Benchmarks extend previous session downfall; Nifty breaches 8,300 mark

Wednesday turned out to be a disappointing session for the Indian equity indices with domestic gauges, extending previous session downfall, ending with a cut of over quarter a percent, though domestic gauges witnessed some recovery in last leg of trade but it was not enough to bring benchmarks back in green terrain. Sentiments remained dampened as traders remained concerned with the World Bank lowering its global growth forecast for 2015 and next year due to disappointing economic prospects in the euro zone, Japan and some major emerging economies that offset the benefit of lower oil prices. The global development lender predicted the global economy would grow 3 per cent this year, below a forecast of 3.4 per cent made in June. Sentiments also remained down-beat after taxes on services, the biggest sector of India’s economy, declined by 5.2 per cent in December year-on-year, as a result of which overall indirect tax collections rose only 5.1 per cent in the month.

Selling got intensified after Wholesale price inflation inched up to 0.11% in December, snapping a six-month easing trend as food costs jumped up year-on-year. Food articles inflation rose to 5.2% from 0.63% m-o-m while manufactured productions inflation went down to 1.57% compared to 2.04% m-o-m. Meanwhile, October WPI inflation was revised to 1.66% compared to 1.77% earlier. However, losses remained capped up to certain extent as some support came from reports that foreign institutional investors were net buyers in Indian equities worth Rs 235 crore on January 13, 2015, as per provisional stock exchange data.

Global cues too remained sluggish with European markets making a somber start with CAC, DAX and FTSE were trading with deep cut, mirroring a slump in copper and oil prices after the World Bank cut its global growth forecast for this year. Moreover, persisting turmoil in commodity markets ignited risk aversion in most Asian stock markets, with Tokyo and Sydney equities finishing at fresh lows.

Back home, depreciation in Indian rupee too dampened the sentiments. The rupee was at 62.18 per dollar at the time of equity markets closing as compared to 62.14 per dollar level on Tuesday. Meanwhile, the metal pack ended in red after copper futures dived 6.2 percent to $5,499 a tonne when major chart support cracked and triggered a host of stop-loss sales. Additionally, shares of oil exploration companies remained under pressure on the back of a further slide in the crude prices. On the flip side, shares of cement companies edged higher, extending their previous day’s rally on the bourses on reports that cement manufacturers have hiked the cement prices in Telangana and Andhra Pradesh.

The NSE’s 50-share broadly followed index Nifty declined by over twenty points to end below the psychological 8,300 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex declined by around eighty points to finish below its psychological 27,400 mark. Broader markets too witnessed selling pressure and ended the session with a cut of around half a percent. The market breadth remained in favor of decliners, as there were 1,259 shares on the gaining side against 1,599 shares on the losing side while 112 shares remain unchanged.

Finally, the BSE Sensex plunged by 78.91 points or 0.29%, to 27346.82, while the CNX Nifty declined by 21.85 points or 0.26% to 8,277.55.

The BSE Sensex touched a high and a low of 27512.80 and 27203.25, respectively. The BSE Mid cap index was down by 0.20%, while the Small cap index was down by 0.45%.

The top gainers on the Sensex were Hindustan Unilever up by 4.21%, BHEL up by 3.94%, Infosys up by 1.99%, Bajaj Auto up by 1.61% and Maruti Suzuki up by 1.34%. On the flip side, Sesa Sterlite down by 7.63%, Hindalco down by 6.17%, Tata Steel down by 3.79%, ITC down by 3.29% and Wipro down by 1.86% were the top losers.

On the BSE Sectoral front IT up by 1.08%, TECK up by 0.80%, Auto up by 0.38%, Power up by 0.38% and Capital Goods up by 0.19% were the only gainers, while Metal down by 3.50%, Healthcare down by 0.90%, Realty down by 0.73%, FMCG down by 0.64% and Oil & Gas down by 0.62% were top losers in the space. 

Meanwhile, the annual rate of inflation, based on monthly wholesale price index (WPI), rose marginally to 0.11% y-o-y in December as compared to 0% in November. Though, WPI inflation rose on m-o-m basis, it came at lower than general market expectation of 0.3%.  The moderation in WPI inflation was broad based and primarily driven by lower prices of fuels and manufacturing products. However, inflation in food articles rose to 5.20% in the reported month as compared to 0.63% in November mainly due to the high prices of egg, moong and barley.

Meanwhile, inflation for non-food articles declined by 3.06% y-o-y in the month of December as against 3.64% contraction in the previous month mainly on account of lower price of guar seed, copra and gingelly seed. On the whole, inflation for Primary Articles, having weight of 20.12% in WPI index, rose to 2.17% in December from a year earlier as compared to 0.98% contraction in the previous month.

Fuel & Power, which has weight of 14.91% in WPI index, has been remained the major contributor to the low wholesale inflation in December'14, witnessing negative inflation of 7.82% in December as compared to 4.91% inflation in the previous month. However, this decline does not come as a surprise as global crude oil prices have fell considerably from a year ago levels. The rate of inflation for manufactured products, having weight of 64.97% in the WPI index, eased to 1.57% y-o-y in December from 2.04% in November mainly primarily driven by the lower prices of metal, rubber, chemical and machine tools.

As the inflation has declined substantially over the past few months, the demand for rate cut has emerged in the markets. RBI is scheduled to announce its sixth bi-monthly monetary policy on February 3.

The CNX Nifty touched a high and low of 8,326.45 and 8,236.65 respectively.

The top gainers on Nifty were BHEL up by 5.17%, Hindustan Unilever up by 5.16%, UltraTech Cement up by 3.21%, ACC up by 2.93% and Infosys up by 1.92%. On the flip side, SSLT down by 8.63%, Hindalco Industries down by 6.36%, Tata Steel down by 3.97%, ITC down by 3.24% and BPCL down by 2.53% were the top losers.

European Markets were trading in the red; UK's FTSE 100 was down by 1.34%, Germany's DAX was down by 0.30% and France's CAC was down by 0.45%.

The Asian equity benchmarks ended in red on Wednesday, with Japanese stocks diving for a second day as the yen traded at a four-week high against the dollar, buoyed by falling global risk sentiment on a continued slide in commodity prices as copper plunged. Japanese Prime Minister Shinzo Abe’s cabinet approved a record $812 billion budget for the fiscal year starting on April 1, while cutting new borrowing for a third straight year in a bid to balance growth and fiscal reform. The 96.34 trillion yen ($812.45 billion) general-account budget draft, the third since Abe swept to power in late 2012, marks a rise from this fiscal year’s initial 95.88 trillion yen, reflecting higher welfare spending and military outlays. Japan’s M2 Money Stock remained unchanged at a seasonally adjusted 3.6%. China housing inventories is expected to pile up in 2015 as supply grows. Nine out of 12 listed Chinese developers will launch more housing projects in 2015 as they strive to meet sales targets and boost market share - at the risk of adding to already-bloated inventories. South Korean Unemployment Rate rose to a seasonally adjusted annual rate of 3.5%, from 3.4% in the preceding month.