which sank 2.39% and 1.66% respectively. On the flipside, the Metal and Healthcare pockets remained the only gainers with less than a quarter percent gains. On the F&O front, December series Nifty and Sensex got butchered by around 2% each. From the expiry perspective, market wide rollover of 63.21% was observed which was higher than the three month average of 61.26% while Nifty rollovers were at 59.64%, higher than 3 month average of 55.77%. Sectorally, the Capital Goods, infrastructure and Metal counters witnessed high rollovers while stocks from the Technology and Pharma pockets observed relatively low rolls. Among individual stocks, vast rollovers were witnessed in heavyweights including JSW Steel (84%), IDFC (80%), Yes Bank (78%), DLF (77%) and PNB (76%) while low rollovers were seen in stocks like PFC (21%), Exide (33%), TVS Motor (34%), Ranbaxy (38%) and Dabur (42%). The market breadth remained pessimistic as there were 1151 shares on the gaining side against 1528 shares on the losing side while 131 shares remained unchanged.

Finally, the BSE Sensex shaved off 183.92 points or 1.17% to settle at 15,543.93, while the S&P CNX Nifty plunged by 59.55 points or 1.27% to close at 4,646.25.

The BSE Sensex touched a high and a low of 15,724.60 and 15,515.44 respectively. The BSE Mid cap and Small cap indices were down by 0.35% and 0.74% respectively.

The major gainers on the Sensex were Jindal Steel up 1.70%, SBI up 1.08%, Sterlite Industries up 0.72%, Hindalco Industries up 0.51% and Wipro up 0.20%. While, Maruti Suzuki down 3.96%, BHEL down 3.59%, Reliance Industries down 3.47%, Tata Power down 3.38% and DLF down 3.01%, were the major loser on the index.

On the BSE sectoral space, Metal up 0.23%, Health Care (HC) up 0.19% were the top gainers while Oil & Gas down 2.62%, Capital Goods (CG) down 2.39%, Realty down 1.66%, Power down 1.43% and Consumer Durables (CD) down 1.31% were the top losers on the BSE sectoral space.

Meanwhile, in a bid to help stabilize the depreciating rupee and enhance bilateral trade, India and Japan have signed a $15 billion currency swap agreement. The agreement is expected to strengthen the rupee, which has been Asia’s worst performing currency this year due to various global and domestic factors. The Japanese yen has also been unstable on the back of unsure global outlook.

Prime Minister Manmohan Singh and Japanese Prime Minister Yoshihiko Noda decided to enhance the earlier bilateral currency swap arrangement from $3 billion to $15 billion, which had expired in June. Further the two leaders expressed hope that the enhancement will further strengthen financial cooperation, contribute to ensuring financial market stability and further develop growing economic and trade ties between the countries.

The move comes at a time when there have been growing concerns about foreign institutional investors (FIIs) pulling out of the Indian market, on the back of slowing economy growth, high inflation and decelerating industrial output.

Moreover, the two leaders also decided to speed up efforts by the relevant authorities for an early realization of some projects including seawater desalination at Dahej, a microgrid system using large-scale photo-voltaic power generation at Neemrana, gas-fired independent power producer in Maharashtra, and improve infrastructure such as ports, industrial parks and their surrounding facilities in Ennore, Chennai and the adjoining areas.  The S&P CNX Nifty touched a high and low of 4,701.80 and 4,639.05, respectively.

The top gainers on the Nifty were Jindal Steel up 2.18%, SAIL up 1.63%, Grasim up 1.61%, Reliance Power up 1.11% and HUL up 1.01%. On the flip side, RCOM down 5.42%, Tata Power down 4.57%, Reliance Infra down 4.45%, BHEL down 4.01% and Reliance Industries down 4.00% were the top losers on the index.

The European markets were trading on a positive note. France's CAC 40 advanced by 0.10%, Britain’s FTSE 100 up by 0.26% and Germany's DAX gained by 0.34%.

Most of the Asian markets reversed their initial losses and ended the session in the positive terrain snapping their three day’s losing streak on Thursday but, volume remained thin as concerns about Europe’s debt crisis kept investors sidelined in the trade. Earlier, the performance in Asia followed fall of US stocks ahead of Thursday’s auction of long-dated Italian debt, seen as a crucial test of that nation’s ability to borrow at sustainable rates.  Meanwhile, after subdued opening, Chinese share got a lift on speculation of policy easing measures from Beijing. Taiwan stocks also reversed course to end up 0.26 percent on Thursday, although trading was thin due to the holiday season. However, Hong Kong shares fell over half a percent in holiday-thinned trade while, Japanese benchmark Nikkei slipped by 0.29 percent ahead of an Italian debt sale that could prove challenging in thin volumes.