Indian equities bid adieu to 2011 on an awful note; plunge 25% in calendar year

Indian benchmark equity indices concluded the last trading session of calendar year 2011 on a disappointing note and registered the first annual fall in three years. The markets witnessed sharp yearend profit booking in the dying hours of trade which dragged the equity indices close to two percent from near intraday high levels to the lowest levels in the session. Though, the selling pressure remained unabated for the fourth straight session and dragged the key gauges by half a percent on Friday however, the indices suffered an even brutal laceration of a gargantuan twenty five percent for the whole year, making Indian markets the worst performer among the BRIC nations which also include Brazil, Russia and China. The year has been characterized by the European debt crisis and going forward it will depend on policymakers and how they implement better fiscal integration in the euro zone to how markets will perform next year. Back home, the frontline indices got dragged around the psychological 4,600 (Nifty) and 15,450 (Sensex) levels in the session as hefty position squaring from the index heavyweight Reliance Industries proved costly for the bourses. Despite trading in positive terrain for most part of the day, sentiments turned around in late hours tracking the slight weakness in European markets. However, investors overlooked the largely positive trends from Asian peers where stocks closed in green zone as a slew of encouraging US economic reports like the Chicago-area factory PMI, pending November home sales and US weekly jobless claims data buttressed sentiments in the region.

Earlier on Dalal Street, the benchmark got off to a positive start following supportive leads from Asian markets were sentiments were optimistic in thin trades triggered by a slew of encouraging economic reports from the US. The bourses soon capitalized on the initial momentum and climbed to highest point in the session. Thereafter, the indices showed range bound movements through the morning trades but the optimism petered out in mid noon trades after the European market opening. There appeared no signs of recovery thereafter as yearend profit booking ensured that the bourses extend the declining streak for the fourth straight session. Eventually, the NSE’s 50-share broadly followed index - Nifty slipped about half a percent to close just above the crucial 4,600 levels while Bombay Stock Exchange’s Sensitive Index - Sensex- suffered about a hundred point cut and closed above the psychological 15,450 mark. Moreover, the broader markets bucked the pessimistic trend and settled with marginal gains, outperforming their larger peers. On the BSE sectoral space, the PSU counter remained the top gainer in the space with close to a percent gains followed by the defensive-Healthcare- index which gained about half a percent. On the flipside, the Oil & Gas pocket got severely punished in the session with around one and half a percent cuts while rate sensitive counters like Realty and Banking too were not spared by investors. The markets declined on weak volumes as it was the first day of a new F&O series. The market breadth was pessimistic as there were 1327 shares on the gaining side against 1451 shares on the losing side while 134 shares remained unchanged.

Finally, the BSE Sensex lost 89.01 points or 0.57% to settle at 15,454.92, while the S&P CNX Nifty declined by 21.95 points or 0.47% to close at 4,624.30.

The BSE Sensex touched a high and a low of 15,694.05 and 15,406.93 respectively. The BSE Mid cap and Small cap indices were up by 0.31% and 0.09% respectively.

The major gainers on the Sensex were Infosys up 0.78%, Coal India up 0.72%, BHEL up 0.67%, Bharti Airtel up 0.29% and ITC up 0.17%. While, Reliance down 2.81%, Jindal Steel down 2.07%, DLF down 2.01%, Tata Steel down 2.00% and Tata Power down 1.52%, were the major loser on the index.

On the BSE sectoral space, PSU up 0.98%, Health Care (HC) up 0.45%, TECk up 0.43% and IT up 0.37% were the top gainers while Oil & Gas down 1.47%, Realty down 1.10%, Bankex down 0.73%, Metal down 0.68% and Auto down 0.33% were the top losers on the BSE sectoral space.

Meanwhile, Finance Minister Pranab Mukherjee has said that the overall inflation would drop to 6% by March end. The statement of the FM came in backdrop of weekly food inflation declining well below one percent, to the lowest level since April 2006. The latest data from the government showed that food inflation stood at 0.42 per cent as on December 17. Food inflation numbers have been moderating every week since early November when it stood at double-digit.

Pranab Mukherjee said that 'If this trend continues then you will have (fiscal) year-end (headline) inflation around 6%... But it cannot be lower than 6% because inflationary pressure was higher in weeks before'.

The Finance Minister's projection of 6 per cent inflation by year-end is well below the 7 per cent forecast made by the Reserve Bank of india (RBI) which has projected it to fall to 7% by March 2012. RBI has hiked interest rates 13 times since March, 2010, to tame demand and curb inflation. But in a policy shift in its Mid Quarter Policy Review earlier this month, RBI stopped further hikes and hinted that the rate may be cut in case inflation moderates.

The S&P CNX Nifty touched a high and low of 4,690.45 and 4,608.90, respectively.

The top gainers on the Nifty were Cairn up 3.40%, RCOM up 2.94%, Sesa Goa up 2.06%, BHEL up 1.10% and Bharti Airtel up 1.00%. On the flip side, Kotak Bank down 5.01%, IDFC down 3.91%, Reliance down 2.77%, Tata Steel down 2.27% and Reliance Power down 2.22% were the top losers on the index.

The European markets were trading mixed. France's CAC 40 advanced by 0.03%, Britain’s FTSE 100 down by 0.25% and Germany's DAX down by 0.03%.

Most of the Asian equity indices signed off the year 2011 on a positive note on Friday following a positive finish for Wall Street, with US employment and housing data hinting at a strengthening domestic economy. US jobless claims rose but held below the crucial 400,000 level for the fourth straight week, with the number filing for benefits during the past month hitting a three-year low.

Meanwhile, Chinese benchmark Shanghai Composite surged over a percentage point shrugging of the country’s factory activity which shrank in December as demand at home and abroad slackened. The final HSBC purchasing managers' index (PMI) reached 48.7 in December, slightly better than the 47.7 in November but lower than preliminary PMI of 49 released earlier this month, as new orders dropped.

Stock markets in Seoul remained closed on account public holiday.