Post Session: Quick Review

With brent crude plunging to multi year lows, Rupee depreciating to thirteen month lows, Indian equity markets witnessed absolutely massacre on Tuesday, which dragged both Sensex and Nifty below psychologically crucial 27,000 and 8,100 levels respectively, with nasty cuts of over 2%. Selling pressure was brutal for broader indices that went home with bigger cuts of around 3%. Somber global cues, ranging from lower-than-expected Chinese manufacturing data to falling crude prices that led to market turmoil around the world, which casted doubts about whether India could afford to cut interest rates given the risk associated with this move that could trigger foreign outflows, mainly weighed on the sentiment. Additionally, sentiment also took a hit after India’s trade deficit, exerting pressure on country’s external sector, widened to 18-month high of $16.86 billion in month of November, as compared to $9.57 in the same month previous year and $13.36 billion in the previous month October.

On the global front, Asia pacific shares were all out in trade after data released by global financial services major HSBC showed that Chinese manufacturing PMI, a measure of robustness of the manufacturing sector in a country, was at 49.5 against an estimate of 49.8, indicating contraction for the sector. While, the rouble which jumped against the dollar after Russia sharply increased its benchmark interest rate in a bid to halt a collapse in its currency, also spooked mood across Asia pacific region. On the flip side, European shares were off session lows in mid-morning trade on Tuesday, with fresh economic data from the euro zone managing to offset pressure from a continued fall in the price of oil. In a bit of positive, Euro zone December flash composite purchasing manager's index (PMI) data from Markit - a closely-watched indicator of economic growth - came in at 51.7, just above street expectation of 51.5 and November's final reading of 51.1.

Closer home, all the sectoral indices on BSE capitulated to selling pressure, with an exception of stocks from Information Technology and Technology counters which pulled out gains on account of rupee depreciation since most of these firms derive majority of their revenue from exports. On the flip side, massive drubbing was witnessed by stocks from Metal, followed by Realty and FMCG counters. Metal shares cracked in trade after dismal Chinese data. Besides, Auto stocks too succumbed to selling pressure after reports suggested that government might not continue to extend excise duty concessions to the automobile sector beyond December 31, 2014. Additionally, banking stocks too collapsed in trade after reports casted doubts on RBI’s ability to cut rates in upcoming monetary policy meet in February. The market breadth on the BSE remained in the favour of decliners, where advancing and declining stocks were in a ratio of 531:2335, while 88 scrips remained unchanged. (Provisional)

The BSE Sensex ended at 26781.44, down by 538.12 points or 1.97% after trading in a range of 26736.23 and 27199.37. There were 3 stocks advancing against 27 stocks declining on the index. (Provisional)

The broader indices ended in the in red; the BSE Mid cap index was down by 2.96%, while Small cap index down by 3.36%. (Provisional)

The only gaining sectoral indices on the BSE were IT up by 1.66% and TECK up by 1.12% while, Metal down by 4.17%, Realty down by 3.80%, FMCG down by 3.08%, Bankex down by 2.91%, PSU down by 2.69% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were TCS up by 3.56%, Infosys up by 0.61% and Bharti Airtel up by 0.03%. On the flip side, Sesa Sterlite down by 7.41%, Dr. Reddys Lab down by 6.06%, Hindalco down by 5.48%, SBI down by 4.82% and Tata Power down by 4.41% were the top losers. (Provisional)

Meanwhile, as international oil prices slumped to five-year low, Petrol and diesel prices have been further cut by Rs 2 per litre each. This was the eighth straight reduction in petrol prices since August and fourth in diesel since October. In Delhi, petrol price has reduced to Rs 61.33 per litre, the lowest in 44 months and Diesel to Rs 50.51 per litre, the lowest since July 2013. After today's reduction, petrol price has been cut by Rs 12.27 per litre cumulatively since August and diesel prices have been cut by Rs 8.46 a litre in four reductions.

Owing to the oversupply in international markets, crude oil prices have been witnessing steady declining trend since June and hit a fresh five-year low of about $60 per barrel on December 15.  State-run oil marketing companies stated that the price cut would have been sharper if rupee does not depreciate against the dollar in last few days.

Besides customers, the government has also benefited from falling oil prices. It raised excise duty on petrol and diesel twice to meet its fiscal deficit target of 4.1% of gross domestic product (GDP) in this financial year. These hikes are expected to generate additional revenue of about Rs 11,000 crore to the exchequer in the remainder of the financial year.

India VIX, a gauge for markets short term expectation of volatility zoomed 16.31% at 16.30 from its previous close of 14.02 on Monday. (Provisional)

The CNX Nifty ended The CNX Nifty ended at 8067.60, down by 152.00 points or 1.85% after trading in a range of 8052.60 and 8189.35. There were 7 stocks advancing against 43 stocks declining on the index. (Provisional)

The top gainers on Nifty were HCL Tech up by 4.96%, TCS up by 3.58%, BPCL up by 1.74%, Tech Mahindra up by 1.55% and Infosys up by 0.69%. On the flip side, Sesa Sterlite down by 7.77%, Dr. Reddys Lab down by 6.36%, Hindalco down by 5.52%, SBI down by 4.81% and Tata Power down by 4.77% were the top losers. (Provisional)

European Markets were trading mostly in the green; UK’s FTSE 100 was up by 0.28% and Germany’s DAX was up by 0.31%, however France’s CAC was down by 0.19%.

The Asian equity benchmarks ended mostly in red on Tuesday, as shrinking Chinese manufacturing stoked concern the global economy may falter. Activity in China’s factory sector contracted in December for the first time in seven months, the latest in a string of weak economic indicators that will intensify calls for more stimulus measures to head off a hard landing. The flash HSBC/Markit manufacturing purchasing managers’ index (PMI) fell to 49.5 in December from November’s final reading of 50.0. The new orders sub-index fell to 49.6, the first contraction since April. A reading below 50 indicates contraction, while one above 50 points to expansion on a monthly basis. China will adjust its import and export taxes from January 1 as part of a larger effort to re-order trade to foster economic growth. Foreign investment into China accelerated in November, despite a worsening slowdown in the world’s second-largest economy and concerns over business risks. Foreign direct investment (FDI) -- which excludes financial sectors -- rose 22.2% year-on-year, totaling $10.36 billion.

Prime Minister Shinzo Abe’s election win strengthened his hand to move beyond the fiscal and monetary stimulus that brought an end to deflation in his first two years. The tougher task for Abenomics 2.0 will be to boost Japan’s growth potential. First up for the next Abe administration will be completing left-over fiscal measures -- a supplementary budget of as much as 3 trillion yen ($25 billion), and replacement legislation for the sales tax, to delay the next increase to April 2017. The new cabinet will be inaugurated on December 24.