Sensex drops third time in last four sessions on earthquake tremors

Indian stock markets concluded an extremely volatile session on a quiet note as the benchmark equity indices closed with marginal losses after an earthquake with a magnitude of 8.9 on Richter’s scale struck under the sea off Indonesia's northern Aceh province and triggered Indian Ocean tsunami alert.

The pessimistic sentiments prevailing in global spilled over local markets in early morning trades as markets participants largely remained influenced by the disappointing overnight close in US markets which registered their biggest one day fall in the year 2012 on Tuesday amid concerns about European debt crisis resurfacing after borrowing costs for Euro-zone nations rose ahead of the start of first quarter earnings season.

After plunging around a percent in morning trades, the markets recovered a great deal from the low point of the day as the frontline gauges moved into the green terrain. Sentiments in domestic bourses improved following the European markets opening, which rebounded a session after witnessing hefty risk aversion.

The domestic markets immediately came off their intraday highs after reports showed tremors of the quake were felt in many Indian regions including Kolkata, Bangalore and Tsunami warnings for 28 countries were issued. However, the frontline indices recovered in the last leg of trade to settle slightly below the previous closing levels after reports that the fears of Tsunami are less likely because the Indonesian earthquake moved horizontally and not vertically.

The key gauges eventually ended around the psychological 5,200 (Nifty) and 17,200 (Sensex) levels as investors were seen buying defensive Healthcare and FMCG stocks while the Banking and IT counters too gained some ground before the close of trade.

The PSU oil marketing companies like HPCL and BPCL closed in the green terrain on the back of sharp decline in international crude oil prices, which plummeted to a near 8-week low. Besides, the stocks from Aviation sector like Kingfisher, SpiceJet and Jet Airways skyrocketed in the session amid reports that foreign airlines might soon be allowed to pick up stakes in Indian carriers.

On the other hand, the upside in local markets was capped by persistent profit booking in Metal and Oil & Gas counters while Capital Goods and rate sensitive Realty pockets too bore the brunt of selling pressure. Besides, stocks from the cement sector plunged sharply after reports showed that Competition Commission of India`s (CCI) ruling on alleged cartelization by companies is expected shortly, with a negative verdict likely to hurt profits and pricing power of manufacturers.

On the global front, sentiments in the Asian region remained pessimistic as most major markets settled with large cuts. Meanwhile, the Asian Development Bank report showed that developing Asia's economic growth will slow to 6.9 percent in 2012 because of weak global demand. The Japanese shares too plunged around a percent and slipped below the psychological 9,450 levels as renewed worries over global growth weighed on Japanese exporters.

The European peers after a flat opening, recouping some of their losses from a day earlier as yields on Spain's benchmark 10-year bond fell back after pushing 6% in last session.

Back home, the NSE’s 50-share broadly followed index Nifty, shed one third of a percent to settle below the psychological 5,250 support level while Bombay Stock Exchange’s Sensitive Index - Sensex fell by forty five points to finish just below the crucial 17,200 mark. Moreover, the broader markets settled on a weak note with the Small Cap index outperforming all its peers as it went home with relatively moderate cut.

The markets consolidated on larger volumes of over Rs 1.43 lakh crore while the turnover for NSE F&O segment remained on the higher side as compared to that on Tuesday at over Rs 1.14 lakh crore. The volumes spiked in last hour of trade after reports of massive earthquake in Indonesia came to the fore. The market breadth remained negative as there were 1,232 shares on the gaining side against 1,539 shares on the losing side while 121 shares remained unchanged.

Finally, the BSE Sensex lost 44.4 points or 0.26% to settle at 17,199.40, while the S&P CNX Nifty declined by 16.75 points or 0.32% to close at 5,226.85.

The BSE Sensex touched a high and a low of 17,319.15 and 17,075.89 respectively. The BSE Mid cap and Small cap index were down by 0.63% and 0.27% respectively.

