Markets suffer sharp profit booking; Benchmarks witness triple digit cuts

Indian markets that have been witnessing choppiness for last couple of days, went through correction on the very starting day of the data heavy week on Monday. Though, the start was on a flat note with a modest negative bias and markets inched higher in green in very early trade but it was for a very short period, there after profit booking started and kept on dragging the markets lower. In the second half selling aggravated and dragged the markets to their lows with both the benchmarks suffering triple digit cut.

The global cues remained mostly week, although the Asian markets made a mixed closing, the China’s Shanghai Composite Index topped 3,000 for the first time in three years, as the country reported a record trade surplus. The European markets made a soft start with major indices turning lower after a four week rally. Germany’s market too was down despite the industrial production of the country rising for a second month in October in a sign that a slow recovery in Europe’s largest economy is continuing.

Back home, gloom widened on the Dalal Street with markets suffering cut of over a percent and traders taking opportunity to book profit after the recent surge. The weakness in domestic currency against the dollar too weighed on the sentiments. Traders even ignored international credit ratings agency Moody's statement that India's Baa3 government bond rating balances the strong growth potential of its large and diverse economy against high fiscal deficits, recurrent inflationary pressures, as well as regulatory and infrastructure constraints on competitiveness. According to Moody's, India's high economic strength is a key source of sovereign credit support. The IT sector remained under pressure since beginning due to Infosys which lost around five percent in trades after four of the founders of the company sold around 32.6 million shares in multiple block deals to raise about $1.1 billion at a fixed price of Rs 1,988 each, a 4 per cent discount to Friday's close. The shares were being offered by the company’s promoters N R Narayana Murthy, Nandan Nilekani, K Dinesh and S D Shibulal, along with their families. The deal amounts to 2.8% of the outstanding equity. The metals stocks too were bit under whether, reacting to weak Chinese trade data. China's exports rose 4.7 per cent in November, well below expectations and added to concerns that it could be facing a sharper slowdown. There was some buzz in the oil & gas sector with report that the Oil Ministry is reworking the fuel subsidy sharing formula to cut ONGC’s payout by a quarter through adjustment of statutory oil cess against its share. ONGC was up by about a percent.

Finally, the BSE Sensex plunged by 338.70 points or 1.19%, to 28119.40, while the CNX Nifty dropped 100.05 points or 1.17% to 8,438.25.

The BSE Sensex touched a high and a low of 28494.85 and 28097.12, respectively. The BSE Mid cap index was down by 1.22%, while the Small cap index lost 0.87%.

The top gainers on the Sensex were Coal India up by 2.20%, ITC up by 1.63%, Sun Pharma up by 0.91%, ONGC up by 0.63% and Cipla up by 0.61%. On the flip side, Infosys down by 4.88%, Sesa Sterlite down by 3.60%, Mahindra & Mahindra down by 3.32%, Hindalco down by 2.51% and TCS down by 2.51% were the top losers.

On the BSE Sectoral front FMCG up by 0.78% was the only gainer, while IT down by 3.18%, TECK down by 2.58%, Realty down by 1.80%, Capital Goods down by 1.72% and Infrastructure down by 1.47% were the top losers in the space.

Meanwhile, the government would be evaluating 31 foreign investment proposals, including those of Ratnakar Bank, Novartis Healthcare and HDFC Bank among others in the coming week. Other investment proposals include that of Lausanne Hospitality Consulting Sa, Switzerland; Sprint Telecom India; Maham Nayyar and Miss Sahar Nayyer, Pakistan; and Symbiotec Pharmalab.

However, out of the total, nine proposals were the ones on which the foreign investment promotion board (FIPB) had deferred a decision in its earlier meetings. The nine proposals include that of Pureplay Investment Partners (Mauritius), INX Music, ASV Europa Security Private Limited, Halyard Health Inc (US) and Beloor Bayir Biotech, Tevapharm India Pvt, GMU Infosoft Pvt, U Infosoft Pvt Ltd, and Monsoon Capital LLC, US.

While India permits FDI in most of the sectors through automatic route, approval of the Foreign Investment Promotion Board (FIPB) in the Finance Ministry is required in certain sectors like pharmaceutical and defence, considered sensitive for the economy.

The CNX Nifty touched a high and low of 8,546.35 and 8,432.25 respectively.

The top gainers on Nifty were Coal India up by 1.81%, ITC up by 1.62%, Asian Paints up by 1.06%, ONGC up by 0.83% and UltraTech Cement up by 0.83%. On the flip side, Infosys down by 4.75%, Sesa Sterlite down by 3.87%, Jindal Steel & Power down by 3.63%, Mahindra & Mahindra down by 3.26% and Hindalco Industries down by 3.19% were the top losers.

European markets were trading in red, France’s CAC 40 was down by 0.55%, Germany’s DAX was down by 0.37% and United Kingdom’s FTSE 100 was down by 0.68%.

The Asian equity benchmarks ended mostly lower on Monday, while Shanghai Composite Index topped 3,000 for the first time since 2011 as brokerages surged on bets the rally will continue. China’s imports shrank unexpectedly in November while export growth slowed, fuelling concerns the world’s second-largest economy could be facing a sharper slowdown and adding pressure on policymakers to ramp up stimulus measures. Exports rose 4.7% from a year earlier, while imports dropped 6.7%, the biggest drop since March. Japan’s GDP fell to a seasonally adjusted -0.5%, from -0.4% in the preceding quarter. Japan’s Economy Watchers Current Index fell to a seasonally adjusted 41.5, from 44.0 in the preceding month. Japan’s Current Account rose to a seasonally adjusted 0.95T, from 0.41T in the preceding month. Taiwan’s trade balance fell more-than-expected last month. The Ministry of Finance Taiwan stated that the country’s Trade Balance fell to a seasonally adjusted annual rate of 4.22B, from 4.62B in the preceding month.