Post Session: Quick Review

Local equity markets, collapsing like house of cards and nursing heavy losses of over 1.50% on Tuesday, dragged Sensex and Nifty below the psychologically crucial 27,000 and 8,050 levels respectively by close of trade. In the extremely dismal session of trade, Nifty and Sensex registered their worst intra-day fall since July 8, 2014 and August 1, 2014. Nevertheless, with the selling being broad-based in nature, broader indices too participated into the gut, which led to both, Midcap and Smallcap indices ending the trade with colossal losses in the range of 1.95%-2.50%. Barometer gauges in-line with regional counterparts, took a hit after a survey in China showed factory employment slumped to a 5-1/2-year low, offsetting benefits from the same survey showing China's factory sector beat expectations. Additionally, cautious ahead of the expiry of monthly derivatives contracts on Thursday, also prompted some losses of Indian equity market. 

In the extremely dismal session of trade, no recovery came to the sight and further incremental selling pressure was witnessed with the opening of European counterparts, which were reeling under pressure right from the start of trade after data showed French business activity slowing again in September amid weakness in the key service sector as the euro zone's second-biggest economy posted zero growth for the second quarter in a row. Data compiler Markit said its preliminary composite purchasing managers index, covering activity in the services and manufacturing sectors which make up around two-thirds of the economy, eased to 49.1 this month from 49.5 in August. Closer home, although benchmarks did cut back some of their losses in the afternoon deals tailing the recovery of pharmaceuticals shares, selling pressure intensified after the sluggish opening of European markets. Meanwhile, Pharmaceuticals shares which showed signs of recovery in afternoon deals after Department of Pharmaceuticals withdrew guidelines issued by it on May 29, which gave National Pharmaceutical Pricing Authority (NPPA) the powers to fix the prices of drugs that are not on the essential medicines list, too slumped by close of trade.

However, none of the sectoral indices on BSE concluded in green, nevertheless stocks from Realty, Oil & Gas and Capital Goods counters were the prominent losers. losses of realty counter were led by shares of DLF which plunged after an esteemed brokerage house downgraded the rating of the stock to 'reduce' from 'hold', while Oil & Gas stocks too witnessed nasty drubbing after reports suggested that complete clarity on the pricing issue for domestically produced gas is expected to emerge by end of September, according to an official of the Ministry of Petroleum and Natural Gas. Meanwhile, the Rs 350-crore initial public offering (IPO) of agrochemical company Sharda Cropchem was subscribed around 60 times. The IPO subscribed 32 times in the qualified institutional investor category, 251 times in the high networth individual (HNI) category and nearly 6 times in the retail segment. The market breadth on the BSE remained in the favour of decliners; where advancing and declining stocks were in a ratio of 882:2138, while 80 scrips remained unchanged. (Provisional)

The BSE Sensex ended higher by 427.45 points or 1.57% at 26779.29 after trading in a range of 26744.07 and 27256.87. There were 3 stocks advancing against 27 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index was down by 1.91%, while Small cap index down by 2.38%. (Provisional)

The losing sectoral indices on the BSE were Realty down by 5.02%, Oil & Gas down by 2.72%, Capital Goods down by 2.52%, PSU down by 2.42% and Metal down by 2.31%, while there were no gainers on the BSE. (Provisional)

The few gainers on the Sensex were Maruti Suzuki up by 0.39%, Dr. Reddys Lab up by 0.19% and ITC up by 0.13%. On the flip side, Cipla down by 4.16%, Tata Motors down by 3.93%, Tata Steel down by 3.10%, Hindalco down by 3.09% and ONGC down by 2.89% were the top losers. (Provisional)

Meanwhile, a complete clarity on the pricing issue for domestically produced gas is expected to emerge by end of September, according to an official of the Ministry of Petroleum and Natural Gas. A four-member panel of secretaries appointed by the government, in the previous week, had submitted the much awaited report on a new gas pricing mechanism, which prescribed lower rate than the price approved by the previous United Progressive Alliance (UPA) government. Though contents of the report were not been disclosed, report suggested that price increase may be around 50%.

The report was discussed over the week-end and the Cabinet Committee on Economic Affairs (CCEA), which is now ready to take it up, probably at its meeting scheduled for Wednesday.

Originally, the Rangarajan formula on gas pricing, approved by the UPA government, was to be implemented from April 1, 2014, but was deferred by three months as general elections were announced. The NDA government on June 25 postponed its implementation by a further three months pending a comprehensive review. It was only in August, the government constituted a committee comprising of secretaries of power, fertilizer and expenditure with additional secretary in the oil ministry as its member secretary, to make amendments to a formula notified in January that doubled the gas price to $8.4 per million British thermal units (Btu).

The four-member panel has reportedly managed to strike a balance between demands for a market linked rate by gas producers to make marginal and deep-sea fields economically viable, and consumers in the power and fertiliser sector, who have said they cannot afford any rate higher than $5.

India VIX, a gauge for markets short term expectation of volatility soared 8.04% at 12.49 from its previous close of 11.71 on Monday. (Provisional)

The CNX Nifty ended lower by 128.75 points or 1.58% at 8017.55 after trading in a range of 8008.10 and 8159.75. There were 6 stocks advancing against 44 stocks declining on the index. (Provisional)

The top gainers on Nifty were HCL Tech up by 1.48%, NTPC up by 0.33%, Wipro up by 0.21%, Tech Mahindra up by 0.19% and Hindustan Unilever up by 0.05%. On the flip side, DLF down by 6.72%, Cipla down by 4.67%, Tata Motors down by 4.12%, Hindalco down by 3.11% and Tata Steel down by 3.05% were the top losers. (Provisional)

European Markets were trading in the red; France's CAC was down by 1.59%, Germany's DAX was down by 1.02% and UK's FTSE 100 was down by 1.33%.

Asian markets ended mostly in red on Tuesday, while Chinese market rose as a manufacturing gauge beat estimates. Japanese stock exchange was closed for the day on account of ‘Autumn Equinox’ holiday. Malaysia’s benchmark stock gauge fell to a six-week low as data showed weekly outflows of foreign funds reached the highest level since March. Foreign funds sold 635.8 million ringgit ($196 million) of Malaysian equities in the five days through September 19 to cap a third straight week of net sales. China Beige Book survey showed that China’s economy remained stuck in low gear this quarter, with struggling retail and residential real-estate industries countering improvements in manufacturing and transportation. A report published quarterly by New York-based China Beige Book International showed that growth in investment slowed further, borrowing costs rose and the share of firms applying for and getting bank loans remained at rock bottom levels.

HSBC’s China flash PMI for September unexpectedly rose to 50.5, above expectations of 50.0 and ahead of the August final of 50.2.  Meanwhile, the employment index declined further and disinflationary pressure intensified. Taiwanese Industrial Production rose to a seasonally adjusted annual rate of 7.03%, from 6.08% in the preceding month.