Sensex dives fifth time in last six sessions; rate sensitives drag

Stock markets in India continue to sulk for second straight session on Wednesday as the benchmark equity indices fail to stage a relief rally a day after being bludgeoned by over two percent. The frontline gauges not only suffered around half a percent cut but also slipped below important psychological levels of 5,000 (Nifty) and 16,500 (Sensex) levels, which happened for the first time in more than four months.

The domestic bourses went through a volatile trading session as the key equity indices flip-flopped around the previous closing levels for most part of the session. The frontline indices showed mild recovery in late morning trades and were trading in an extremely tight range around the previous closing levels.

However, nervous market participants turned jittery in early noon trades following the European stock markets which after a flat to positive opening, slipped into the negative terrain as the uncertainty over European debt trouble was far from over since Greek leaders were busy in cross-party talks to form a government, and the chances for a coalition slim.

Stock markets across the Asian region went back to their losing ways on Wednesday with most equity indices ending lower by half to one percent. Political uncertainty in Greece intensified concerns over Europe's onerous financial trouble and undermined investors’ morale. Deepening the feeling of instability a staunch leftist is likely to stitch together a coalition government with the aim of tearing up Greece's bailout agreements, a move that would spark a dangerous escalation of the Euro-zone debt crisis. 

Back home, the concerns from money market showed little signs of dying down as the anemic rupee slipped closer to 54 against the US dollar despite recent measures from the central bank to support the beleaguered currency. Meanwhile, the quarterly earnings from banking majors like Union Bank and Punjab National Bank did not go down well with the Street as investors not only punished the two banks by 2% and 4% respectively but even pummeled the BSE’s Bankex index which plunged close to two percent.

The high beta Realty and Metal counters too bore the brutal brunt of hefty selling pressure in the session. However, the gains in defensive - FMCG and IT counters did their bit by capping losses for the benchmark equity indices. Index heavyweight ITC bucked the weak trend prevailing in markets and rallied over four percent after declining almost 8% in last six days, after the government has proposed an amendment to the pricing methodology for an excise duty announced in March which would be positive for cigarette manufacturers as it would provide better pricing flexibility and margin upside.

On the global front, sentiments in the Asian region remained pessimistic as most major markets settled with notable losses amid fears that Greece could leave the European Union after the country’s second biggest party said it would rip up a bailout deal following weekend elections. European markets after a flat opening, edged lower as a technical rebound from four-month lows was offset by falls among Spanish banks, which were dragged by fears they would be forced to raise money to cover their property assets.

The NSE’s 50-share broadly followed index Nifty declined by half a percent to settle below the psychological 5,000 support level while Bombay Stock Exchange’s Sensitive Index - Sensex shed sixty seven points to finish below the crucial 16,500 mark. Moreover, the broader markets too finished on a negative note but went on to comprehensively underperform their larger peers.

The markets sank on good volumes of over Rs 1.52 lakh crore while the turnover for NSE F&O segment remained on the lower side as compared to that on Tuesday, at over Rs 1.16 lakh crore. The market breadth turned pessimistic by the end as there were 936 shares on the gaining side against 1,796 shares on the losing side while 124 shares remained unchanged.

Finally, the BSE Sensex lost 66.60 points or 0.40% to settle at 16,479.58, while the S&P CNX Nifty declined by 25.15 points or 0.50% to close at 4,974.80.

The BSE Sensex touched a high and a low of 16,615.74 and 16,422.93 respectively. The BSE Mid cap and Small cap indices were down by 0.98% and 1.23% respectively.

The major gainers on the Sensex were ITC up by 5.61%, TCS up by 2.13%, Hindalco up by 1.36%, Bajaj Auto up by 1.19%, and Wipro up by 1.11% while DLF down by 4.18%, SBI down by 3.64%, M&M down by 3.21%, NTPC down by 2.92% and Jindal Steel down by 2.90% were the major losers on the index.

The few gainers on the BSE sectoral space were FMCG up by 2.69% and IT up by 0.21% while Realty down by 2.99%, Metal down by 2.06%, Bankex down 1.89%, Power down by 1.84% and PSU down by 1.79% were major losers on the BSE sectoral space.

Meanwhile, India has given a strong signal that it will continue to trade with Iran despite pressure from the US. Iran too has stated that both the countries should continue to work together irrespective of what others like or do not like. India is in fact considering increasing trade with Iran through a bilateral preferential trade pact as per Joint Secretary in the Commerce Ministry, Arvind Mehta.

Trade between India and Iran amounted to $14 billion in 2010-11, of which a major part was the Indian import of crude oil. In the wake of sanctions from US and EU, Iran is looking at expanding this bilateral trade further. India too is keen on expanding trade as it believes that Iranian oil is critical for its development and that Iran can also be a good export destination for its food products. However, the two countries still face problems with regard to banking transactions for which Iran has sought permission to open a branch of Parsian Bank in Mumbai.

These comments are coinciding with the visit of US Secretary of State Hillary Clinton who is keen that India keeps its trade with Iran at a bare minimum level.  At a joint press conference with Clinton, External Affairs Minister S M Krishna has said, Iran is 'one of the critical destinations for our external trade'.

Commerce Secretary Rahul Khullar has also assured the Iranian business persons of resolving their problems, including setting up of Parsian Bank in India.

The S&P CNX Nifty touched a high and low of 5,016.25 and 4,956.45 respectively.

The top gainers on the Nifty were ITC up by 5.73%, Ranbaxy up by 3.78%, Bajaj Auto up by 2.42%, TCS up by 1.94% and IDFC up by 1.89%.

On the flip side, JP Associates down by 5.23%, DLF down by 4.29%, Kotak Bank down by 3.87%, SBI down by 3.80%, and M&M down by 3.57% were the top losers on the index.

The European markets were trading in red, as France's CAC 40 down by 0.90%, Britain’s FTSE 100 down 0.99%, while Germany's DAX was down by 0.37%.

Asian markets resumed southbound journey after a day halt and all the Asian counters snapped the day’s trade in the negative terrain on Wednesday as investors remained concerned over fears that Greece could leave the eurozone after the country’s second biggest party said it would rip up a bailout deal following weekend elections. Moreover, the anti-austerity Syriza leftists said Sunday’s polls showed Greeks had rejected the strict cuts imposed as part of plans to clear up Athens' mountain of debts. Further adding to jitters, the Chinese Communist Party could delay its upcoming five-yearly congress as the party struggles to finalise a once-in-a-decade leadership change, sparking fears that economic recovery could stall in the world's second-largest economy. 

Meanwhile, Hong Kong shares suffered a fifth-straight loss on Wednesday, dogged by weakness in Chinese financials and growth-sensitive sectors as investors cut risk and rotated into defensive plays, underscoring fears that the Greek bailout deal could unravel. Moreover, Taiwan stocks fell about a percent, joining regional bourses in declines as uncertainty over Greece’s future cut appetite for risk, while confusion over Taiwan's controversial plan for a tax on stock trading profit added to worries.