Benchmarks witness bloodbath on feeble global cues

Indian barometer gauges witnessed bloodbath with both the major indices losing over one and a half percentage points and ending below their crucial 8,050 (Nifty) and 26,800 (Sensex) levels amid feeble global cues. Selling was both brutal and wide-based as none of sectoral indices on BSE were spared. Counters, which featured in the list of worst performers, include realty, oil and gas, capital goods and public sector undertaking. After trading in tight band for most part of the day’s trade, domestic gauges crashed like house of card in the last leg of trade as investors offloaded their positions ahead of F&O contract expiry on Thursday. Sentiments remained dampened on report that foreign portfolio investors (FPIs) sold shares worth a net Rs 186.41 crore on September 22, 2014.

Sentiments also remained down-beat after global rating agency Moody’s Investors Service said that India’s state-run banks barely manage to meet the minimum capital requirements and the major 11 banks need between Rs 1.5 lakh crore to Rs 2.2 lakh crore, or $26-$37 billion by 2019 to comply with the so-called Basel-III norms and the government will find it difficult to raise capital quickly in the current environment due to low bank valuations.

Selling got intensified as European markets made an awful start with CAC, DAX and FTSE were trading with a cut of over a percentage point in early deals after a private survey showed that business activity in the euro zone comprising of 18 countries in September dropped to a nine-month low at 52.3 in September compared to 52.5 in August, raising concerns that the economy in the continent continues to struggle. Asian markets shut shop mostly in the red on reports that the U.S. military and several Arab allies have launched the first attacks on Islamic State targets in Syria kept investors in a wait-and-watch mode, offsetting better-than-expected manufacturing data from China.

Back home, depreciation in Indian rupee against dollar too dampened the sentiments. The rupee was trading at 60.96 at the time of equity markets closing versus its previous close of 60.81. Slump in realty counter too played spoil sport for the Indian equity markets. Losses in realty space were mainly led by shares of DLF which plunged after an esteemed brokerage house downgraded the rating of the stock to ‘reduce’ from ‘hold’. Meanwhile, The Delhi government hiked circle rates by up to 20 percent with an aim to check black money component in sale and purchase transactions. 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.

The NSE’s 50-share broadly followed index Nifty tumbled by around one hundred and thirty points to end below the psychological 8,050 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex declined by over four hundred and thirty points to finish below its psychological 27,800 mark. Broader markets too witnessed blood-bath and ended the session with a cut of around two percentage points. The market breadth remained in favor of decliners, as there were 875 shares on the gaining side against 2,148 shares on the losing side while 79 shares remain unchanged.

Finally, the BSE Sensex plunged by 431.05 points or 1.58%, to 26775.69, while the CNX Nifty dropped by 128.75 points or 1.58% to 8,017.55.

The BSE Sensex touched a high and a low of 27256.87 and 26744.07, respectively. The BSE Mid cap index was down by 1.91%, while the Small cap index was down by 2.48%.

The top gainers on the Sensex were NTPC up by 0.18%, Hindustan Unilever up by 0.10%, ITC up by 0.07% and Maruti Suzuki up by 0.07%. On the flip side, Cipla down by 4.65%, Tata Motors down by 4.00%, Hindalco down by 3.09%, Tata Steel down by 2.95% and ONGC down by 2.78% were the top losers in the index.

On the BSE Sectoral front Realty down by 4.91%, Oil & Gas down by 2.58%, PSU down by 2.40%, Capital Goods down by 2.40% and Metal down by 2.33% were the top losers, while there were no gainers in the space.

Meanwhile, in a bit of the relief to the pharmaceutical industry, the Department of Pharmaceuticals has withdrawn 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 in response to a plea filed by an organization of drug manufacturers challenging the drug regulator’s July 10 notification that brought over 100 medicines under price control.

The industry, which off-lately has been baffled by the increasing number of medicines adding to the list of essential medicines, strongly protested against this matter of fixing price cap for non essential drugs. Despite this, reports suggests that the decision to withdraw the drug pricing authority's powers to fix the prices of non-essential medicines will be on a prospective basis, and will not affect price caps imposed in July on 108 drugs.

NPPA had taken the industry by surprise on July 10, when it invoked the rarely used clause of Paragraph 19, which allows price control outside of the list of essential medicines under extraordinary circumstances and imposed price caps on 108 non-essential drugs, which are used to treat diseases ranging from diabetes to HIV/AIDS. The move of price control was driven by huge inter-brand price difference seen in most drug categories. NPPA had used the term 'exploitative pricing' for such situations where medicines become unaffordable or hugely expensive for patients, in a market which pays out of pocket.

However, the industry bodies had taken representations to the government, opposing the order and pressure had been building up on the drug regulator. Both Indian drug lobbies Indian Pharmaceutical Alliance and MNC group Organisation of Pharma Producers of India had legally challenged the order in separate petitions, questioning the use of Para19 and NPPA's jurisdiction to carry out the order.

The CNX Nifty touched a high and low of 8,159.75 and 8,008.10 respectively.

The top gainers of the Nifty were HCL Technologies up by 1.22%, Wipro up by 0.70%, NTPC up by 0.33%, Tech Mahindra up by 0.11% and Ambuja Cements up by 0.07%. On the other hand, DLF down by 6.75%, Cipla down by 4.36%, Tata Motors down by 3.94%, Tata Steel down by 3.44% and Asian Paints down by 3.11% were the top losers. 

European markets were trading in red, France’s CAC 40 was down by 1.49%, Germany’s DAX was down by 0.92% and United Kingdom’s FTSE 100 was down by 1.17%.

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.