Profit bookings weigh on markets; Nifty slips below 7800 mark

A session after showcasing a vivacious rally and amassing close to a percent of gains, Indian equity indices faltered failing to extend the winning momentum on Tuesday, as investors avoided building large positions in a holiday-shortened week and ahead of the expiry of derivatives contracts next Thursday. Sentiments remained down-beat with the reprot that the Finance Ministry has cut its ambitious disinvestment revenue target by 57% to Rs 30,000 crore for the current fiscal year. Despite missing targets in the past five years, the Centre had set an ambitious disinvestment revenue target of Rs 69,500 crore for FY16. But, strategic stake sales failed to take off and minority stake sales in PSUs also came to a halt after initial promise due to volatile markets. Besides, parliamentary turmoil and the upcoming US GDP (gross domestic product) figures, also weighed on the sentiment. However, investors got some comfort with Harvard researchers report that India, with a projected annual growth rate of 7 per cent, has the potential to be the world's fastest growing economy over the coming decade, surging ahead of its South Asian economic rival China that will continue to see a slowdown. Furthermore, the rupee appreciated by another 4 paise to 66.31 against the US dollar extending its winning streak for the sixth day on continued selling of the American currency by banks and exporters.

On the global front, Asian equity markets ended mostly in green on Tuesday, with positive cues from Wall Street and the prospects of more stimulus in China underpinning investor sentiment. China’s government said that monetary policy must be more ‘flexible’ and fiscal spending more ‘forceful’ to combat slowing growth in the world’s second-largest economy. Overnight, US stocks ended stronger on Monday, helped by surge in Apple and Microsoft as well as a rally in hospital stocks after more Americans signed up for subsidized health insurance. However, European stocks reversed gains to trade lower on Tuesday despite a recovery in oil prices from multi-year lows. The global crude benchmark Brent rebounded from an 11-year low hit on Monday.

Back home, the benchmark got off to a soft start as the indices showed signs of consolidation in early trade, a session after the awe-inspiring close to a percent rally. Thereafter, the key indices failed to show any eagerness to regain those levels, as they oscillated around the neutral line for most part of morning trades due to lack of any encouragement. The key gauges made some attempts to claw back into the green zone in early afternoon trades but profit booking at higher levels dragged the key indices to the lowest point. Eventually the NSE’s 50-share broadly followed index Nifty, took a cut of over a half percent to settle below the crucial 7,800 support level, while Bombay Stock Exchange’s sensitive Index, Sensex slipped by about one fifty points and closed below the psychological 25,600 mark. Barring consumer durables, all other BSE sectoral indices ended in the red. Among them, IT index declined the most by 1.15 per cent, followed by metal 1 per cent. Selling was witnessed in IT stocks like Infosys, TCS and Wipro on account of sharp increase in US visa fees. Almost all Indian IT companies would have to pay between $8,000 and $10,000 per H-1B visa from April 1, when the next annual H-1B visa filing session starts, thus making it unsustainable for them. Further, banking stocks which were trading on a firm note earlier in the day also fell prey to selling pressure. On the other hand, healthy buying was witnessed in Telecom stocks like Reliance Communications (RCom), Bharti Airtel and Idea Cellular on the report that the government will not take any coercive action against telecom service providers for call drops till 6 January. Further, Aviation stocks too remained in limelight for second day in a row on the report that domestic air traffic grew by nearly 25 per cent in November to 7.32 million passengers as compared to 5.82 million passengers in the same period last year.

The market breadth remained in favor of declines, as there were 2911 shares on the gaining side against 1305 shares on the losing side, while 1369 shares remained unchanged.

Finally, the BSE Sensex declined by 145.25 points or 0.56% to 25590.65, while the CNX Nifty lost 48.35  points or 0.62% to 7,786.10.

The BSE Sensex touched a high and a low 25787.21 and 25485.17, respectively. The broader indices ended in green, with the BSE Mid cap index ending down by 0.36%, while Small cap index ending higher by 0.2%.

The only gaining sectoral index on the BSE was Consumer Durables up by 0.82%, while IT down by 1.15%, Metal down by 1.00%, TECK down by 0.86%, FMCG down by 0.81%, Auto down by 0.66% were the top losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 1.29%, Axis Bank up by 1.18%, Bharti Airtel up by 0.75%, Asian Paints up by 0.61% and GAIL India up by 0.55%. On the flip side, Infosys down by 1.67%, ITC down by 1.63%, Mahindra & Mahindra down by 1.46%, TCS down by 1.43% and Adani Ports &Special down by 1.17% were the top losers.

Meanwhile, the government has introduced a Bill in the Lok Sabha to consolidate and amend all laws relating to insolvency resolution so as to tackle the issue of undue delays. The ‘Insolvency and Bankruptcy Code, 2015’ provides for resolution of insolvency in a speedier and time-bound manner and aims at promoting investments, freeing up banks’ resources for other productive uses, boosting credit markets and improving ease of doing business in India. The important thing of the Bill is that it has been introduced as a money Bill, which means Rajya Sabha cannot reject or amend it once it is passed by the Lower House.

The Bill proposes the setting up of an Insolvency and Bankruptcy Board of India to regulate insolvency regulate professionals, agencies and information utilities engaged in resolution of insolvencies of companies, partnership firms and individuals. It also proposes the setting up of a fund dubbed the ‘Insolvency and Bankruptcy Fund of India’. The Code seeks to provide for designating National Company Law Tribunal (NCLT) and Debt Recovery Tribunal (DRT) as the adjudicating authorities for corporate persons and firms and individuals, respectively, for resolution of insolvency, liquidation and bankruptcy.

As per the proposed legislation, the corporate insolvency would have to be resolved within a period 180 days, extendable by 90 days. It also provides for fast-track resolution of corporate insolvency within 90 days. The Code also seeks to balance the interest of all the stakeholders including alteration in the priority of payment of government dues.

Earlier Economic Affairs Secretary Shaktikanta Das has said that “Next to GST, bankruptcy legislation will be the biggest reform”. CII Director General, Chandrajit Banerjee too has said that the proposed Bill aims for a complete renovation of the current insolvency and bankruptcy system in India, which will help streamline the procedure of revival of companies facing financial distress.

The CNX Nifty touched a high and low 7,846.30 and 7,776.85 respectively.  

The top gainers on Nifty were Sun Pharma up by 1.37%, Idea Cellular up by 0.90%, Asian Paints up by 0.89%, Axis Bank up by 0.88% and BPCL up by 0.84%. On the flip side, Mahindra & Mahindra down by 2.01%, IndusInd Bank down by 1.86%, ITC down by 1.82%, Hindalco down by 1.78% and PNB down by 1.67% were the top losers.

European Markets were trading in red; France’s CAC was down by 0.27% and Germany’s DAX was down by 0.39%. on the other hand, UK’s FTSE was up by 0.04%.

Asian equity markets ended mostly in green on Tuesday, with positive cues from Wall Street and the prospects of more stimulus in China underpinning investor sentiment. China’s government said that monetary policy must be more ‘flexible’ and fiscal spending more ‘forceful’ to combat slowing growth in the world’s second-largest economy. Hong Kong stocks closed tad higher as trading activities started to wind down for the Christmas holiday break. However, Japanese stocks ended lower after directionless moves amid a dearth of fresh incentives, with many investors sitting on the fence prior to holidays in Japan and abroad.