Benchmarks end lower on ECB move; Nifty breaches 7,800 mark

Friday turned out to be a disappointing session for the Indian equity indices which got pounded by around a percentage point tracking a global sell-off after the European Central Bank’s (ECB) stimulus package fell well short of markets’ high expectations. After a negative opening, the domestic bourses never looked in recovery mood and ended the trade near intraday lows, breaching their crucial support levels of 25,700 (Sensex) and 7,800 (Nifty). Selling was both brutal and wide-based as none of sectoral indices, barring Metal, on BSE were spared. Counters, which featured in the list of worst performers, include utilities, power and finance.

Sentiments also remained downbeat with Janet Yellen’s hawkish stance on the US economy thus reinforcing the case for an interest rate hike in December 2015. The rating agency, Crisil in its latest report has said that India is unlikely to attain the ambitious target of doubling exports of goods and services to $900 billion by fiscal 2020 from $470 billion in FY15, mainly due to declining competitiveness of India Inc, infrastructure bottlenecks and labour market rigidity. Investors failed to draw any sense of relief with Standard & Poor's Ratings Services projecting India's economy growing at 7.4 percent in the current fiscal, which will further improve to over 8 percent in 2016-17.

Selling got intensified after European markets made an awful start after the European Central Bank's stimulus package fell well short of markets' high expectations, sending the euro rocketing to its biggest one-day surge in nearly seven years. Asian markets too showed a similar fate and ended in red terrain, with some of the indices losing around two percent for the day on disillusionment with the ECB’s decision.

Back home, traders did not pay any heed to Finance Minister Arun Jaitley’s statement that the government will meet fiscal deficit target and maintain quality. Depreciation in Indian rupee too dampened the sentiments. Rupee was trading at 66.78 per dollar at the time of equity markets closing compared with its previous close of 66.65 per dollar. Sentiments also remained under pressure on report that foreign portfolio investors (FPIs) sold shares worth a net Rs 611.43 crore yesterday, as per provisional data released by the stock exchanges.

Selling in software and auto counters too dampened the sentiments as heavy flooding in the southern state of Tamil Nadu shut down factories and paralysed the airport. However, stocks related to logistic showed some strength on report that the government and Opposition were finding some common ground on crucial elements of the much-awaited goods & services tax (GST). The government is likely to concede the Congress demand to do away with the 1% tax on interstate sales, which was proposed to compensate manufacturing states. Sical Logistics and Allgargo Logistics gained over a percent, while Gati surged by over 3 percent.

The NSE’s 50-share broadly followed index Nifty declined by over eighty points to end below the psychological 7,800 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex declined by around two hundred and fifty points to end below its crucial 25,700 mark. Broader markets too witnessed bloodbath and ended with a cut of around a percentage point. The market breadth remained in favor of decliners, as there were 1,177 shares on the gaining side against 1,567 shares on the losing side while 168 shares remain unchanged.

Finally, the BSE Sensex plunged by 248.51 points or 0.96% to 25638.11, while the CNX Nifty declined by 82.25 points or 1.05% to 7781.90. 

The BSE Sensex touched a high and a low 25810.06 and 25623.71, respectively. The BSE Mid cap index was down by 1.05 %, while Small cap index was down by 0.64 %.   

The top gaining sectoral index on the BSE was Metal up by 0.08%, while Power down by 1.78%, Realty down by 1.35%, FMCG down by 1.21%, Auto down by 1.11% and Bankex down by 1.09% were the losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 4.02%, Bharti Airtel up by 0.48%, Coal India up by 0.16% and Tata Steel up by 0.02%. On the flip side, Mahindra & Mahindra down by 2.42%, HDFC down by 2.42%, NTPC down by 2.28%, ITC down by 2.19% and ICICI Bank down by 1.71% were the top losers.

Meanwhile, amid governments' all out effort of increasing ease of doing business in the country, and an ambitious bilateral trade target of $500 billion with US. The US Ambassador Richard Verma has said that problems related to ease of doing business such as taxation, regulatory burdens and legal issues can deter American investors from investing in India.

He said that on the trade and investment front, we have been taking up the ease of doing business factors that sometimes can deter the US companies and investors such as tax and legal certainty and easing regulatory burdens. He added that 'I think we are making progress in that regard and it's not just US companies that are voicing those concerns, it is also Indian companies who are coming together and voicing similar concerns.”

Verma said that in the last Trade Policy Forum meeting, both sides discussed in detail the trade relationships with the goal of continuing to break down trade barriers and laying the foundation for reaching the trade target of $ 500 billion. In 2005, the two-way trade between the countries was about $ 35 billion, which exceeded to $105 billion last year, but it's still the pockets compared to the size of our economy and the number of people we trade with.

He further added that in 2005, there were 200 US companies in India and now there are over 500, employing several million people. Agriculture trade between the two countries too has increased to $ 7 billion from $ 1.5 billion in 2005.

The CNX Nifty touched a high and low 7821.40 and 7775.70 respectively. 

The top gainers on Nifty were Sun Pharma up by 3.87%, Cairn India up by 2.12%, Bharti Airtel up by 0.67%, SBI up by 0.27% and Tata Steel up by 0.15%. On the flip side, Zee Entertainment down by 3.50%, Tata power down by 2.44%, Power Grid down by 2.43%, M&M down by 2.35% and HDFC down by 2.20% were the top losers.

European Markets were trading in red; France’s CAC was down by 0.55%, Germany’s DAX was down by 0.52% and UK’s FTSE was down by 0.37%.  

Asian equity markets ended in red on Friday, following a global sell-off overnight as investors digested comments from the Federal Reserve and the European Central Bank (ECB). Federal chair Janet Yellen said Thursday that recent economic data back the central bank's expectations of an improved job market. The US non-farm payrolls number for November is due later today. Yellen added the bank will proceed with caution in raising interest rates from near zero and that Fed funds rates would remain accommodative after the initial increase. Elsewhere, ECB president Mario Draghi announced monetary policy measures that fell short of market expectations. The central bank cut deposit rate by 10 basis points to negative 0.3 percent and said its asset purchase program will also be extended until at least March 2017 and broadened in scope. Japanese shares fell after the European Central Bank dashed expectations for greater stimulus, triggering a broader sell-off after the dollar weakened against the yen. Chinese shares too closed down as investors remained cautious over Chinese economy.