Benchmarks crash like house of card; Sensex breaches 29,200 mark

Friday’s trading session turned out to be a daunting one for stock markets in India and benchmarks ended below their crucial 9,850 (Nifty) and 29,200 (Sensex) levels as investors booked profit off the table amid Chinese growth concern gripped the markets. Selling was both brutal and wide-based as none of sectoral indices, barring realty, power and software, on BSE were spared. Counters, which featured in the list of worst performers, include banking, consumer durables, public sector undertaking and metal.

Markets, after hitting fresh peaks in early deals, witnessed bout of selling pressure as investors booked profit at higher levels ahead of RBI policy meeting on February 3. Though, Street widely expects Central bank to pause during the February 2015 monetary policy review, while maintaining a dovish tone, and resume cutting the repo rate by a further 50 basis points (bps) after the presentation of the Union Budget. Lower than expected corporate earnings posted by blue chip companies such as Dr Reddy’s Lab, ICICI Bank and HDFC Bank also weighed on the bourses. Moreover, market participants failed to draw any sense of relief with UN report stating that, notwithstanding the decline in global foreign direct investment inflows, India’s FDI increased by 26 percent in 2014 to an estimated $35 billion with maximum growth in the services sector.

Selling got intensified after European markets made negative start. However losses remained capped by upbeat German retail sales, which posted their biggest annual rise in 2-1/2 years in December. Asian markets ended mostly in the red after China’s fiscal revenue growth dipped to a 23-year low of 8.6 per cent last year due to a slump in the demand in the world’s second largest economy and a fragile global market, raising concerns of a prolonged slowdown.

Back home, investors failed to draw any solace from report that foreign institutional investors were net buyers in Indian equities worth Rs 1,723.77 crore on January 29, 2015, as per provisional stock exchange data. Depreciation in rupee too dampened the sentiments. Rupee was trading at 61.92 per dollar at the time of equity markets closing compared with its previous close of 61.86 per dollar.

Meanwhile, stocks related to financial space witnessed selling pressure on the back of PSU banking major Bank of Baroda (BOB) and ICICI Bank’s disappointing third quarter earnings. The shares of BOB slumped over 11% after reporting a sharp 68% year on year (yoy) drop in net profit at Rs 334 crore for the third quarter ended December 31, 2014 (Q3), due to higher provisions for stressed loans and tax provisions. Meanwhile, ICICI Bank  shares plunged by around 5% after India’s largest private sector Bank missed street expectations on Friday with the third quarter net profit rising 14 percent year-on-year to Rs 2,889 crore, aided by other income and net interest income. However, higher provisions restricted profit growth.

The NSE’s 50-share broadly followed index Nifty declined by over one hundred and forty points to end below the psychological 9,850 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex declined by around five hundred points to end below its crucial 29,200 mark. Broader markets too struggled to get any traction and ended the session with a cut of around half a percent. The market breadth remained in favor of decliners, as there were 1,239 shares on the gaining side against 1,623 shares on the losing side while 113 shares remain unchanged.

Finally, the BSE Sensex plunged by 498.82 points or 1.68%, to 29182.95, while the CNX Nifty dropped by 143.45 points or 1.60% to 8,808.90.

The BSE Sensex touched a high and a low of 29844.16 and 29070.48, respectively. The BSE Mid cap index was down by 0.30%, while the Small cap index was down by 0.43%.

The top gainers on the Sensex Tata Power up by 2.90%, BHEL up by 1.62%, NTPC up by 1.37%, Wipro up by 0.79% and Sesa Sterlite up by 0.67%. On the flip side, SBI down by 5.13%, ICICI Bank down by 4.95%, Dr. Reddys Lab down by 3.91%, Coal India down by 3.81% and HDFC down by 3.35% were the top losers.

On the BSE Sectoral front Realty up by 2.17%, Power up by 0.88% and IT up by 0.20% were the only gainers, while  Bankex down by 3.14%, Consumer Durables down by 1.85%, PSU down by 1.67%, Auto down by 1.21% and Metal down by 0.84% were the top losing indices on BSE.

Meanwhile, Union Urban Development Secretary Shankar Aggarwal unveiled that the framework for Prime Minister Narendra Modi's ambitious project of developing 100 smart cities will be finalized by next month-end. The minister further said that the government in next two days would be completing the process for identification of 100 smart cities.

The government's objective is to develop cities with technology-based governance, which will enable efficient public services and have 24x7 water and power supply, 100% sewerage, drainage and solid waste management facilities, besides top class infrastructure.

Further, the government expects a large contribution from the private sector in developing the cities as it plans to build this project on public private partnership basis. As per the envisaged plan, every city would on an average need investments to the tune of Rs 1,000 crore over next 10 years and the private sector is expected to contribute largely, nearly 80-85%, towards this development, according to the government.

Besides, Union Urban development ministry has asked the states to ensure that the cities picked under the smart cities initiative would have to meet the broad contours listed by it, including economically viable cities, meeting the requirements of 'e-governance', 'Swachh Bharat' and 'Make in India'.

Lastly, the minister unveiled that the centre would take a final call on criteria like cities accounting for 54% of incremental GDP till 2025, hill and coastal areas, tourist and religious centres and mid-sized cities.

The CNX Nifty touched a high and low of 8,996.60 and 8,775.10 respectively.

The top gainers on Nifty were HCL Technologies up by 8.82%, Tata Power Company up by 3.69%, DLF up by 2.64%, BPCL up by 2.34% and Lupin up by 1.63%. On the flip side, Bank of Baroda down by 11.49%, State Bank of India down by 5.41%, ICICI Bank down by 5.27%, PNB down by 4.95% and Dr. Reddy's Laboratories down by 4.05% were the top losers.

European Markets were trading in the red; France's CAC was down by 0.36%, Germany's DAX was down by 0.14% and UK's FTSE 100 was down by 0.52%.

The Asian equity benchmarks ended mostly in red on Friday, with Japanese stocks rising for a second week as investor sentiment recovered amid expectations of slower interest-rate increases in the US. The Bank of Japan has put monetary policy on hold and found backing for its wait-and-see stance from advisors to Prime Minister Shinzo Abe, who worry more easing could send the yen to damagingly low levels. Concerns about the yen, along with a belief among central bank officials - including Governor Haruhiko Kuroda - that coming wage increases will support higher prices, suggest the BOJ could hold policy steady until October.

China’s factory growth likely inched up from a 1-1/2-year low in January, helped by a slight pick-up in momentum the previous month, but the bounce is not expected to last due to unsteady exports and slowing investment. China’s fiscal revenue rose 8.6% from a year earlier to 14 trillion yuan ($2.24 trillion) while China’s fiscal expenditure increased 8.2% last year to 15.2 trillion yuan. Thailand’s Industrial Production rose to a seasonally adjusted -0.4%, from -3.5% in the preceding month. Philippines GDP rose to a seasonally adjusted annual rate of 6.9%, from 5.3% in the preceding month.