Late hour sell-off drag benchmarks lower

Thursday turned out to be a disappointing session for the Indian equity indices which got pounded by over a percentage point as investors sold stocks across sectors amid global growth concerns. The barometer gauges traded near their neutral lines till noon deals on hopes of a good show by the BJP in state polls and weakness in global crude oil prices but a sharp wave of selling, which emerged in last leg of trade, dragged the major indices below their crucial 7,750 (Nifty) and 26,000 (Sensex) levels. 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 consumer durables, power, metal and auto.

Sentiments remained down-beat after government reported that India’s trade deficit widened to $14.25 billion in September following a jump in oil and gold imports. While the merchandise imports surged nearly 26 percent last month, Exports were up by marginal 2.73 percent year on year. Markets failed to draw any sense of relief from report that Indirect tax collections grew by 5.8 percent to Rs 2.42 lakh crore during April-September period of current fiscal as compared to Rs 2.29 lakh crore during the same period of previous financial year. Markets also failed to draw heart from Finance Secretary Arvind Mayaram’s statement that declining crude oil prices will have favourable implications for the country; however he cautioned that there is no need to be overly optimistic about it.

Selling got intensified as European markets, after a positive opening, slumped by around two percent in early deals, resuming their month-long sell-off as worries over the strength of the global economy and fears of deflation in the euro zone kept investors on edge. Asian markets too shut shop mostly in the red as disappointing US economic data fuelled growth concerns. Data from the US showed retail sales and producer prices both fell in September.

Back home, sentiments remained down-beat on the back of depreciation in Indian rupee against dollar. The rupee was trading at 61.82 at the time of equity markets closing versus its previous close of 61.42. Sentiments also remained dampened on report that foreign portfolio investors sold shares worth a net Rs 694.67 crore on October 14, 2014, as per provisional data. Meanwhile, selling in metal counter too dampened the sentiments. Metal shares edged lower on worries that global economic growth slowdown would hurt demand.

The NSE’s 50-share broadly followed index Nifty tumbled by over one hundred and ten points to end below the psychological 7,750 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex declined by around three hundred and fifty points to finish below its psychological 26,000 mark. Broader markets too witnessed blood-bath and ended the session with a cut of around two and a half percentage points. The market breadth remained in favor of decliners, as there were 756 shares on the gaining side against 2,173 shares on the losing side while 90 shares remain unchanged.

Finally, the BSE Sensex plunged by 349.99 points or 1.33%, to 25999.34, while the CNX Nifty dropped by 115.80 points or 1.47% to 7,748.20.

The BSE Sensex touched a high and a low of 26462.08 and 25933.98, respectively. The BSE Mid cap index was down by 2.42%, while the Small cap index lost 2.71%.

The top gainers on the Sensex were ITC up by 1.48%, Coal India up by 1.34%, GAIL India up by 0.74% and Cipla up by 0.13%. On the flip side, Hindalco down by 5.46%, Mahindra & Mahindra down by 4.41%, Sesa Sterlite down by 4.09%, Tata Steel down by 3.57% and Tata Power down by 3.29% were the top losers in the index.

On the BSE Sectoral front Consumer Durables down by 4.25%, Power down by 2.91%, Metal down by 2.28%, Infrastructure down by 2.27% and Auto down by 2.09% were the top losers, while there were no gainers in the space.

Meanwhile, amid falling global crude oil prices, Finance Secretary Arvind Mayaram has asserted that declining crude oil price will have favourable implications for the country. However, there is no need to be over optimistic as winter demand and global economic uncertainty would put upward pressure on oil prices in coming future, Finance Secretary added.

Benchmark Brent crude has fallen to almost four-year low at around $82 per barrel on account of oversupply and low demand from major economies mainly China and the US. With international oil prices dropping to multi-year lows, government's oil subsidy bill is likely to be slashed by over 60 percent in the current fiscal which in turn will help bridging the fiscal deficit.

The government currently controls diesel, domestic LPG and kerosene and prices them at rates below cost. Under-recovery or revenue loss arising out of selling diesel, domestic cooking gas (LPG) and kerosene at prices lower than imported cost is estimated at Rs 86,080 crore for current fiscal which is lower than Rs 1,39,869 crore gross under-recovery last fiscal. Diesel prices have been raised by up to 50 paisa a litre every month since January 2013. The hikes together with a sharp drop in global oil prices have helped wipe out the under-recovery or loss on diesel. Presently, oil firms in the country are making Rs 2.25-2.50 a litre profit on diesel, which should have been passed to consumers in form of a price cut but the same has been delayed due to assembly elections in states include Maharashtra and Haryana.

 The CNX Nifty touched a high and low of 7,893.90 and 7,729.65 respectively.

The top gainers of the Nifty were DLF up by 5.57%, NMDC up by 2.63%, ITC up by 1.44%, BPCL up by 1.33% and Coal India up by 0.99%. On the other hand, UltraTech Cement down by 6.32%, Hindalco Industries down by 5.96%, Grasim Industries down by 5.06%, Mahindra & Mahindra down by 4.52% and Tata Steel down by 4.29% were the top losers.

European markets were trading in red, France’s CAC 40 was down by 2.50%, United Kingdom’s FTSE 100 was down by 1.70% and Germany’s DAX was down by 1.75%.

Asian markets ended in red on Thursday, with the regional benchmark index heading for its lowest since March, extending a rout in global equities after the yen gained the most against the dollar in six months. China’s broadest measure of new credit rose to a three-month high in September as the central bank’s targeted measures to boost liquidity helped spur lending. New local-currency loans were 857.2 billion yuan, and M2 money supply grew 12.9 percent from a year earlier. Foreign reserves were $3.89 trillion at September 30. Separately, China is lowering down payment requirements and discounting mortgages as declining housing sales put a drag on the economy. After four years of government restrictions to cool housing prices that had tripled since 2000, the central bank is reversing course, making it easier for homeowners to buy second properties.

Industrial production in Japan fell more-than-expected last month. The industrial production fell to a seasonally adjusted -1.9%, from -1.5% in the preceding month. Singaporean Retail Sales fell to a seasonally adjusted 5.4%, from 5.5% in the preceding month.  South Korean Interest Rate Decision fell to a seasonally adjusted annual rate of 2.00%, from 2.25% in the preceding quarter.