Indian equities witness first significant butchery since start of 2012; nosedive over 2%

The wave of ruthless selling pressure owing to the downbeat economic growth numbers from world’s largest economy and growing uncertainty over an agreement to avert an onerous Greek debt default, callously bludgeoned Indian frontline equity indices on the first trading session of a new week. Bears finally got the opportunity to go on rampage for the first time in the New Year after recent sharp resurgence in Indian markets which saw the key gauges jump over eleven percent. The benchmarks got thrashed by around two and a quarter percent in the session and got dragged even below the psychological 5,100 (Nifty) and 16,900 (Sensex) levels. The bourses were caught amid the pandemonium of ruthless risk aversion as discouraging global leads along with disappointing domestic tidings dissuaded investors from opening fresh positions. Power Sector bellwether BHEL remained the main culprit in the session as it got pulverized by over ten percent on announcing worse than expected earnings for the third quarter of this fiscal and dented investors’ sentiments. Besides, downbeat result announcements from other stocks like NTPC, Indian Bank, Oriental Bank of Commerce too weighed down investors’ morale. Meanwhile, a CII survey underscored that business confidence in India has declined in the December quarter owing to uncertain global economy, rising interest rates and surging inflation. On the global front, sentiments were undermined by underwhelming US GDP growth figures of 2.8% in the quarter ended December 2011 denting hopes of a swift recovery in global economy while uncertainty kept looming over Greek debt deal. Also, rating agency Fitch slashed credit rating of Italy, Spain, Belgium, Slovenia and Cyprus, citing concerns about further monetary shocks in the euro zone and the divergence of monetary and credit conditions in the region.

Earlier on Dalal Street, the benchmark got off to a gap down beginning following the hefty selling in Asian equities after investors largely remained influenced by gloomy global developments. After the somber opening there was continuous downslide for the frontline indices as they lacked enthusiasm to tread to higher levels amid absolutely no supporting cues. The selling pressure aggravated from the mid noon trades as European markets too collapsed. The indices’ southbound journey only halted with the close of trading session and the key gauges even slipping below crucial levels. Eventually, the NSE’s 50-share broadly followed index Nifty, got battered by around two and a quarter percent and settled below the psychological 5,100 support level while Bombay Stock Exchange’s Sensitive Index - Sensex suffered over three hundred fifty points laceration to close below the psychological 16,900 mark. The broader markets too failed to show resilience and settled on a bleak note with large cuts of under two percent. On the BSE sectoral front, across the board position squaring was evident with the Capital Goods counter leading the space with 5.55% plunge. The Power and high beta Realty counters too went home with over 3% losses each. Though there appeared no sectoral gainer, however some individual names like Sun Pharma and Bajaj Auto managed to keep their heads above the water till the end. The markets got pounded on weak volumes of over Rs 0.94 lakh core while the turnover for NSE F&O segment remained on the higher side as compared to that on Friday at over Rs 0.77 lakh crore. The market breadth remained pessimistic as there were 998 shares on the gaining side against 1817 shares on the losing side while 100 shares remained unchanged.

Finally, the BSE Sensex shaved off 370.68 points or 2.15% to settle at 16,863.30, while the S&P CNX Nifty plunged by 117.40 points or 2.26% to close at 5,087.30.

The BSE Sensex touched a high and a low of 17,138.04 and 16,828.33 respectively. The BSE Mid cap and Small cap indices were down by 1.96% and 1.82% respectively.

The major gainers on the Sensex were Sun Pharma up 1.34%, Bajaj Auto up 0.48%, Jindal Steel up 0.41%, Hero MotoCorp up 0.13% and TCS up 0.06%. While, BHEL down 10.41%, Sterlite Industries down 5.99%, L&T down 5.37%, Hindalco Industries down 4.81% and Mahindra & Mahindra down 4.71%, were the major losers on the index.

There was no gainer on the BSE sectoral space, while Capital goods (CG) down 5.55%, Power down 3.54%, Realty down 3.10%, Metal down 2.85% and Bankex down 2.78% were the top losers on the sectoral space.

Meanwhile, in an effort to attract US investors, Finance Minister, Pranab Mukherjee while speaking to top business leaders, including those from Fortune 500 firms, at the Chicago Council of Global Affairs reiterated his government’s commitment to bring about Foreign Direct Investment (FDI) in multi brand retail. He said that India had further liberalised FDI in single brand retail, and was in the process of building up consensus among the various stakeholders for FDI in multi brand retail. 

India has taken number of steps to simplify the FDI regime to make it easily comprehensible to foreign investors. To make the FDI policy more user-friendly, all prior regulations and guidelines have been consolidated into a comprehensive document, which is reviewed every 6 months. FDI flows in India, which had considerably declined in 2010-11, had now bounced back in current fiscal year.

Emphasizing the need to sustain and strengthen the domestic growth, finance minister said that India was concentrating on accelerating the pace of the investment in infrastructure in its 12th Five Year Plan. India needed to invest an additional $1 trillion to sustain its current levels of growth and to equalize its benefits over the Plan period. For this, it was looking for additional investments from the private sector. The share of private and public-private partnership (PPP) investments in total investment during the 12th Plan (2012-17) was targeted to increase to 50% from the estimated 30% in the 11th Plan (2007-12).

The PPP route for investment in Indian infrastructure represented a commercially attractive opportunity for foreign investors. He further stated that the government had taken various measures to encourage and facilitate foreign investment in infrastructure.  By adding further he said, standardized and sophisticated contract documentation is in place and finally, India has now established unique and innovative financing instruments such as a scheme to support Viability Gap Funding (VGF) for PPP projects and special purpose vehicles (SPVs) for giving long tenor loans to PPP projects.

He also observed that India’s growth fundamentals were strong and they looked more attractive in a world challenged by problems of confidence and lack of growth. India’s robust performance in difficult times made it a safe haven that global capital was looking for. India presented an opportunity at this moment that could not be ignored.

The S&P CNX Nifty touched a high and low of 5,166.15 and 5,076.70 respectively.

The top gainers on the Nifty were Sun Pharma up 1.48%, Ranbaxy up 1.18%, Bajaj Auto up 0.80%, Jindal Steel up 0.70% and Grasim up 0.40%.

On the flip side, BHEL down 11.33%, Sterlite Industries down 7.00%, Sesa Goa down 6.96%, JP Associates down 6.57% and L&T down 5.75% were the top losers on the index.

The European markets were trading in red as France's CAC 40 was down 0.87%, Britain’s FTSE 100 down 0.61% and Germany's DAX down by 0.63%.

Most of the Asian equity indices slipped on Monday after US growth data came in below expectations and profit-takers cashed in recent gains. Moreover, investors adopted a cautious stance to await the outcome of talks on a Greek debt swap deal that is key to avoiding a messy default and yet another European summit. Greece appeared to be close to clinching a bond swap agreement with private creditors and Prime Minister Lucas Papademos sought backing from leading Greek party leaders for painful reforms.

Shanghai shares reopened with a loss, after an expected cut in the amount of cash banks are required to hold in reserve failed to materialize over the week-long Lunar New Year holiday, dragging bank shares lower while, Hong Kong shares snapped a six-session winning streak on Monday as investors sold some of this year's outperformers. Moreover, Japan's Nikkei share average slipped in early trade on Monday, weighed down by disappointing corporate earnings results, while U.S. fourth-quarter economic growth was weaker than expected though it grew at its fastest pace in 1-1/2 years.