Post Session: Quick Review

Extending their previous session southward journey, Indian barometer gauges witnessed blood bath with both the major indices losing over a percent and ending below their crucial 7,500 (Nifty) and 24,600 (Sensex) levels. Initially domestic gauges kept altering between green and red terrain for the most part of session but they crashed like house of card in the last leg of trade as sentiments turned down-beat after Reserve Bank of India (RBI) maintained status quo on rates. RBI’s Governor Raghuram Rajan opted to keep the policy repo rate unchanged on inflation concerns even as it emphasized that it continues to be accommodative. It has also left the cash reserve ratio of scheduled banks unchanged at 4.0 per cent. The reverse repo rate under the LAF will remain unchanged at 5.75 per cent, and the marginal standing facility (MSF) rate and the Bank Rate at 7.75 per cent.

Traders failed to get any sense of relief with report of Core sector output returning to positive territory in December 2015 by registering a 0.9 per cent growth after shrinking (-) 1.3 per cent in November last year. During April-December 2015 period this fiscal, the output of these eight sectors slowed to a 1.9 per cent growth from 5.7 per cent growth in the same period last fiscal.

Selling got accelerated after European counters making an awful start with all CAC, DAX and FTSE were declining over a percent as crude oil prices slipped again on oversupply concerns and companies such as oil major BP disappointed on the earnings front. Asian markets ended mostly in red weighed down by oil prices which fell on reports that there is no co-ordinated production cut planned by producing nations. Weak economic data from China also hurt the sentiments.

Back home, selling was both brutal and wide-based as none of sectoral indices, barring telecom, on BSE were spared. Counters, which featured in the list of worst performers, include metal, energy, Oil and gas and Healthcare. Depreciation in Indian rupee too weighed down sentiments. The rupee depreciated by twelve paise to trade at 67.96 against the US dollar at the time of equity markets closing. Sentiments also remained dampened with Moody’s Investors Service’s report that RBI’s target to bring down retail inflation at 5% by March 2017 will face some risks from monsoon uncertainty and execution of 7th Pay Panel recommendations, while macro-economic factors will be critical for sustaining growth.

Shares of real estate companies fell after the RBI kept key rates unchanged in its monetary policy review. Shares of Auto and banking which traded in green in early deals after RBI’s stance on rates, ended lower as investors opted to book profit at higher levels.

The NSE’s 50-share broadly followed index Nifty tumbled by over hundred points to end below the psychological 7,500 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex declined by over two hundred and eighty points to finish below its psychological 24,600 mark. Broader markets too struggled to get any traction and ended the session with a cut of around one and a half percent.

The market breadth remained in favor of decliners, as there were 858 shares on the gaining side against 1,842 shares on the losing side while 108 shares remain unchanged. (Provisional)

The BSE Sensex ended at 24539.00, down by 285.83 points or 1.15% after trading in a range of 24460.53 and 24928.75. There were 5 stocks advancing against 25 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index was down by 1.74%, while Small cap index down by 1.25%. (Provisional)

The top losing sectoral indices on the BSE were Metal down by 4.33%, Energy down by 2.69%, Oil and gas down by 2.59%, Healthcare down by 2.46% and Power down by 2.42%, while Telecom was up by 0.41% remained the lone gainer on the BSE. (Provisional)

The top gainers on the Sensex were Bharti Airtel up by 2.06%, Bajaj Auto up by 1.48%, Infosys up by 0.30%, Lupin up by 0.28% and Wipro up by 0.01%. On the flip side, Tata Steel down by 7.18%, NTPC down by 4.28%, Sun Pharma down by 4.12%, BHEL down by 3.99% and Cipla down by 3.98% were the top losers. (Provisional)

Meanwhile, pointing to a low growth in industrial activity, eight core sectors -- coal, crude oil, natural gas, refinery products, fertiliser, steel, cement and electricity, which comprise nearly 38% of the weight of items included in the Index of Industrial Production (IIP), posted tepid growth of 0.9% in December 2015 from 3.2 per cent in the same month of previous year on the back of decline in production of crude oil, natural gas and steel sectors. The December production numbers are, however, better than those in November which witnessed the worst performance in seven months with the output of eight sectors contracting by 1.3 per cent.

