D-Street witnesses wild swings in late trade; registers fourth straight downfall

Indian market commenced the fresh week on a depressing note as the benchmark indices extended previous week’s sell-off and sank by close to half a percentage points during the session. Sentiments took a hit after the industry body ASSOCHAM in its latest report said that prospects of interest rate cut in near future may be bleak due to factors like continuous pressure on rupee against dollar, firming of the US interest rates and hardening of crude oil prices. Apart from continued outflows by foreign funds, a weak trend in Asia and concerns of an expected jump in US interest rates next year also weighed on the sentiment. Foreign investors have pulled out more than Rs 19,500 crore from the capital market this month so far. The FPI outflows took place following a withdrawal of over Rs 49,700 crore on net basis from the capital market (equity and debt) in last two months (October-November).  However, investors got some comfort with Finance Minister Arun Jaitley’s statement that infrastructure investment needs a booster and his next Budget in February will focus on encouraging more public as well as private spending to boost economic growth. Some support also came with Union Transport Minister Nitin Gadkari’s statement that India’s infrastructure sector has the potential of boosting GDP growth up to 3% and efforts are being put in by the centre to achieve this objective. Meanwhile, shares of oil marketing companies (OMCs) settled higher in otherwise weak market after these companies raised petrol and diesel prices with effect from midnight of 16th / 17th December 2016. This week, the market is likely to be rangebound as the holiday spirit is expected to keep the market muted on account of less volume on the FII counter.

On the global front, Asian markets ended the session on dull note on Monday as investors trimmed their equity holdings following hawkish comments from the US Federal Reserve on interest rate hikes last week. Richmond Fed President Jeffrey Lacker said that the U.S. central bank will likely need to raise interest rates more than three times next year. However, a selloff in global markets eased after China agreed to return a US drone it had seized, easing worries about rising diplomatic tensions between the world's two biggest economic powers. A Chinese warship seized a US underwater drone in the South China Sea, which triggered a formal diplomatic protest and a demand for its return. Meanwhile, European stocks fell, halting two straight weeks of gains, as investors kicked off the last full week of trading of the year.

Back home, the local benchmark got off to a soft start this morning tracking the Asian peers which traded on a subdued note in the early hours. Thereafter, the key indices failed to show any kind of fervor due to lack of encouraging leads. The key gauges suffered a setback in late afternoon trades as sudden bouts of selling emerged in the local markets after weak start of European markets. Finally, the NSE’s 50-share broadly followed index - Nifty settled with modest losses of fourteen points, below the psychological 8150 levels, while Bombay Stock Exchange’s Sensitive Index - Sensex shed thirty points and closed below the psychological 26500 mark. Moreover, the broader markets too failed to show any kind of fervor and settled with cuts of around half a percent. On the BSE sectoral space, Consumer Durables index remained the top laggard in the space and settled with over a percent laceration followed by the Capital Goods and Metal pockets which went home with over half a percent cuts. On the flipside, Oil & Gas and Power pockets managed to go home with moderate gains.

The market breadth remained pessimistic as there were 1077 shares on the gaining side against 1552 shares on the losing side while 191 shares remained unchanged. Finally, the BSE Sensex declined by 114.86  points or 0.43% to 26374.70, while the CNX Nifty dropped 35.10 points or 0.43% to 8,104.35.

The BSE Sensex touched a high and a low of 26505.66 and 26340.38, respectively and there were 9 stocks on gainers side against 21 stocks on the losers side on the index. 

The broader indices made a negative closing; the BSE Mid cap index ended lower by 0.51%, while Small cap index was down by 0.46%.

The gaining sectoral indices on the BSE were Oil & Gas up by 0.98%, Power up by 0.04% and PSU up by 0.01%, while Consumer Durables down by 1.24%, Capital Goods down by 0.84%, Metal down by 0.79%, Realty down by 0.69% and Auto down by 0.59% were the top losing indices on BSE.

The top gainers on the Sensex were GAIL India up by 2.23%, ICICI Bank up by 0.51%, Reliance Industries up by 0.43%, Cipla up by 0.43% and Lupin up by 0.42%. On the flip side, Asian Paints down by 2.35%, Sun Pharma down by 2.30%, HDFC down by 1.58%, Bharti Airtel down by 1.56% and Adani Ports &Special down by 1.32% were the top losers.

Meanwhile, the Associated Chambers of Commerce & Industry of India (Assocham) in its latest report has said that the interest rates cut prospects in the near future by the Reserve Bank of India (RBI) may be adversely affected due to factors such as continuous pressure on rupee against dollar, firming of the US interest rates and hardening of the crude oil prices.

The report further pointed out that even though there is a sufficient liquidity in the banking system after demonetization and lowering of inflation both at the WPI and CPI levels, this cannot be regarded as a normal situation. It also noted that once the scrapped Rs 500 and Rs 1000 notes are exchanged and fresh currency is injected back into the banking system fully, the ball game would change. Besides, there are certain commodities like sugar and wheat which are witnessing firming of prices.

As per the Assocham, the biggest risks are deriving from the unfolding global scenario marking sharp firming of the U.S. dollar and raking in international money back into the US economy. It added that most of the emerging markets have witnessed huge outflows, exerting pressure on their currencies. India may get consolation from the fact that it will be less affected as it is amongst the largest crude oil importers in the world and net importing country. Therefore, the dollar strengthening has a direct and immediate impact on the country’s overall balance of payment position and would lead to inflation in the medium term.

According to the report, while rupee depreciation is good news for the Indian exporters, they would face greater competition from the peers like China, Vietnam, the Philippines and Bangladesh. The Chinese currency is melting against dollar and helping its exporters in the process. The report also noted that the play-out of the November 8 demonetisation measure remains to be seen in terms of impact on the Gross Domestic Product (GDP), while uncertainty over implementation of the Goods and Services Tax (GST) has increased.

The CNX Nifty traded in a range of 8,132.50 and 8,094.85. There were 19 stocks in green against 32 stocks in red on the index.

The top gainers on Nifty were GAIL India up by 2.34%, Aurobindo Pharma up by 1.05%, Tata Power up by 0.85%, Grasim Industries up by 0.84% and HCL Tech up by 0.66%. On the flip side, Bharti Infratel down by 3.01%, Asian Paints down by 2.32%, Sun Pharma down by 2.19%, Ultratech Cement down by 2.13% and HDFC down by 2.01% were the top losers.

The European markets were trading mostly in red; UK’s FTSE 100 decreased 4.62 points or 0.07% to 7,007.02 and France’s CAC decreased 8.83 points or 0.18% to 4,824.44, while Germany’s DAX increased 8.71 points or 0.08% to 11,412.72.

Asian equity markets ended in red on Monday as investors pondered over rising diplomatic tensions between the world's two biggest economic powers. While China agreed to return the US underwater drone that it seized in international waters on Thursday, US President-elect Donald Trump continued to take jabs at China on Twitter telling Beijing to keep the naval drone it had seized. China stocks slipped, led by blue-chips, as hopes for fresh monetary stimulus dimmed after Beijing vowed to contain asset bubbles next year by keeping monetary policy ‘prudent and neutral.’ Japanese shares fell slightly after a nine-day rally, as the yen strengthened and data showed a smaller-than-expected trade surplus in November. Hong Kong stocks slid to 4-1/2 month lows, extending declines since last week's US rate hike, with shares hurt as Beijing signalled a ‘neutral’ monetary policy and media reports said mainland insurance firms face fresh investment curbs.