Slump extends for the second straight day; Nifty ends below 8400

Tuesday was not a very different day for the Indian markets which after witnessing their biggest fall in nearly two months in last session, lost further ground breaching some of the crucial psychological levels. The major bourses remained under pressure since beginning tailing the weakness in other global markets, while on domestic front too there wasn’t any supportive cues that could have supported the markets on upside.

The global cues mainly pressured the domestic markets, the US indices gave a soft cue and Asian markets followed them amid declining oil prices and on fear that slower growth in China will keep a lid on demand for oil. Chinese markets which looked bucking the trends in early hours suffered sharp slump towards the end on tightening of collateral rules in the country. The Chinese currency too witnessed its largest single day fall. Recently China’s securities regulator has warned that Investors must consider risks while putting money into stocks. While, the Japanese market was down as stronger yen weighed on Japanese exporters. The European markets too made a weak start after data showed German imports and exports contracted in October.

Back home, the slump in the Indian markets aggravated post lunch, following the sharp decline in global markets with both the benchmarks losing more than a percent and Sensex ending below 27800 and Nifty below 8350. Apart from the weak trend in global markets, rising current account deficit (CAD) in the July-September quarter too dampened the sentiment. CAD widened sharply to $10.1 billion in the second quarter of FY15 due to high gold imports. Back on street the cut on the broader markets was even wider and they underperformed the benchmarks by around half a percent. On the sectoral front while all the indices ended in red, the auto sector stocks were unable to get any support from the Society of Indian Automobile Manufacturers (SIAM) report that domestic passenger car sales increased 9.52% to 156,445 units in November as compared with 142,849 units in the year-ago month. Total two-wheeler sales in November rose 4.89% to 1.3 million units, while sales of commercial vehicles rose 9.05% to 47,686 units. Vehicle sales across categories registered an increase of 5.03% to 1.6 million units. Metals gauge on the BSE was biggest loser, weighed down by the weakness in Chinese market on fear of low demand on softening economic growth. Although, there was positive news for the Indian steel companies, as the World Trade Organisation (WTO) ruled against the US which had imposed high duty on imports of certain steel products from India. It said that duty imposed by the US on the Indian steel products is 'inconsistent' with its Agreement on Subsidies and Countervailing Measures.

Finally, the BSE Sensex plunged by 322.39 points or 1.15%, to 27797.01, while the CNX Nifty lost 97.55 points or 1.16% to 8,340.70.

The BSE Sensex touched a high and a low of 28157.53 and 27763.82, respectively. The BSE Mid cap index was down by 1.57%, while the Small cap index declined by 1.59%.

The top gainers on the Sensex were Dr. Reddys Lab up by 1.53%, Sun Pharma by 1.46%, Mahindra & Mahindra up by 1.21% and TCS up by 0.15%. On the flip side, Sesa Sterlite down by 5.24%, ONGC down by 4.29%, Bharti Airtel down by 4.24%, Tata Power down by 4.21% and NTPC down by 3.54% were the top losers.

On the BSE Sectoral front while there were no gainers, Power down by 2.75%, Metal down by 2.71%, Capital Goods down by 2.29%, INFRA down by 2.28% and PSU down by 2.25% were the top losers in the space. .  

Meanwhile, Coal Ministry has proposed a minimum floor price of Rs 150 per tonne for auctioning coal mines to steel, cement as well as captive power plants and a reserve price of Rs 100 a tonne for mines to be allotted to government companies and power stations through the reverse auction method.

According to proposal, the final floor and reserve price will be different for each block depending on the grade of the coal, using Coal India’s notified price for various types of the fuel. The floor price of the blocks would be worked out by computing their net present value (NPV) through the discounted cash flow method. Winners from steel, sponge iron and captive power plant industries would have to pay 10% of the floor price upfront. The ministry also suggested a cap on the auction price for the blocks being auctioned to the power sector where capacity has been set up under tariff-based bidding and with a cost-plus power purchase agreement.

The government is set to auction coal blocks, including operational and several others close to production, after the Supreme Court in September cancelled all mine allotments since 1993. The government will offer around 92 blocks during the first round of auction of which 59 have been reserved for the power sector. Of these 59, 25 blocks will be put out on auction and 34 will be allocated to Central and State public sector firms.

The CNX Nifty touched a high and low of 8,444.50 and 8,330.50 respectively.

The top gainers on Nifty were Mahindra & Mahindra up by 1.70%, Dr. Reddy's Laboratories up by 1.57%, Sun Pharmaceuticals Industries up by 0.99%, HCL Technologies up by 0.25% and HDFC Bank up by 0.06%. On the flip side, SSLT down by 4.92%, ONGC down by 4.19%, Tata Power Company down by 3.93%, Tata Steel down by 3.60% and NTPC down by 3.50% were the top losers.

European markets were trading in red, France’s CAC 40 was down by 0.82%, Germany’s DAX was down by 0.72% and United Kingdom’s FTSE 100 was down by 0.96%.

The Asian equity benchmarks ended mostly lower on Tuesday, with Shanghai Composite Index slumping the most in more than five years amid extreme volatile trading that sent the mainland stock bourses’ turnover to a record. China’s policy change was the biggest drag on the market as there’s a liquidity crunch. China’s authorities announced that lower-rated bonds can no longer be used as collateral for some short-term loans, sparked sell-off in debt and the yuan. The move will help remove riskier debt from the repo market before China requires local government financing vehicles to clarify next month which bonds are backed by the state. Japan’s M2 Money Stock rose to a seasonally adjusted 3.6%, from 3.2% in the preceding month.

Indonesia’s central bank, which quickly raised the benchmark rate after the government hiked fuel prices last month, is expected to keep all rates unchanged at its last policy meeting for the year scheduled on Thursday. At a special meeting right after President Joko Widodo announced gasoline and diesel prices hikes, the central bank also raised the lending rate by 50 basis points to anchor inflation expectation and encourage interbank borrowing. The World Bank has cut its growth forecast on Indonesia’s economy for next year to 5.2% from 5.6% as projected in July, due to a weaker outlook of the country’s exports and investment growth. The projection by the Washington-based lender is lower than government estimates for next year’s growth, which is at 5.8%.