According to that data released by the ministry of Commerce and Industry, the combined Index of Eight Core Industries stands at 175.7 in December, 2015, which was 0.9% higher compared to the index of December, 2014. Its cumulative growth during April to December, 2015-16 was 1.9%.

Crude Oil production having weight of 5.22%, decreased by 4.1% in December, 2015 over December, 2014, due to lower global prices that has squeezed out investments from oil exploration and production activities. Its cumulative index during April to December, 2015-16 decreased by 0.8% over the corresponding period of previous year. The Natural gas production with the overall weight of 1.71% contracted 6.1% in December, 2015. Its cumulative index during April to December, 2015-16 declined by 2.7% over the corresponding period of previous year. Steel production having weight of 6.68% declined 4.4% in December, 2015. Its cumulative index during April to December, 2015-16 declined by 1.9% over the corresponding period of previous year. With the trend in global prices weighing upon the viability of domestic production, the contraction in steel output may persist in the near term, and continue to act as a drag upon core sector growth.

Meanwhile, Coal production having 4.38% weight increased by 6.1% in December, 2015 over December, 2014. Its cumulative index during April to December, 2015-16 increased by 4.6% over corresponding period of previous year. Petroleum Refinery production having weight 5.94% increased 2.1% in December, 2015. Its cumulative index during April to December, 2015-16 increased by 2.4% over the corresponding period of previous year. Fertilizer production having 1.25% weight increased 13.1% in December, 2015. Its cumulative index during April to December, 2015-16 increased by 10.1% over the corresponding period of previous year.

Cement production having weight of 2.41% increased by 3.2% in December, 2015. Its cumulative index during April to December, 2015-16 increased by 2.2% over the corresponding period of previous year. Electricity generation having weight of 10.32% increased 2.7% in December, 2015. Its cumulative index during April to December, 2015-16 increased 4.0 % over the corresponding period of previous year.

The sluggish performance of the eight core infrastructure industries has continued in the month after hitting seven-month low levels of negative (-) 1.3 per cent in November. The poor growth indicates that industrial production would remain subdued and a stable recovery would take more time to materialise. The slow growth could also push down GDP growth projects for the 2015-16 financial year. The government is hoping for growth to stabilize in the balance period of the fiscal to achieve targeted growth levels.

The CNX Nifty ended at 7455.55, down by 100.40 points or 1.33% after trading in a range of 7428.05 and 7576.30. There were 5 stocks advancing against 45 stocks declining on the index. (Provisional)

The top gainers on Nifty were Bharti Airtel up by 1.89%, Bajaj Auto up by 1.56%, Lupin up by 0.19%, Infosys up by 0.19% and Grasim Industries up by 0.02%. On the flip side, Vedanta down by 7.81%, Tata Steel down by 7.16%, Cairn India down by 5.06%, Tech Mahindra down by 4.65% and NTPC down by 4.42% were the top losers. (Provisional)

European markets were trading in red; Germany’s DAX declined 142.15 points or 1.46% to 9,615.73, UK’s FTSE 100 tumbled 104.84 points or 1.73% to 5,955.26 and France’s CAC was down by 86.67 points or 1.97% to 4,305.66.

Asian equity markets ended mostly in red on Tuesday after US crude oil prices fell as much as 7 percent on Monday, pressured by weak manufacturing reports, a US forecast calling for warm weather through mid-February and doubts about the possibility of a coordinated cutback on production. Factory activity in the world’s two biggest economies - the United States and China - slowed in January, a discouraging trend for the global economy. Japanese shares slipped on Tuesday as investors locked in profits from large gains made following the Bank of Japan's surprise decision late last week to adopt negative interest rates. However, Chinese shares bucked the weak sentiment across the region after the People's Bank of China guided the yuan to its highest fix in almost a month and pumped more money into the financial system to avoid a possible cash crunch ahead of next week's Lunar New Year holidays.