Benchmarks end F&O expiry session on pessimistic note

Indian equity markets truly depicted the choppiness of F&O expiry session on Wednesday and after a cautious markets start extending their southward journey to close with a cut of over a percentage point. Final hour of trade proved to be the curse for the markets and bourses settled below their crucial 27,250 (Sensex) and 8,200(Nifty) bastions. After trading in tight band for most part of the day’s trade, domestic gauges crashed like house of card in the last leg of trade as investors offloaded their positions an hour before the end of F&O contract expiry day. Sentiments remained dampened on report that foreign portfolio investors (FPIs) sold shares worth a net Rs 444.93 crore on December 23, 2014, as per provisional data.

Investors failed to draw any solace from the reports that the direct tax collections during April-November of this fiscal rose 5.67 percent to Rs 3.29 lakh crore over the same period a year ago. Also, market-participants failed to draw any sense of relief from Reserve Bank, Chief Economic Adviser Arvind Subramanian’s statement that there is a need to boost investments to achieve the potential economic growth rate of 7-8 percent in the next few years. Industry body, Ficci too has said that interest rate reduction will boost investment cycle.

On the global front, European counters were trading mixed in early deals, failing to gain traction from a rally in the U.S. where the Dow Jones Industrial Average closed above 18,000 points for the first time ever. Trading volumes are set to be light in Europe on Wednesday with markets open for just a half day due to the festive holidays. Asian markets ended mostly in the green thanks to surprisingly robust U.S. economic growth, helping investors head into the Christmas holidays in a more relaxed mood after the global market turbulence of the past two weeks.

Back home, sentiments remained down-beat on the back of depreciation in Indian rupee against dollar. The rupee was trading at 63.48 at the time of equity markets closing versus its previous close of 63.28. Meanwhile, shares of three public sector oil marketing companies i.e. BPCL, HPCL and IOC edged lower as Brent crude oil futures gained $1.58 a barrel on December 23, 2014 and as rupee continue to weaken against the dollar.

On the flip side, shares of companies operating insurance business edged higher on reports that the Union Cabinet at a meeting today, approved issuing an ordinance to raise foreign investment ceiling the insurance sector. Moreover, shares of three companies like Opto Circuits, Advanced Micronic Devices and Poly Medicure surged after the Union Cabinet gave its approval to amend the existing FDI policy in the pharmaceutical sector to create carve out for medical devices. Besides, Shares of UltraTech Cement, ACC, and Ambuja Cements firmed up on reports that these companies have hiked cement rates by Rs 10-25/bag.

NSE’s 50-share broadly followed index, Nifty declined by over ninety points to end below the psychological 8,200 support level, while Bombay Stock Exchange’s Sensitive Index - Sensex slipped by around three hundred points to end below its psychological 27,250 mark. Broader markets however outperformed benchmarks and managed to keep their head above water. The market breadth remained in favour of decliners, as there were 1,340 shares on the gaining side against 1,487 shares on the losing side while 115 shares remain unchanged.

Finally, the BSE Sensex plunged by 297.85 points or 1.08%, to 27208.61, while the CNX Nifty dropped by 92.90 points or 1.12% to 8,174.10.

The BSE Sensex touched a high and a low of 27571.25 and 27146.52, respectively. The BSE Mid cap index was up by 0.15%, while the Small cap index was up by 0.02%.

The top gainers on the Sensex were Sesa Sterlite up by 0.59%, Tata Steel up by 0.06% and ICICI Bank up by 0.03%. On the flip side, BHEL down by 2.62%, NTPC down by 2.35%, GAIL India down by 2.22%, ONGC down by 2.16% and HDFC down by 2.07% were the top losers.

On the BSE Sectoral front Realty up by 1.14% was the only gainer, while IT down by 1.38%, Oil & Gas down by 1.36%, PSU down by 1.15%, TECK down by 1.07% and FMCG down by 1.02% were top losers in the space. 

Meanwhile the government by the end of this month is likely to take a decision on base price for spectrum, which is expected to be auctioned by February next year. The decision would put an end to impending spectrum pricing brawl as Inter-ministerial panel Telecom Commission, early this month, recommended a base price of Rs 3,693 crore per megahertz for the premium 900 MHz frequency band, 23% higher than the price recommended by telecom regulator, TRAI for the spectrum auction in February.

The commission finalized a base price of Rs 3,646 crore per Mhz for CDMA band, nearly 17% higher than the price suggested by TRAI. Telecom regulator had recommended that base price for 900 Mhz band price be kept at Rs 3,004 crore per Mhz, for 1800 Mhz at Rs 2,138 crore and for CDMA spectrum at Rs 3,104 crore.

Soon after the prices are approved by the Cabinet, that Department of Telecom (DoT) expects to issue auction details through 'Notice Inviting Application' (NIA). According to a presentation by DoT to Telecom Minister Ravi Shankar Prasad on November 13, the department expects to issue NIA by December 26-27 and start bidding for spectrum by February 23.

Separately, DoT is also mulling to auction 3G spectrum along with these three bands for which telecom regulator TRAI is expected to give its recommendations on price and other conditions in the first week of January.

The CNX Nifty touched a high and low of 8,286.40 and 8,155.25 respectively.

The top gainers on Nifty were UltraTech Cement up by 2.80%, Sesa Sterlite up by 0.86%, ACC up by 0.72%, Zee Entertainment Enterprises up by 0.70% and Bank of Baroda up by 0.58%. On the flip side, GAIL (India) down by 3.54 %, Dr. Reddy's Laboratories down by 2.13%, HDFC down by 2.08%, NTPC down by 2.03% and Infosys down by 2.01% were the top losers.

European markets were trading mixed, France’s CAC 40 was down by 0.24% while, United Kingdom’s FTSE 100 was up by 0.27%.

The Asian equity benchmarks ended mostly in green on Wednesday, with Japanese stocks rising for a fourth day following a public holiday after the yen fell and the US reported the fastest economic growth in 11 years. China’s stocks tumbled for a second day, the biggest two-day loss since June 2013 amid speculation that government is taking measures to cool the world’s best-performing major stock market over the past month. Chinese banks, which suffered a steady rise in bad loans this year, must step up efforts to rein in lending risks in 2015. The China Banking Regulatory Commission (CBRC) stated that the average non-performing loan ratio of Chinese banks was at 1.31% at the end of November.  That marked a rise from 1.16% at the end of September and 1.08% at the end of June. Japanese Finance Minister Taro Aso urged companies to boost wages to help underpin private consumption, stressing that such private-sector efforts are key to the success of premier Shinzo Abe’s ‘Abenomics’ stimulus policies. The minister also reiterated the need to push through fiscal reforms to prevent losing market trust in Japan’s finances, after having delayed a second sales tax hike next year.