The Indian markets went through carnage in last session with both the Sensex and Nifty suffering cut of three percent. It was frenzied selling that engulfed the markets and none were spared. Today, the start is likely to remain somber but the mood may recover as the trade proceeds, with buying appearing in the beaten down shares after the last session’s massacre. Meanwhile, in a customary pre-budget consultation with finance minister Arun Jaitley India Inc has pitched for reduction in corporate tax rate, aggressive disinvestment of government stake in public sector units, higher personal income tax exemption limits and a massive increase in public expenditure to boost growth. Manufacturing sector is likely to draw some support with Finance Minister Arun Jaitley saying that infrastructure sectors such as coal, power and cement have been recording double digit growth in the last few months while growth in the manufacturing sector is still patchy and reviving manufacturing, diversifying its base and equipping it for robust long-term expansion is one of the major challenges before the Centre. Auto stocks especially the car makers are likely to see some action on reports that the Centre is examining the possibility of extending incentives for export of cars to all markets, including large ones such as the European Union.
The US markets extended their decline and major averages despite some recovery in latter part of the trade, ended lower by about a percent, mainly on decrease in the crude oil prices and as US service sector grew at a notably slower rate in December. The Asian markets after a slow start are slightly showing some improvement and some of the indices in the region are back into green.
Back home, 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, while the Asian markets ended mostly in red. 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. 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.
