Markets make gap-down opening amid weak global cues

With a gap-down opening Indian equity markets have extended their previous session losses, and are now trading with cut of around a quarter percent, tracking weakness in global markets following a slide in global crude oil prices. Further, foreign portfolio investors (FPIs) sold shares worth a net Rs 65.04 crore on December 7, 2015, as per provisional data released by the stock exchanges that added negative milieu. Besides, Rupee opened lower against the dollar and was trading at 66.83, down 10 paise at the Interbank Foreign Exchange on sustained foreign fund outflows amid increased demand for the U.S. currency from importers that too kept pressurizing the sentiment. However, down side remained capped with ratings agency Fitch, which while maintaining a stable outlook for India, stated that the country’s economy will grow by 7.5 percent in the current fiscal that it will stand out globally, but warned that its business environment would remain weak despite improvements. On the sectoral front, traders were seen piling up position in FMCG, Auto, IT, TECK and Realty, while selling was witnessed in  Metal, Oil & Gas, PSU, Consumer Durables and Capital Goods.

On the global front, the US stocks ended lower, weighed by a sharp decline in energy as oil plunged to a near-seven-year low. Asian markets were trading in red after oil prices fell more than 5 percent overnight. The Organization of the Petroleum Exporting Countries' (OPEC) failed to reach an agreement to reduce production levels when it met on Friday.

Back home, the NSE Nifty and BSE Sensex were trading below the psychological 7,800 and 25,500 levels respectively. The market breadth on BSE was positive in the ratio of 1093: 796 while 102 scrips remained unchanged.

The BSE Sensex is currently trading at 25479.27, down by 50.84 points or 0.20% after trading in a range of 25431.22 and 25488.42. There were 8 stocks advancing against 22 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.06%, while Small cap index gained 0.09%.

The top gaining sectoral indices on the BSE were FMCG up by 0.59%, Auto up by 0.39%, IT up by 0.37%, TECK up by 0.29% and Realty up by 0.03%, while, Metal down by 1.05%, Oil & Gas down by 0.57%, PSU down by 0.51%, Consumer Durables down by 0.45% and Capital Goods down by 0.26% were the losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 1.52%, ITC up by 0.83%, Infosys up by 0.78%, Hindustan Unilever up by 0.63% and SBI up by 0.17%. On the flip side, ONGC down by 1.65%, Vedanta down by 1.59%, Dr. Reddys Lab down by 1.57%, Hindalco down by 1.51% and Coal India down by 1.45% were the top losers.

Meanwhile, Fitch Ratings, the global credit ratings agency has affirmed India's rating at 'BBB-' -- the lowest investment grade -- with a stable outlook, saying strong medium-term growth outlook and favourable external finances balance out weak structural features, including its business environment. The agency has affirmed India's Long-Term Foreign- and Local-Currency Issuer Default Ratings at 'BBB-'. The issue ratings on India's senior unsecured foreign- and local-currency bonds are also affirmed at 'BBB-'. The Outlooks on the Long-Term IDRs are Stable. The Country Ceiling is affirmed at 'BBB-' and the Short-Term Foreign-Currency IDR at 'F3'.

Fitch has further said that affirmation of India's sovereign ratings and Stable Outlook balances a strong medium-term GDP growth outlook and favourable external finances, including a strong foreign reserves buffer, with a high government debt burden and weak structural features, including a difficult - but improving - business environment.Fitch forecast that India's GDP growth will accelerate to 7.5 per cent in the current fiscal and further to 8 per cent in 2016-17 supported by the government's beefed-up capex spending and gradual implementation of a broad-based structural reform agenda. It added that the Reserve Bank of India's (RBI) policy rate cuts of 125bp in total in 2015 are also likely to contribute to higher GDP growth, even though monetary transmission is impaired by relatively weak banking sector balance sheets.

It noted that India's relatively weak business environment and standards of governance are gradually improving as a result of the pursued reforms, but obstacles faced by investors, including infrastructure bottlenecks, have not been reduced overnight. It cautioned that loose macroeconomic policy settings that cause a return of persistently high inflation levels and a widening current account deficit, which would increase the risk of external funding stress. Fitch also warned that a deviation from the fiscal consolidation path, deterioration in the banking sector's asset quality, higher inflation and widening of current account deficit could lead to a negative rating action.

The CNX Nifty is currently trading at 7751.35, down by 14.05 points or 0.18% after trading in a range of 7734.10 and 7753.05. There were 16 stocks advancing against 34 stocks declining on the index.

The top gainers on Nifty were Tata Motors up by 1.54%, HCL Tech. up by 1.34%, ITC up by 0.80%, Infosys up by 0.74% and BPCL up by 0.58%. On the flip side, Cairn India down by 2.76%, Dr. Reddys Lab down by 1.66%, ONGC down by 1.61%, Vedanta down by 1.59% and Coal India down by 1.45% were the top losers.

Asian markets were trading in red, Hang Seng decreased 372.05 points or 1.68% to 21,831.17, Nikkei 225 decreased 200.94 points or 1.02% to 19,497.21, Taiwan Weighted decreased 99.31 points or 1.17% to 8,354.96, Shanghai Composite decreased 47.04 points or 1.33% to 3,489.88, KOSPI Index decreased 9.03 points or 0.46% to 1,954.64, Jakarta Composite decreased 8.33 points or 0.18% to 4,513.06 and FTSE Bursa Malaysia KLCI decreased 1.69 points or 0.1% to 1,670.31.