Benchmarks end choppy trade slightly in the red

Extending their southward journey for yet another session, Indian equity benchmarks ended the session slightly in the red on Monday amid choppy trades. Sentiments remained dampened since start of the trade as investors reacted negatively to the weak industrial output data announced late Friday that fell by 4.2 per cent in October compared to 2.5% growth in September, led by a 7.6 per cent fall in manufacturing output. However, losses remained capped after data showed that India’s wholesale price index-based inflation for November was down to 0% compared to its October level of 1.7%. The reduction in WPI was mainly on account of sharp decline in inflation for ‘Fuel & Power’ group, followed by Inflation in Primary Articles. The index for ‘Fuel & Power’, which occupies 14.91% weightage in the overall index, declined by 5.4% to 199.3 (provisional) from 210.7 (provisional) for the previous month. Meanwhile, retail inflation as measured by the Consumer Price Index (CPI) eased sharply by 114bps to 4.38% during November 2014 as compared to 5.52% in October 2014.

Global cues remained mixed with European counters making a positive opening and trading higher in early deals on Monday. However, Asian shares ended near nine-month lows on Monday as oil prices sank to fresh 5-1/2 year lows on concerns about a supply glut and slower global growth, hitting the stocks of energy and commodity producers and exporters. Investors remained nervous after US shares posted their biggest weekly fall in 2-1/2-years last week on losses led by energy sector, and as they expect the US Federal Reserve to hint this week it is getting closer to raising interest rates.

Back home, investors remained on sidelines ahead of the outcome of the two-day US Federal Open Market Committee (FOMC) monetary policy review which begins today. Moreover, Markets would be keeping a note of corporate advance tax payment this week as that would provide clues on Q3 December 2014 corporate earnings. Sentiments remained dampened on reports that foreign institutional investors were net sellers in Indian equities worth Rs 864.96 crore on Friday, as per provisional stock exchange data. Depreciation in Indian rupee too dampened the sentiments. Rupee was trading at 60.91 per dollar at the time of equity markets closing compared with its previous close of 62.29.

Meanwhile, shares of information technology (IT) were under pressure and ended lower by up to 4% after Tata Consultancy Services (TCS) in an investor update communicated for a weak revenue growth for the current (October-December) quarter. Oil and gas shares were under pressure as global crude prices are expected to fall further on weaker demand and increased supply. On the flip side, shares of state-owned companies Oil and Natural Gas Corporation (ONGC) and Coal India ended higher on reports that the government has decided to defer disinvestments plan in both these companies until January.

The NSE’s 50-share broadly followed index Nifty declined by just five points and managed to hold its psychological 8,200 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex declined by over thirty points to end below its crucial 27,350 mark. Broader markets too struggled to get traction during the trade and ended the session with a cut of around half a percent. The market breadth remained in favor of decliners, as there were 1,177 shares on the gaining side against 1,722 shares on the losing side while 111 shares remain unchanged.

Finally, the BSE Sensex declined by 31.12 points or 0.11%, to 27,319.56, while the CNX Nifty lost 4.50 points or 0.05% to 8,219.60.

The BSE Sensex touched a high and a low of 27392.18 and 27105.04, respectively. The BSE Mid cap index was down by 0.46%, while the Small cap index was down by 0.64%.

The top gainers on the Sensex were HDFC up by 5.12%, Coal India up by 3.68%, ONGC up by 1.50%, Hero MotoCorp up by 0.84% and HDFC Bank up by 0.78%. On the flip side, TCS down by 3.53%, Sesa Sterlite down by 1.83%, Hindustan Unilever down by 1.10%, Tata Steel down by 1.09% and Axis Bank down by 1.07% were the top losers.

On the BSE Sectoral front, Bankex up by 0.35% and PSU up by 0.18% while, Realty down by 2.07%, Consumer Durables down by 2.02%, IT down by 1.94%, TECK down by 1.46% and FMCG down by 0.97% were the losing indices on BSE.

