Benchmarks magnify losses; Nifty below 8450 mark

Benchmark equity indices, after starting the session on negative note, have added some more losses on account of sustained selling pressure by funds and speculators ahead of monthly expiry in the derivatives segment. Sentiments were deterred after ratings agency ICRA in its latest report highlighted that the Indian economic growth may have slowed to 5 per cent in the July-September quarter due to a low kharif harvest, a slowdown in exports and muted government spending. Official GDP data for the second quarter of the current fiscal year ending March is due for release this Friday. The market sentiment weakened further as stock market regulator Securities and Exchange Board of India (Sebi) imposed restrictions on issue of Offshore Derivative Instruments (ODIs) by foreign portfolio investors (FPIs). However, the losses at D-street were capped by encouraging statement of Minister of State for Finance Jayant Sinha that India had the potential to become a $5 trillion economy in the next 10 years, if it grows at an average 7-8%. He further highlighted that target of gross domestic product (GDP) reaching at least $5 trillion at the end of 10 years was possible given the strong capital inflows and expected appreciation of Indian currency. Support came in from reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 1,168.94 crore on November 25, 2014.

On the sectoral front, stocks from Power, Realty and PSU counters were supporting the markets’ uptrend, while those from Banking, TECK and Auto counters were adding to the underlying cautious undertone. In scrip specific development, shares of Camphor & Allied Products (CAPL) have soared after the company has entered in to a multi-year manufacturing and supply agreement for the manufacture of fragrance ingredient intermediates and finished products with US-based International Flavours and Fragrances Inc. (IFF). Furthermore, Atul Auto rose after Goldman Sachs India Fund bought nearly 300,000 shares of the company from the open market.

On global front, most of Asian stock markets edged up after upbeat U.S. economic growth data calmed investor anxiety over a deteriorating global outlook. Back home, Indian rupee strengthened by five paise to 61.81 against the dollar in early trade on increased selling of the US currency by exporters and banks.  The market breadth on BSE was positive, out of 2290 stocks traded, 1286 stocks advanced, while 921 stocks declined on the BSE.

The BSE Sensex is currently trading at 28302.83 down by 35.22 points or 0.12% after trading in a range of 28379.27 and 28276.80. There were 13 stocks advancing against 17 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index was down by 0.12%, while Small cap index up by 0.44%.

The gaining sectoral indices on the BSE were Power up by 0.87%, Realty up by 0.63%, PSU up by 0.56%, FMCG up by 0.55% and Consumer Durables up by 0.39% while, Bankex down by 0.61%, TECK down by 0.44%, IT down by 0.34% and Auto down by 0.17% were the losing indices on BSE.

The top gainers on the Sensex were GAIL India up by 2.46%, Cipla up by 2.10%, BHEL up by 1.06%, ITC up by 1.01% and NTPC up by 0.96%. On the flip side, Bajaj Auto down by 1.50%, ICICI Bank down by 1.25%, Bharti Airtel down by 1.23%, Dr. Reddys Lab down by 0.89% and Axis Bank down by 0.88% were the top losers.

Meanwhile, Amid the rising clamour from industry for rate cuts and signs of slow economic growth in September quarter that may compel Finance Ministry Arun Jaitley too, to argue Reserve Bank of India (RBI) Governor Raghuram Rajan to lower interest rates when the two meet ahead of an RBI interest rate decision, Raghuram Rajan has said that bad behaviour by some unscrupulous promoters was harming all industry and greater scruples would possibly do more to bring down borrowing costs for entrepreneurs than monetary policy actions.

Rajan stated that 'Some promoters find ways to take out the equity as soon as the project gets going, so there really is no cushion when bad times hit,' and added that lenders should insist on more real equity up front, and monitor the project closely to ensure it stays in. Promoters should not try and finance mega projects with tiny slivers of equity.

The RBI governor also detailed some remedial measures and said that introducing monetary incentives for members of Debt Recovery Tribunals that bring down the duration of hearing of cases, a limit on number of stays that courts can grant against recovery of loans, making appeals against DRT orders costly as well as introducing a whole new bankruptcy regime could help in changing the situation.

Although, the central bank is unlikely to cut rates, but industry facing poor domestic and external demand is expecting a dovish stance by the RBI in its upcoming monetary policy review. Economic growth for the second quarter is widely expected to be around 5 percent, mainly due to a decline in farm and industrial output growth and has been confirmed by the rating agency Icra.

The CNX Nifty is currently trading at 8,443.95 down by 19.15 points or 0.23% after trading in a range of 8,468.70 and 8,439.45. There were 23 stocks advancing against 27 declining on the index.

The top gainers on Nifty were GAIL India up by 2.36%, Asian Paints up by 2.21%, Cipla up by 2.09%, ITC up by 1.20%, and Ultratech Cement up by 1.07%. On the flip side, Zee Entertainment down by 4.35%, HCL Tech down by 2.13%, Bajaj Auto down by 1.44%, ICICI Bank down by 1.34% and Bharti Airtel down by 1.31% were the top losers.

The Asian markets were trading mostly in green, KOSPI Index was up by 0.11%, FTSE Bursa Malaysia KLCI gained 0.25%, Nikkei 225 added 0.07%, Taiwan Weighted was up by 0.09%, Shanghai Composite gained 0.52% and Hang Seng was higher by 0.12%. On the other hand Straits Times declined by 0.17% and Jakarta Composite was lower by 0.16%.