Post Session: Quick Review

Indian markets depicted a very volatile trade on Monday and the benchmarks after a flat start and various attempt of entering the green in first half of the day, suffered severe selling in second half, ending with cut of over a percent to start the new week on a disappointing note. Traders remained concerned about the global development, while the fund outflow continued weighing down the sentiments; overseas investors have pulled out close to Rs 3,500 crore from the Indian equity market so far in the New Year on growing concerns over the Chinese economy and relentless fall in crude oil prices, which hit a fresh 12-year. Indian markets that made a flat start made a valiant attempt and entered in green in early deals but were soon dragged down in red with intensified profit taking in some blue-chips, though the trade remained range-bound for the first half and markets lacking any positive cues traded near the neutral line, but the selling pressure resumed again in the last hour of trading and dragged the markets lower. Sentiments were also pressured with exports contracting for 13th month in a row in December 2015 as outward shipments shrank 14.75 per cent to $22.2 billion amid a global demand slowdown. Trade deficit during the month under review widened to the most since August to $11.6 billion as against $9.17 billion in December 2014. Imports too declined by 0.5 per cent at $448 billion but the Gold shipments rose to $3.8 billion.

On the global front, though most of the Asian markets ended in red, the Chinese market managed a positive close after its central bank helped calm investors’ nerves by strengthening the yuan fixing by the most in almost a month. The People’s Bank of China raised its daily reference rate for the yuan by 0.07 percent on Monday, the most since Dec. 21.Though, the Japanese market ended in red despite the yen declining from near a four-month high. The European markets too made a cautious start and were trading marginally in red in early deals.

The weakness in the European markets weighed on the sentiments and the marketmen fearing further slump in global markets started booking profit in the second half dragging the markets considerably lower. The major drag came from the continued slump in global crude prices after the UN nuclear watchdog on Saturday said Tehran had met its commitments to curtail its nuclear programme, and the United States immediately revoked sanctions that had slashed the OPEC member's oil exports by around 2 million barrels per day (bpd) since their pre-sanctions 2011 peak to little more than 1 million bpd. Iran - a member of the Organization of the Petroleum Exporting Countries (OPEC), said it was ready to increase its exports by 500,000 bpd.  Traders even overlooked, NITI Aayog Vice-Chairman Arvind Panagariya’s statement, who keeping hopes alive for a growth rate of 8 per cent this fiscal year said GDP figures will get revised and there will be a surprise in the fourth quarter. In December, the government had lowered its growth forecast for 2015-16 to 7-7.5 per cent from the earlier 8.1-8.5 per cent in its Mid-Year Economic Analysis presented in Parliament during its last session. IT bigwig Wipro’s broadly in-line estimates numbers for the December quarter kept the momentum going for the IT sectoral index initially but later it too fell in line and ended in red along with all other sectoral indices. Oil & gas stocks were among the worst hit with heavyweight Reliance Industries losing around 5% ahead of its December quarter numbers tomorrow.

The BSE Sensex ended at 24196.85, down by 258.19 points or 1.06% after trading in a range of 24141.99 and 24524.85. There were 13 stocks on gainers side against 17 stocks on losers side on the index. (Provisional)

The broader indices were butchered; the BSE Mid cap index ended down by 2.71%, while Small cap index slumped by 4.03%. (Provisional)

The top losing sectoral indices on the BSE were Oil & Gas down by 3.52%, Realty down by 3.03%, PSU down by 2.18%, Capital Goods down by 2.16%, Power down by 1.56%. (Provisional)

The top gainers on the Sensex were BHEL up by 3.59%, Tata Steel up by 3.52%, Hero MotoCorp up by 1.00%, Wipro up by 0.94% and TCS up by 0.89%. On the flip side, Reliance Industries down by 5.05%, Bajaj Auto down by 3.48%, Asian Paints down by 3.47%, Cipla down by 2.48% and Larsen & Toubro down by 2.23% were the top losers.(Provisional)

Meanwhile, amid the worries of continuous slide in rupee, the industry body Assocham in its latest paper has said that India should allow its currency to slide while the RBI should use ample foreign exchange reserves to defend the currency only if there is a rout situation. However, there is a distinct possibility that rupee could actually strengthen over the medium term.

Assocham said that any depreciation in rupee on account of China-led turmoil in the global financial markets should only be welcome sign for India, or else Indian exports will suffer more at the hands of China and other emerging countries witnessing correction in their currencies.

The industry body said that India must also ensure that Indian exports need to get back their competitiveness even in the midst of global slowdown. The major challenge is coming from China in various forms with sizeable influence on the currency valuation. The paper further highlighted that Yuan devaluation, third in the last five months, will negatively impact Indian firms which have export exposure to China in sectors such as tyres, pharmaceuticals, steel and organic chemicals textiles due to a volatile change in terms of trade. “The impact of this devaluation will depend on the time horizon....However, the short-term impact can be negative in some sectors which also include capital goods among others,' the ASSOCHAM paper on 'Implications of Devaluation of Chinese Yuan’ noted.

It said that the devaluation will make Indian exports expensive to the neighbouring country, affecting the competitiveness. Even in a third country market, the currency devaluation in China can make things difficult for Indian goods since the rupee depreciation has not been sharp enough to give competitive edge to the country's exporters.

The CNX Nifty ended at 7352.90, down by 84.90 points or 1.14% after trading in a range of 7336.40 and 7463.65. There were 14 stocks in green against 36 stocks in red on the index. (Provisional)

The top gainers on Nifty were BHEL up by 3.59% and Tata Steel up by 3.42% and Ultratech Cement up by 1.05% and HCL Tech. up by 0.97% and Hero MotoCorp up by 0.88%. On the flip side, Cairn India down by 7.27%, Vedanta down by 5.77%, Reliance Industries down by 5.25%, BPCL down by 4.31% and Asian Paints down by 3.55% were the top losers. (Provisional)

European markets were trading in red, Germany’s DAX was down by 40.79 points or 0.43% to 9,504.48, France’s CAC declined by 29.4 points or 0.7% to 4,180.76 and UK’s FTSE 100 decreased 9.62 points or 0.17% to 5,794.48.

Asian equity markets ended mostly in red on Monday as massive falls in oil prices and weak US economic data on retail sales, industrial production and regional manufacturing activity stoked worries about the health of the world economy. Japanese stocks closed lower amid continued unease over China's economic outlook and the slide in crude oil prices to lows not seen since 2003. However, Chinese shares ended higher, aided by property gains after figures from the National Bureau of Statistics showed China's home prices continued to rise in December 2015, adding to signs of improvement in the housing market. The People’s Bank of China stepped up its fight against currency speculators by unveiling plans to lift the reserve requirement ratio on offshore yuan interbank deposits placed by yuan clearing banks with their head offices in China. The new rules, which will be effective from January 25, are aimed at stopping the shorting of the offshore yuan (traded in Hong Kong), which has been falling as traders bet on more weakness in the onshore yuan.