The top gainers on the Sensex were Sun Pharma up by 2.08%, NTPC up by 1.79%, Infosys up by 0.92%, SBI up by 0.43%, and HDFC Bank up by 0.33% while Jindal Steel down by 2.92%, Bharti Airtel down by 2.27%, Sterlite Industries down by 1.97%, BHEL down by 1.92%, and Tata Power down by 1.87% were the major losers on the index.

The top gainers on the BSE sectoral space was Health Care up by 0.58%, Bankex up by 0.19%, IT up by 0.19% and FMCG up by 0.10%, while Metal down by 1.34%, Consumer Durables down by 1.05%, Oil & Gas down by 0.86%, Capital Goods down by 0.83% and Realty down by 0.77% were the top losers on the BSE sectoral space.

Meanwhile, the Petroleum and Natural Gas Regulatory Board (PNGRB) has directed a cut of 64% in the gas tariffs on sale of piped cooking gas to households and CNG to automobiles in the national capital. According to experts, the order will lead to a fall of 10% and 20% in the prices of PNG and CNG respectively. It will also directly impact Indraprastha Gas Ltd (IGL) which is a monopoly supplier in the NCR region.

IGL currently charges a pipeline distribution tariff of Rs. 104.5 per million British thermal units (mBtu) and a compression charge of Rs. 6.66 per kg of gas transported. As per the order, the tariffs have to be reduced to a pipeline distribution tariff of Rs. 38.58 per mBtu and compression charges of Rs. 2.75 per kg. Also, IGL is expected to refund the consumers the excess amount charged since 2008.

The order which is likely to put considerable strain on the finances of the company has been appealed against in the high court. IGL in its defense has stated that it has not been given any opportunity of a personal hearing before passing of the order, despite repeated requests. Hence it has been denied the principle of natural justice. It has also challenged the legality of PNGRB’s power to fix rates. However the regulator is of the opinion the decision was based on technical data and that it had been seeking data from IGL for a while now.

IGL is jointly promoted by state-owned GAIL (India) and Bharat Petroleum Corp (BPCL), which together own 45% of the company. GAIL is the biggest gas distributor in India. As per the new tariffs it is expected that IGL could struggle to make even normal gains on the capital it has invested in the business Also the refund could be in excess of Rs 1,000 crore.

Post the order the shares of other gas distribution companies also fell sharply, on fears that a similar directive may be extended to them.

The S&P CNX Nifty touched a high and low of 5,263.65 and 5,190.80 respectively.

The top gainers on the Nifty were Kotak Bank up by 2.57%, Sun Pharma up by 1.99%, Infosys up by 1.89%, NTPC up by 1.85% and Ranbaxy up by 1.36%.

On the flip side, ACC down by 4.47%, Ambuja Cement down by 3.87%, Reliance Infra down by 3.60%, JP Associates down by 3.30%, and RPower down by 2.47% were the top losers on the index.

The European markets were trading in green, as France's CAC 40 up 1.27%, Britain’s FTSE 100 up 0.51%, while Germany's DAX was up by 1.20%.

Most of the Asian equity indices ended the day’s trade in the negative terrain on Wednesday as investors continued to cut back their risk exposure given uncertainty over global growth. Concerns over weak data from China and the US was compounded by fears over Spain’s finances after the country’s cost of borrowing crept closer to levels that have forced other countries to seek bailouts. Moreover, markets will be closely watching for first quarter gross domestic product results, starting with China on Friday. China lowered its GDP growth target last month to 7.5 percent, sparking concern the world's second-largest economy is slowing faster than expected.

Meanwhile, Japanese Nikkei extended their losing streak to seven sessions as a stronger yen, steep declines on Wall Street, and worries about European debt problems sent major exporters reeling. While, Chinese shares yo-yoed in a narrow range for most part of the day’s trade but negotiated a positive end, as investors awaited the release later in the week of GDP data and other indicators.

Stock markets in Malaysia remained closed on Wednesday on account of a nationwide holiday for Installation of the Yang Di-Pertuan Agong. The South Korean markets also remained shut for a holiday due to Assembly Members Election Day.