Benchmarks snap three days winning streak

Tuesday turned out to be a disappointing session for the Indian equity indices which got pounded by over half a percentage point as investors opted to book profit ahead of December F&O expiry due tomorrow. Earlier, markets made a positive start supported by firm global cues with key indices surpassing their crucial 27,800 (Sensex) and 8,350 (Nifty) levels in morning deals, but a sharp fall in second half of the trade dragged benchmarks lower to end near intraday low levels, as domestic sentiment was hit after poll trends indicated that the Modi-led BJP will not have majority in Jharkhand or in Jammu and Kashmir.

Selling by foreign institutional investors continued unabated and they were net sellers in Indian equities worth Rs 335.24 crore on Monday, as per provisional stock exchange data. Some cautiousness also crept in after international credit ratings agency Moody’s statement that high fiscal deficits constrain India’s rating now. Meanwhile, the winter session of Parliament ended today after passing a record number of 18 legislations, including amendment bills on amending coal mines allocation and labour laws, in 22 sittings. During the session, progress on key reform proposals, particularly the Insurance Laws (Amendment) Bill that would have enabled the insurance industry to have up to 49% foreign investment, failed to meet market expectations.

On the global front, European counters were mostly in the green in early deals on speculations that the European Central Bank is set to start buying euro government bonds and news of political stability in Greece. Meanwhile, France’s final third-quarter figure for gross domestic product (GDP) came in unchanged at 0.4 percent (year-on-year) with consumer spending also rising by the same figure. While, In the U.K., third-quarter GDP came in at 0.7 percent, compared to the month before, unchanged from its first reading and below a forecast 0.8 percent. Asian markets ended mostly in the green after Wall Street indices closed at historic highs.

Back home, depreciation in Indian rupee too dampened the sentiments. Rupee were trading at 63.38 per dollar at the time of equity markets closing compared with its previous close of 63.24 as month-end dollar demand from oil companies hurts the Indian unit. Meanwhile, selling in software and technology too hit the sentiments as after TCS, HCL Tech too have raised concern over earnings on dollar strength and there are reports that global banks may remove IT allocations from their annual budget. Weakness in global commodity prices kept the metal shares under pressure.

The NSE’s 50-share broadly followed index Nifty declined by around sixty points to end below the psychological 8,300 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex declined by over one hundred and ninety points to end below its crucial 27,550 mark. Broader markets too struggled to get any 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 1,058 shares on the gaining side against 1,862 shares on the losing side while 114 shares remain unchanged.

Finally, the BSE Sensex plunged by 195.33 points or 0.71%, to 27506.46, while the CNX Nifty dropped by 57.00 points or 0.68% to 8,267.00.

The BSE Sensex touched a high and a low of 27851.10 and 27475.13, respectively. The BSE Mid cap index was down by 0.33%, while the Small cap index was down by 0.64%.

The top gainers on the Sensex were NTPC up by 2.88%, Bajaj Auto up by 1.99%, Cipla up by 1.82%, Bharti Airtel up by 1.69% and Hero MotoCorp up by 0.79%. On the flip side, Sesa Sterlite down by 3.15%, Tata Power down by 3.09%, Tata Steel down by 2.15%, Larsen & Toubro down by 1.72% and Coal India down by 1.68% were the top losers.

On the BSE Sectoral front FMCG up by 0.08% was the only gainer, while Metal down by 1.89%, Capital Goods down by 1.46%, Consumer Durables down by 1.39%, Oil & Gas down by 0.96%, IT down by 0.90% were top losers in the space. 

Meanwhile, a Parliamentary panel has suggested the government to put a blanket ban on foreign direct investment (FDI) in brown field pharma units. A Standing Committee on Commerce, in its latest report, has highlighted that under existing policy domestic firms are facing threat due to takeover by MNCs and it could affect India's ability to produce low-cost quality generic drugs.

Highlighting the rationale  behind its recommendations, the report noted that the conditions imposed for approving FDI proposals in brown field pharma sector are not comprehensive and do not cater to the objective/purpose for which FDI is allowed. Further, there is no compulsion on transfer of technology and similar other conditions that can bring qualitative change to domestic pharma industry, the report added. Expressing the fear over the increasing acquisitions of domestic firms by MNCs, Panel stated that it would affect competition as well as take control of the larger share India's pharma industry and driving the domestic market as per their choice and desire.

The committee further added that FDI in pharma sector may be rigorously promoted for green field projects rather than brown field projects. It recommends that the Department of Industrial Policy and Promotion (DIPP) to work in tandem with Ministry of Health to ensure that FDI in pharma sector does not impinge on availability of affordable drugs to the Indian public. On the issue of rising price anomalies in the Indian pharma sector, the panel said that a ceiling may be fixed for introductory price of generic drugs in the country.

The CNX Nifty touched a high and low of 8,364.75 and 8,252.85 respectively.

The top gainers on Nifty were NTPC up by 2.99%, Bajaj Auto up by 1.97%, Bharti Airtel up by 1.92%, Cipla up by 1.78% and UltraTech Cement up by 1.31%. On the flip side, SSLT down by 3.23%, Tata Power Company down by 3.21%, HCL Technologies down by 3.12%, Tata Steel down by 2.36% and Housing Development Finance Corporation down by 1.94% were the top losers.

Most of European markets were trading in green, France’s CAC 40 was up by 0.19% and United Kingdom’s FTSE 100 was up by 0.11% while, Germany’s DAX was down by 0.12%.

The Asian equity benchmarks ended mostly in green on Tuesday, with China’s stocks closing down, sending the benchmark index down by the most in two weeks, amid concern that recent gains were excessive and a slowing economy will curb earnings growth. Japan’s Stock Exchange was closed on account of ‘Emperor’s Birthday’ holiday. China’s private sector suitors are set to drive another strong year of Asian mergers and acquisitions in 2015 after deals hit a record this year, with consumer retail, financial services and technology seen as the most active sectors for deal-making. The IMF in its report stated that the recent drop in oil prices should persist, helping to boost global economic activity by up to 0.7% points next year. Lower oil prices should boost China’s gross domestic product growth by 0.4 to 0.7% points. In 2016, it could mean an extra 0.5 to 0.9% points of growth. Singapore’s headline inflation rate in November may turn negative for the first time in five years due partly to sliding oil prices, and a few economists see scope for the central bank to ease tight monetary policy to support economic growth.