Markets continue to exhibit weakness; Sensex slips below 28,000 mark

Local equity markets after slipping into negative territory, continued languishing below the neutral line in absence of any major positive trigger which could heave the markets higher, rather prevailing caution ahead of the release of FOMC minutes this week, weighed on the sentiment. At day’s low, both Sensex and Nifty were trading below psychologically crucial 28,000 and 8,400 levels respectively, with losses of around four tenths of a percent. Meanwhile, broader indices also trading somber in line with larger counterparts, were nursing losses in the range of 0.25%-0.50%.

On the global front, Asian equity markets traded mixed on Thursday, as traders reacted to key economic data from Asia's two biggest economies. In Japan, exports rose 9.6 percent on an annual basis, data from the Ministry of Finance showed early Thursday, above the 4.5 percent rise forecast, and following a 6.9 percent rise in September. Imports, meanwhile, rose 2.7 percent from the year-ago period, below expectations of a 3.4 percent rise and after rising 6.2 percent in September, leaving behind a trade deficit to 710 billion yen, better than expectations of a 1.05 trillion yen deficit. Meanwhile, China's factory activity stalled in November as output shrank for the first time in six months. The HSBC flash purchasing managers' index (PMI) for November clocked in at the breakeven level of 50, which separates expansion from contraction, following the 50.4 final reading in October.

Closer home, most of the sectoral indices on BSE succumbed to selling pressure, nevertheless biggest losers were stocks from Consumer Durables, Capital Goods and Power counters. On the flip side, much of the demand was witnessed by stocks from IT, followed by Fast Moving Consumer Goods counters, which were the top gainers of the session. Indian rupee extending its depreciating streak for sixth straight session, weakened to nine months low level on Thursday, tracking dollar’s strength against the basket of other major currencies. The overall market breadth on BSE was in the favour of declines which thumped advances in the ratio of 1419:555; while 23 shares remained unchanged.

The BSE Sensex is currently trading at 27924.48, down by 108.37 points or 0.39% after trading in a range of 27922.68 and 28118.53. There were 9 stocks advancing against 21 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.29%, while Small cap index down by 0.48%.

The gaining sectoral indices on the BSE were IT up by 0.30% and FMCG up by 0.05% while, Consumer Durables down by 1.93%, Capital Goods down by 1.32%, Power down by 1.29%, Realty down by 1.28% and INFRA down by 1.08% were the losing indices on BSE. 

The top gainers on the Sensex were Cipla up by 1.59%, SBI up by 1.55%, Hindalco up by 0.58%, Sun Pharma Inds. up by 0.46% and Infosys up by 0.29%. On the flip side, BHEL down by 2.97%, Sesa Sterlite down by 2.08%, Bharti Airtel down by 1.58%, Tata Steel down by 1.47% and Larsen & Toubro down by 1.40% were the top losers.

Meanwhile, In an encouraging development for the country, the Organization for Economic Cooperation and Development (OECD) pointed that economy is coming out of its worst slowdown in a quarter-century and implementation of new reforms held the key for putting the economy on a strong and sustainable growth path of 8%.

The Paris-based think-tank pegged India’s growth rate, which languished at below 5% for the last two fiscal due to high interest rates, stubborn inflation and weak investment to grow by 6.6% in 2015-16, up from its last forecast of 5.7% growth in May and to edge higher to 6.8% in 2016-17.

It, however, emphasized to achieve 8% growth rate, the economy would have to undertake sweeping reform measures, like switching subsidy spending to social and physical infrastructure, bringing in tax reforms, cleaning up the banking system to free up funds for infrastructure and reducing structural barriers for job creation by bringing in labour reforms among other things.

The Paris-based think-tank also pushed for early implementation of the goods and services tax (GST) to improve public finances and also stressed on the need for India to improve the quality of its fiscal consolidation both by the Centre and the states.

In yet another positive, the OECD, in its latest forecast, pegged inflation to fall to 5.4% in 2015-16 and nudge higher to 5.6% the following fiscal year, after 6.9% in 2014-2015. In May, it forecast that inflation would remain above 6 percent over the next few years.

Notably, OECD in its key recommendations suggested that India to Improve the macroeconomic framework by introducing flexible inflation targeting, pursuing fiscal consolidation and implementing a national value-added tax and strengthening banking oversight. OECD also added that it could boost manufacturing jobs by simplifying labour laws, improving access to education, accelerating approvals for infrastructure projects and improving the business climate. 

The CNX Nifty is currently trading at 8359.00, down by 23.30 points or 0.28% after trading in a range of 8358.70 and 8410.10. There were 14 stocks advancing against 36 stocks declining on the index.

The top gainers on Nifty were Kotak Mahindra Bank up by 6.75%, Cipla up by 1.89%, SBI up by 1.44%, Tech Mahindra up by 0.90% and Hindalco up by 0.74%. On the flip side, Jindal Steel & Power down by 3.03%, BHEL down by 2.83%, Bank of Baroda down by 2.17%, Sesa Sterlite down by 1.98% and NMDC down by 1.74% were the top losers.

Asian markets were trading mixed; with Shanghai Composite edging higher by 0.04% to 2,451.98; Nikkei 225 gaining by 12.11 points or 0.07% to 17,300.86  Hang Seng rising by 18.85 points or 0.08% to 23,392.16; Taiwan Weighted advancing by 115.63 points or 1.29% to 9,078.87, while Jakarta Composite declining by 44.59 points or 0.87% to 5,083.35; Straits Times sliding by 10.07 points or 0.3% to 3,324.49; KOSPI Index shedding 8.83 points or 0.45% to 1,958.04 and FTSE Bursa Malaysia KLCI losing 5.6 points or 0.31% to 1,818.79.