Markets return to their southbound journey after a brief halt

Indian markets returned to their southbound journey on Thursday after a day of halt. Reeling under the global risk aversion pressure, the domestic markets witnessed wide based selling that dragged the bourses off their many crucial support levels. There were lots of encouraging domestic policy developments but traders remained concerned about the global growth scenario and some of the major macro economic data slated to be announced tomorrow. Rupee slipping to its nine months intraday low too weighed on the sentiments and led the markets end lower by about a percent for the day.

The global cues remained weak and after a slump in the US markets overnight the Asian markets too followed the trend with all the major indices suffering cuts of half to one percent for the day. The Japanese market declined despite the yen weakening following its biggest surge in 18 months in last session. However, the European markets made a good bounce back from three days of losses, supported by gains in energy stocks and amid speculation the European Central Bank will consider quantitative easing at its January meeting.

Back home, markets made strong recovery attempt in the second half but was met with equal resistance with profit booking. Traders remained concerned about the CPI and IIP data due to be announced tomorrow. Although there were some major policy announcements like the government approving various amendments to the Electricity Act, 2003 and proposal for implementation of the 'Tea Development and Promotion Scheme' with an outlay of Rs 1,425 crore during the the 12th Plan period (2012-17) but they were unable to make any impact. There was another setback with reports that GST may not be tabled this Winter session of parliament, as CST issue may have been resolved but agreement is yet to be reached upon others such as inclusion of alcohol, tobacco and petroleum and states rejected government's proposals. Back on street, barring the healthcare most of the sectoral indices ended in red with oil & gas and realty suffering the most. The most striking was the considerable weakness in the IT stocks despite rupee plunging to multi month lows. Sugar stocks came into action after the government increased the procurement prices of ethanol by Rs 1 per litre and sugar industries are expected to see better realization with the decision. The government has fixed a price of Rs 48.50-49.50 per liter for procurement of ethanol for blending with petrol, a rate much higher than the price oil companies presently pay to buy the sugarcane extract. Bajaj Hindusthan and Balrampur Chini and Shree Renuka Sugars were up by over 4%. There was some buzz in PSU banking stocks too, after the Union Cabinet approved plans to raise about Rs 1.6 lakh crore ($25.76 billion) by selling some of government stakes in state-run banks by 2019. The government holds stakes ranging from 56 percent to 84 percent in 27 state-run banks.

Finally, the BSE Sensex plunged by 229.09 points or 0.82%, to 27,602.01, while the CNX Nifty lost 62.75 points or 0.75% to 8,292.90.

The BSE Sensex touched a high and a low of 27796.34 and 27539.47, respectively. The BSE Mid cap index was down by 0.60%, while the Small cap index declined by 0.67%.

The top gainers on the Sensex were Coal India up by 1.00%, Hindalco up by 0.91%, Dr. Reddys Lab up by 0.86%, Maruti Suzuki up by 0.53% and BHEL up by 0.47%. On the flip side, ONGC down by 3.21%, Tata Steel down by 2.85%, Bharti Airtel down by 2.77%, Reliance Industries down by 2.76% and Tata Power down by 2.59% were the top losers.

On the BSE Sectoral front while Healthcare up by 0.30% was the lone gainer, the top losing sectoral indices were Oil & Gas down by 2.48%, Realty down by 2.03%, IT down by 1.18%, TECK down by 1.05%, Power down by 1.03%.  

Meanwhile, global rating agency Moody's, in its latest report titled '2015 Outlook-Global Credit Conditions' has highlighted that Indian economy is likely to pick up pace in 2015 and grow in the range of 5-6%, on the back of robust domestic demand. Moody's noted that Indian economy has benefited from a strong domestic demand base and diversified export markets that give protection from the effects of a slowing Chinese economy and muted growth in the Euro zone and Japan.

Further, the rating agency added that employment and consumption are likely to increase in India and the fall in global commodity prices will help to lower high inflation in the country.  It also projected that Indian companies would see improved cash flows owing to the acceleration in manufacturing activity. However, Moody's outlook remains negative on banking industry as it expects that high leverage in the corporate sector will inhibit any meaningful recovery in asset quality of banks.

After registering an average growth rate of 8% during FY08-FY12, Indian economic growth had slowed down to below 5% over the last two financial years. The factors like high interest rate and stubborn inflation, low investments and slow execution of infrastructure projects have impacted country’s economy growth.  However, the domestic economy has shown signs of nascent recovery and expanded at 5.5% during first half of this fiscal as compared to 4.9% in the same period of previous fiscal. 

The CNX Nifty touched a high and low of 8,348.30 and 8,272.40 respectively.

The top gainers on Nifty were IDFC up by 2.05% and Tech Mahindra up by 1.84% and Hindalco up by 1.01% and Coal India up by 1.01% and Kotak Mahindra Bank up by 0.89%. On the flip side, Jindal Steel & Power down by 3.53%, ONGC down by 3.23%, Tata Steel down by 3.18%, Reliance Industries down by 2.83% and Bharti Airtel down by 2.83% were the top losers.

European markets were trading mostly in green, France’s CAC gained 13.69 points or 0.32% to 4,241.60, Germany’s DAX was up by 60.46 points or 0.62% to 9,860.19, while the UK’s FTSE 100 decreased 5.02 points or 0.08% to 6,495.02.

The Asian equity benchmarks ended in red on Thursday, on global growth concerns and as tumbling oil prices hit energy firms. Most emerging Asian currencies firmed up as the dollar broadly slid with investors taking profits ahead of the year-end, while Malaysia’s ringgit fell after OPEC cut its forecast for global oil demand next year. Japanese voters head to the polls in three days, with the focus on Prime Minister Shinzo Abe’s economic policies. A revised report on gross domestic product this week confirmed the economy had entered a recession, contracting for two straight quarters since an April sales-tax increase. Japan’s Core Machinery Orders fell to -6.4% compared to 2.9% in the preceding month.

China’s benchmark interest-rate swap climbed by the most since March and money-market rates increased, as the central bank refrained from offering reverse-repurchase agreements in auction window. The People’s Bank of China conducted no open-market operations today for the fifth auction window in a row, having last offered repurchase agreements on November 18. Moody’s Investors Service upgraded its rating on the Philippines by one notch to Baa2 from Baa3 with a stable outlook, citing a decline in the Philippines’ debt burden and structural improvements in fiscal management.