Benchmarks nosedive for fifth straight session

Extending their southward journey to fifth straight session, Indian equity benchmarks ended the volatile day of trade in red terrain on Wednesday as investors remained on sidelines ahead of the outcome of a crucial US Federal Reserve meeting. Earlier, markets made an awful start with Nifty declining below its crucial 8,000 mark as sentiments remained dampened on reports that foreign institutional investors were net sellers in Indian equities worth Rs 1,247.24 crore on December 16, as per provisional stock exchange data. Decline in crude oil prices, depreciation in Indian rupee, weak macro-economic parameters and global growth concerns also dampened sentiments of the market participants. However, markets recouped most of their losses and turned positive for a brief period in noon deals on reports that LIC, a government-run entity, brought into domestic share markets to arrest the freefall of the markets. The rupee also retreated from 13-month lows after the central bank stepped up interventions, while bonds also recovered despite concerns over whether foreign funds will stick with India. The partially convertible rupee was trading at 63.63 per dollar at the time of equity markets closing, after weakening to as much as 63.89, its lowest since November 13, 2013. It had closed at 63.53/54 on Tuesday.

Global sentiment was dampened as European counters made a somber start with CAC, DAX and FTSE were trading with a cut of over half a percent due to relentless drop in crude oil prices and Russia’s brewing financial crisis. However, Asian equity indices ended mostly higher led by around one and a half percent rise in Shanghai Composite amid speculation the government will loosen monetary policy and ease capital requirements that may allow brokerages to boost margin lending.

Back home, sentiments remained dampened on reports that credit flow to the commercial sector has come down to 11.1 percent in October from 14.2 percent in April on account of weak demand for banking funds. Meanwhile, Pharma shares remained under pressure on fears that a crash of the Russian currency would hurt their exports. A weaker currency raises the cost of imports hurting further demand. Moreover, stocks related to auto space edged lower on reports suggesting that government would not extend excise duty beyond December 31, 2014. Besides, public sector oil marketing companies (OMCs) ended in red with the government denying it had any plans to withdraw the recent hike in excise duty on petrol and diesel.

The NSE’s 50-share broadly followed index Nifty declined by around forty points to end below the psychological 8,050 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex declined by over seventy points to end below its crucial 26,750 mark. Broader markets too struggled to get any traction during the trade and ended the session with a cut of around a percent. The market breadth remained in favor of decliners, as there were 1037 shares on the gaining side against 1,776 shares on the losing side while 95 shares remain unchanged.

Finally, the BSE Sensex declined by 71.31 points or 0.27%, to 26710.13, while the CNX Nifty lost 37.80 points or 0.47% to 8,029.80.

The BSE Sensex touched a high and a low of 26871.91and 26469.42, respectively. The BSE Mid cap index was down by 0.60%, while the Small cap index was down by 1.06%.

The top gainers on the Sensex were Sesa Sterlite up by 3.50%, ONGC up by 2.16%, SBI up by 2.08%, Hindalco up by 1.76% and Tata Steel up by 1.04%. On the flip side, Cipla down by 2.92%, Hero MotoCorp down by 2.65%, ITC down by 2.33%, Sun Pharma down by 2.19% and Bharti Airtel down by 1.99%were the top losers.

On the BSE Sectoral front Metal up by 1.06%, Oil & Gas up by 0.74%, PSU up by 0.72%, Infrastructure up by 0.33% and Bankex up by 0.21% were the top gainers, while Healthcare down by 1.95%, Realty down by 1.59%, Auto down by 1.57%, Consumer Durables down by 1.38% and FMCG down by 1.27% were the top losers in the space. 

Meanwhile, the government has cleared that it has no plans to roll-back the recent hike in excise duty on diesel and petrol. Minister of state for finance Jayant Sinha has asserted that there is no plan to roll-back the duty as present circumstances do not warrant a change in the excise duty structure on petrol and diesel. 

To enhance the revenue collection to meet its fiscal deficit target of 4.1% of gross domestic product (GDP) in this financial year, the government hiked excise duty by Rs 1.50 a litre on both the fuels first on Nov 12. Later, on Dec 2, the duty on petrol was hiked by Rs 2.25 per litre and on diesel by Re 1 a litre. The move is expected to fetch the government an additional Rs 10,500 crore in the current fiscal. At present, excise duty on diesel stood at Rs 5.96 per litre for unbranded and Rs 8.25 per litre branded diesel. For unbranded and branded petrol, the excise duty is Rs 12.95 per litre and Rs 14.10 per litre, respectively.

Global crude oil prices have been witnessing steady declining trend since June owing to the oversupply in international markets and hit a fresh five-year low of about $60 per barrel on December 15.  However, the government on December 12 announced further cut by Rs 2 per litre each in Petrol and diesel prices. 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.The CNX Nifty touched a high and low of 8,082.00 and 7,961.35 respectively.

The top gainers on Nifty were SSLT up by 3.31%, State Bank of India up by 2.45%, ONGC up by 1.92%, Hindalco Industries up by 1.83% and NMDC up by 1.71%. On the flip side, Asian Paints down by 3.80%, DLF down by 3.55%, Lupin down by 3.10%, Kotak Mahindra Bank down by 2.92% and Cairn India down by 2.82% were the top losers.

European markets were trading in red, France’s CAC 40 was down by 0.50%, Germany’s DAX was down by 0.72% and United Kingdom’s FTSE 100 was down by 0.56%.

The Asian equity benchmarks ended mostly in green on Wednesday, with China’s benchmark stock index rose to a four-year high amid speculation the government will loosen monetary policy and ease capital requirements that may allow brokerages to boost margin lending. Japan’s exports grew for a third straight month in November from a year earlier, but much more slowly than expected and despite a sharp fall in the yen as slowing demand in Asia and Europe dampened trade. The 4.9 percent rise in exports was much weaker slowing from a 9.6 percent gain in October. Weakness in exports could compound April’s sales tax rise which pushed the economy into a recessionary second quarter of contraction through September. Japan’s trade balance rose to a seasonally adjusted -0.93T, from -0.99T in the preceding month whose figure was revised down from -0.98T.