Post Session: Quick Review

Indian markets after surging in last two sessions, suffered sharp setback on Wednesday with major averages losing around a percent and half in frenzied selling in the second half of the trade. Intermittent profit taking at higher levels that was being witnessed in first half turned into sharp selling. Traders grew concerned with heavy gunfire erupting in a north Paris suburb, as special police forces launched an operation to catch the alleged mastermind behind gun and bomb attacks in which 129 people were killed last week. Back on street, apart from profit-booking in recent gainers, absence of any positive cues mainly dragged the indices down. The weakness in rupee that depreciated considerably against the dollar on buying of the US currency by importers, too weighed on the sentiments. Traders even overlooked some big ticket reform measures by the government, as the union cabinet approved 10% stake sale in Coal India, initial public offer of Cochin Shipyards, approved 3% interest subsidy for exports, while empowered roads ministry to revive 34 stalled projects by appropriate measure.

On the global front too, the mood remained somber and impacted the trade back home, as after a lackluster trade of the US markets the Asian markets showed a choppy trade and ended mostly in red, led by the commodities stock after copper and gold prices sank to their lowest levels in at least five years. Chinese shares ended lower despite encouraging home price data. The Japanese markets that showed good upmove in early trade on weakness in yen, too pared its gains and just managed a positive close. The European markets too made a weak start after a gun-battle broke out in a northern suburb of Paris during an anti-terrorist police operation.

Back home, markets completely lost their momentum in the second half after the weak start of the European markets, traders fearing further slide opted to take whatever profit they can take off the table. Once started losing ground there was no looking back for the markets, they kept plunging deeper into red, with no support in sight and ended near the lows of the day, with benchmarks losing their crucial psychological levels of 25500 (Sensex) and 7750 (Nifty). The broader market that outperformed the benchmark indices for most of the trade, too succumbed to the selling pressure and ended lower. Though there were lots of sectoral movement that kept the markets buzzing, while the power sector ended lower after losing its early gains, with Ministry of Power planning to call bids for two domestic coal-based ultra mega power projects next month and two more by March 2016. Out of the four projects on the anvil, one would be in Bedabahal in Odisha and another in Deogarh in Jharkhand, while locations for the remaining two are yet to be decided. In non index gauges, sugar stocks continued trading higher after reports said that the government was planning to offer a subsidy of Rs 1,200 crore to farmers. Aviation stocks that came under pressure in early deals after the Competition Commission of India (CCI) fined the three major airlines, Jet, IndiGo and SpiceJet to pay Rs 151.7 crore, Rs 63.7 crore and Rs 42.5 crore, respectively for acting like a cartel and 'overcharging cargo freight in the garb of fuel surcharge, witnessed good recovery after the three airlines decided to legally challenge the order. InterGlobe Aviation gained around a percent, Spicejet surged by around 10%, while the Jet Airways ended with loss of around 3%.

The BSE Sensex ended at 25461.15, down by 403.32 points or 1.56% after trading in a range of 25455.34 and 25890.36. There were just 6 stocks on gainers side against 24 stocks on decliners’ side on the index. (Provisional)

The broader indices too ended in negative terrain; both the BSE Mid cap index and Small cap index were down by 0.78%.(Provisional)

The lone gaining sectoral index on the BSE was Consumer Durables up by 0.39%, while IT down by 2.39%, Bankex down by 2.05%, TECK down by 1.86%, Metal down by 1.73%, Realty down by 1.10% were the top losing indices on BSE.(Provisional)

The top gainers on the Sensex were GAIL India up by 1.78%, Coal India up by 0.54%, NTPC up by 0.38%, Bharti Airtel up by 0.21% and Sun Pharma Inds. up by 0.14%. On the flip side, Hindalco down by 5.38%, Infosys down by 4.06%, Tata Steel down by 3.62%, Vedanta down by 3.31% and SBI down by 3.04% were the top losers.(Provisional)

Meanwhile, in a move that could allow more ministries to clear their own projects, without going through the time-consuming process of seeking the approval of the Cabinet Committee on Economic Affairs (CCEA), the government is likely to exclude the cost of land while computing the total cost of infrastructure projects

In order to implement the proposal, the government will need to amend the transaction of business rules for the CCEA. The proposals will benefit the ministries of urban development and railways. The Prime Minister's Office has supported the proposal to exclude the land cost from total project cost and now the road transport and highway Ministry are waiting for the Cabinets approval. Presently all infrastructure projects costing over Rs 1,000 crore have to be approved by the CCEA and given the high cost of land, many projects will remain below the threshold if this component is not included in the project cost.

Currently, in many cases the land cost makes up as much as 40% of the project cost. Earlier, the land cost for any project was not more than 10-15%, but because of the increased compensation for land acquisition in some cases prices of land are as high as the construction cost. Exclusion of land cost is a must if the Ministry has to increase the pace of awarding projects.

According to the data available with the road transport and highways ministry, the land cost in recent times has seen a significant increase in states including Delhi, Punjab, Haryana, Uttar Pradesh, Maharashtra and Karnataka. As per the National Highways Authority of India's figures, the estimated initial price of land has increased to Rs 3 crore per hectare on average from Rs 56 lakh in 2011-12

The CNX Nifty ended at 7729.05, down by 108.50 points or 1.38% after trading in a range of 7725.05 and 7843.40. There were 11 stocks in green against 39 stocks in red on the index.(Provisional)

The top gainers on Nifty were Idea Cellular up by 3.40%, Asian Paints up by 1.62%, GAIL India up by 1.60%, BPCL up by 1.22% and Coal India up by 0.50%. On the flip side, Hindalco down by 5.44%, Infosys down by 3.90%, Tata Steel down by 3.79%, PNB down by 3.73% and Vedanta down by 3.20% were the top losers. (Provisional)

European markets were trading in red, Germany’s DAX lost 62.89 points or 0.57% to 10,908.15, France’s CAC declined by 48.23 points or 0.98% to 4,889.08 and UK’s FTSE 100 was lower by 27.78 points or 0.44% to 6,240.98.

The Asian markets closed mostly lower on Wednesday, as sentiments got affected by fears of fresh terror attacks in Europe. Investors in the region were also wary of the outcome of Bank of Japan’s two-day policy meeting, which started on Wednesday, after previous data indicated negative growth. Japan has slid back into recession as the economy deteriorated more severely than expected in the third quarter. Meanwhile, Chinese President Xi Jinping stated that the fundamentals of China’s economy remain positive, the economy is proving resilient to the pains of deepening reform and there is ample room to fend off downward pressure. Xi added that the world economy was beset with uncertainties with growth continuing to fall short of expectations. Home prices in China rose for first time in over a year in October on an annual basis, signaling a housing market stabilization that could help re-energize the listless economy. Average new home prices rose 0.1 percent in October from a year earlier, reversing September’s 0.9 percent drop, marking the first year-on-year gains since August 2014. In a sign of the weakness in the housing market, month-on-month price gains were recorded in only 27 of the 70 cities tracked by the NBS, down from 39 in September. Thailand GDP rose to a seasonally adjusted 2.9%in the last month compared to 2.8% in the preceding month.