Benchmarks extend losing streak for fifth straight session

Extending their losing streak for fifth straight session, Indian equity benchmarks ended Tuesday’s trade with a cut of around a percent amid feeble global cues. Initially markets made soft start as investors failed to get any sense of relief with ratings agency Fitch, while maintaining a stable outlook for India, stating that the country’s economy will grow by 7.5 percent in the current fiscal that will stand out globally. The agency said a ‘BBB-’ rating, the lowest in the investment grade, along with a stable outlook and a strong medium-term growth prospect and favourable external finances, will balance out with high government debt, weak structurals and a difficult, but improving, business environment.

Domestic gauges extended their southward march and crashed like house of card in the last leg of trade as sentiment took a hit on sustained foreign fund outflows and confusion around the passage of the GST bill after prospects of a compromise between the government and the Opposition were cast in doubt, when a court ruled that Sonia Gandhi and Rahul Gandhi must appear in court in the National Herald case. Leaders of Congress party disrupted the parliament’s functions accusing the government of vendetta politics.

Sluggish start in European counters too dampened sentiments, as oil held near the lowest since 2009 and weighed on whole commodities pack. Asian markets ended in red on Tuesday, led by the Chinese markets after the nation's exports fell for a fifth month. Slowing trade and a larger-than-expected decline in foreign-exchange reserves intensified concern at the scope of the slowdown in the world’s second-largest economy. Japanese market too ended lower by over a percent, despite report that Japan’s gross domestic product expanded in the third quarter rather than contracting as previously thought, meaning the economy didn’t enter a recession earlier this year.

Back home, depreciation in Indian rupee too weighed down sentiments. The rupee was trading lower by 6 paise at 66.79 against the dollar at the time of equity markets closing on sustained foreign fund outflows amid increased demand for the US currency from importers. Selling in metal counter too dampened sentiments on weak trade report from China. The world's second largest economy saw its trade numbers weaken in November, with exports falling for the fifth straight month and imports dropping for the 13th consecutive month, leading to a trade surplus of $54.10 billion for the month. The banking gauge too suffered sharp plunge and contributed majorly in dragging the markets lower. However, from the non sectoral gauges Tea stocks surged after it was reported that tea prices are likely to rise by Rs 15-20/kg from March 2016.  

The NSE’s 50-share broadly followed index Nifty declined by over sixty points to end below the psychological 7,750 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex declined by around two hundred and twenty points to end below its crucial 25,400 mark. Broader markets too struggled to get any traction during the trade and ended the session with a cut of over a percentage point. The market breadth remained in favor of decliners, as there were 877 shares on the gaining side against 1,879 shares on the losing side while 149 shares remain unchanged.

Finally, the BSE Sensex plunged by 219.78 points or 0.86% to 25310.33, while the CNX Nifty declined by 63.70 points or 0.82% to 7701.70.

The BSE Sensex touched a high and a low 25542.47 and 25256.79, respectively. The BSE Mid cap index was down by 1.17 %, while Small cap index was down by 1.33%.   

The top losing sectoral indices on the BSE were Realty down by 3.69%, Metal down by 3.25%, Oil & Gas down by 2.14%, PSU down by 2.11% and Power down by 1.80%, while there were no gainers on the sectoral index.

The top gainers on the Sensex were Tata Motors up by 0.74%, Bajaj Auto up by 0.55%, ITC up by 0.53% and TCS up by 0.23%. On the flip side, GAIL India down by 5.05%, Vedanta down by 4.60%, Hindalco down by 4.35%, Tata Steel down by 3.61% and ONGC down by 3.57% 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 touched a high and low 7771.25 and 7685.45 respectively. 

The top gainers on Nifty were HCL up by 1.23%, Tata Motors up by 0.68%, Bosch up by 0.28%, TCS up by 0.28% and Bajaj Auto up by 0.26%. On the flip side, Cairn India down by 6.22%, GAIL India down by 4.97%, Vedanta down by 4.93%, Dr. Reddys Lab down by 4.26% and ONGC down by 4.20% were the top losers. 

European Markets were trading in red; France’s CAC was down by 0.62%, Germany’s DAX was down by 0.61% and UK’s FTSE was down by 0.54%.    

Asian equity markets ended in red on Tuesday after oil prices fell more than 5 percent overnight. Oil prices suffered a sharp decline as a result of a global supply glut. The Organization of the Petroleum Exporting Countries' (OPEC) failed to reach an agreement to reduce production levels when it met on Friday. Chinese stocks posted their biggest loss in 10 days, as disappointing China trade data and slumping oil prices unnerved investors already cautious ahead of an anticipated US rate hike that could trigger more capital outflows. China's exports fell by a more-than-expected 6.8 percent in November from a year earlier, a fifth straight month of decline. Imports, meanwhile, were down 8.7 percent on-year. There was a trade surplus of $54.10 billion. Japan’s stocks fell as a rout in oil and commodity prices dragged energy and material shares lower, outweighing a report showing the nation’s economy avoided a recession in the third quarter. Reports showed the revised Q3 GDP grew 1 percent on-quarter, on an annualized basis. The number beat previous estimation of a 0.8 percent contraction during the same period. Hong Kong stocks closed at a two-month low, tracking sluggish global markets, as slumping oil prices dented already fragile investor confidence ahead of a likely US rate hike.