Meanwhile, in order to meet the set disinvestment target, the government has planned to speed up the stake sales programme in public sector units in the next three months. Concerns over the government’s disinvestment programme and its ability to meet the Rs 63,425 crore target for current fiscal from stake sales in PSUs such as Coal India, ONGC and NHPC among others have begun mounting.

At present, the government shareholding in the Coal India is 89.65 percent and will disinvest 10 percent stake worth around Rs 23,000 crore. Government stake in ONGC stands at 68.94 percent and will disinvest 5 percent stake worth Rs 16,000 crore. Besides these two, 11.36 percent disinvestment in hydro power generator NHPC has also been approved. The government holds 85.96 percent stake in company and expects to garner worth Rs 2,800 crore. The government is also trying to get clarity on the residual stake sales in Hindustan Zinc and Balco that are estimated to raise at least Rs 15,000 crore.

With tax collections registering low growth, proceeds from stake sales are crucial to meet the fiscal deficit target at 4.1 percent of GDP in FY15. Furthermore, the government is likely to take advantage of robust state of domestic stock markets helped by heavy inflow of funds from the foreign institutional investors (FIIs).

The government has been missing its disinvestment target for past five consecutive financial years. In the previous fiscal, the government was able to disinvest only around Rs 16,000 crore as against the set target of Rs 40,000 crore mainly on account of subdued economic and markets conditions. During FY11 and FY12, the government had raised Rs 22,144 crore and Rs 13,894 crore through disinvestment, against the budgeted target of Rs 40,000 crore in each year. In FY13, it had raised Rs 23,956 crore, as against the target of Rs 30,000 crore.

The CNX Nifty touched a high and low of 8,242.40 and 8,152.50 respectively.

The top gainers on Nifty were Kotak Mahindra Bank up by 5.35%, HDFC up by 5.26%, Coal India up by 3.69%, Grasim up by 1.92% and Ambuja Cement up by 1.82%. On the flip side, DLF down by 4.83%, BPCL down by 4.33%, Tech Mahindra down by 3.69%, TCS down by 3.50% and Sesa Sterlite down by 2.04% were the top losers.

European markets were trading in green, France’s CAC 40 was up by 0.84%, Germany’s DAX was up by 0.86% and United Kingdom’s FTSE 100 was up by 0.86%.

The Asian equity benchmarks ended mostly in red on Monday, amid concern that tumbling oil price signals weakness in the outlook for global economic growth. Confidence among Japanese manufacturers worsened slightly in the fourth quarter and firms expect conditions to deteriorate more, highlighting the challenges premier Shinzo Abe faces in reviving the economy a day after his big win in Sunday’s snap election. Abe’s election win gives him a fresh mandate to pursue policies aimed at ending 15 years of deflation and sparking durable growth. Japan’s Tankan manufacturing index fell unexpectedly in the last quarter, to a seasonally adjusted 12, from 13 in the preceding quarter. Japan’s Tankan large non-manufacturing index rose to a seasonally adjusted 16, from 13 in the preceding month. The tankan showed big companies plan to increase capital expenditure by 8.9 percent in the fiscal year ending in March 2015, compared with a median forecast of a 8.0 percent rise.

Indonesia’s rupiah tumbled to its lowest level since the Asian financial crisis as an uptick in dollar buying by local companies before year-end coincided with a rout in the sovereign bond market. Overseas investors have pulled 10.09 trillion rupiah ($795 million) from local-currency sovereign bonds this month through December 1. Singaporean Retail Sales rose to a seasonally adjusted 8.1%, from 5.5% in the preceding month while Singaporean Unemployment Rate rose to 2.0%, from 1.9% in the preceding quarter. Singapore home sales fell to the lowest this year in November as the government’s lending curbs stemmed purchases. Developers sold 412 units last month compared with a revised 785 units in October. That’s the lowest since December, when 259 units were sold.