Benchmarks crash like house of card; Sensex breaches 27,000 mark

Tuesday’s trading session turned out to be a daunting one for stock markets in India and benchmarks ended below their crucial 8,150 (Nifty) and 27,000 (Sensex) levels as investors turned risk averse on sustained fall in crude oil prices implying weakness in global demand and concerns over political uncertainty in Greece. Selling was both brutal and wide-based as none of sectoral indices on BSE were spared. Counters, which featured in the list of worst performers, include realty, power, public sector undertaking and capital goods.

Sentiments remained down-beat after HSBC India Services PMI, which accounts for around 60% of country’s GDP, slipped to 51.1 in December, which is lower than the five year high index reading of 52.6 for November. Nevertheless, the reading still is indicative of the expansion since any number above the watershed ‘50’ mark means expansion. Markets failed to draw any sense of relief from reports that the government has aligned the foreign direct investment policy with the upgraded National Industrial Classification (NIC) Code. The code will classify business activities and help the industry in seeking policy approvals for specific activities.

Selling got intensified after European markets made an awful start tracking fall in euro to a nine year low against the dollar on Monday as bets mounted that the currency will suffer further declines, faced with the possibility of more monetary easing by the European Central Bank and its diminishing status as a reserve currency. Asian markets ended mostly in red as sliding oil prices and political uncertainty in Greece forced investors out of riskier assets and into the safety of government bonds.

Back home, investors failed to draw any solace from report that foreign institutional investors were net buyers in Indian equities worth Rs 472 crore on Monday, as per provisional stock exchange data. Selling in banking stocks too dampened the sentiments as stocks like SBI, ICICI Bank, HDFC Bank, PNB etc. edged lower in the absence of any significant reform centric announcements during the two-day banking conclave which was held in Pune and attended by Prime Minister, RBI Governor and top officials from the banking and insurance sector. Additionally, telecom stocks too rang off after  the Union Cabinet approved the largest ever telecom spectrum auction that is targeted to fetch the exchequer at least Rs 64,840 crore, much higher than the target of Rs 43065 crore set in the Union Budget for 2014-15. However, sugar stocks, like Bajaj Hindusthan, Dhampur Sugar Mills, Sakthi Sugars, Balrampur Chini Mills and Shree Renuka Sugars were in demand on renewed buying.

The NSE’s 50-share broadly followed index Nifty declined by over two hundred and fifty points to end below the psychological 8,150 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex declined by over eight hundred and fifty points to end below its crucial 27,000 mark. Broader markets too witnessed bloodbath and ended with a cut of around three percentage points. The market breadth remained in favor of decliners, as there were 644 shares on the gaining side against 2,253 shares on the losing side while 58 shares remain unchanged.

Finally, the BSE Sensex plunged by 854.86 points or 3.07%, to 26987.46, while the CNX Nifty dropped by 251.05 points or 3.00% to 8,127.35.

The BSE Sensex touched a high and a low of 27698.93 and 26937.06, respectively. The BSE Mid cap index was down by 2.95%, while the Small cap index was down by 2.95%.

The top gainers on the Sensex were Hindustan Unilever up by 1.89%. On the flip side, ONGC down by 5.89%, Sesa Sterlite down by 5.09%, Tata Steel down by 4.88%, HDFC down by 4.69% and Reliance Industries down by 4.67% were the top losers.

On the BSE Sectoral front there were the no gainers, while Oil & Gas down by 4.17%, Realty down by 3.66%, Metal down by 3.49%, PSU down by 3.39%, Capital Goods down by 3.24% were top losers in the space. 

Meanwhile, India's sugar production increased by 27.3 percent to 7.46 million tonnes in the first three months of October-September 2014-15 marketing year as compared to 5.86 million tonnes recorded in the same period of previous year. During the reported period, the output in Maharashtra, the country's top sugar producing state, has increased by 47 percent to 3.27 million tonnes from 2.23 million tonnes in the review period. On the other hand, the production in Uttar Pradesh, the country's second largest producing state, has risen by 55 percent to 1.72 million tonnes during October-December of this year from 1.11 million tonnes in the year-ago period. 

Meanwhile, Indian Sugar Mills Association (ISMA) has expressed concern over falling ex-mill prices of sugar and notified that the rates are 'substantially below the cost of production' and it has become difficult for mills to even pay the cane price to farmers within stipulated period. Currently, sugar mills are selling sugar at Rs 2,450-2,500 per quintal in Maharashtra and at Rs 2,600-2,650 per quintal in Uttar Pradesh. Industry body also sought continuation of export subsidy on raw sugar to check falling sugar price and improve cane price paying capacity of industry.

India is the world's second largest producer and biggest consumer of Sugar. According to ISMA, the sugar production is likely to rise to 25-25.5 million tonnes in 2014-15 marketing year as compared to 24.4 million tonnes in the previous year. Meanwhile, the annual domestic demand of sugar is pegged at 230-240 lakh tonnes.

The CNX Nifty touched a high and low of 8,327.85 and 8,111.35 respectively.

The top gainers on Nifty were Hindustan Unilever up by 1.54% and Coal India up by 0.07%. On the flip side, Jindal Steel & Power down by 7.03%, ONGC down by 6.06%, SSLT down by 5.32%, Tata Steel down by 5.11% and HDFC down by 5.05% were the top losers.

European Markets were trading in the red; UK's FTSE 100 was down by 0.95%, France's CAC was down by 0.26% and Germany's DAX was down by 0.03%.

The Asian equity benchmarks ended mostly in red on Tuesday, with the regional benchmark index heading for its biggest decline in nine months, extending a global selloff as the bear market in oil deepened. China’s stronger-than-seasonal property sales in December point to a recovery in market sentiment thanks to looser housing and monetary policy, with the upbeat momentum expected to swing into 2015. China’s services sector grew at its fastest pace in three months in December as new orders remained strong, an encouraging sign of strength even as manufacturing activity slows and the property market softens. The HSBC/Markit Services Purchasing Managers’ Index (PMI) picked up to 53.4 last month from November’s 53.0, well above the 50-point level that separates growth from contraction in activity on a monthly basis. A sub-index measuring new business cooled slightly to 53.9 in December from two and half years high of 54.2 in November, but remained well in expansion territory. Japan’s Monetary Base rose to 38.2%, from 36.7% in the preceding month. Taiwanese CPI fell to a seasonally adjusted annual rate of 0.61%, from 0.86% in the preceding quarter.