Bourses resume southbound journey on weak global cues

Indian equity indices resumed their southbound journey after a day of halt as investors opted to take some profit off the table on the penultimate day of F&O September series expiry amid weakness in global markets. The gauges witnessed sharp kneejerk selling pressure in the mid noon trade breaching their crucial 18,600 (Sensex) and 5,650 (Nifty) levels. Though some damage control in dying hours ensured that the key bourses recover some part of the ground lost, however, it was not enough to pull the frontline indices back into the positive terrain.

Meanwhile, traders got some respite from Chief Economic Advisor Raghuram Rajan’s statement that India’s recent reforms measures has changed international perception about the country for the better and is likely to reverse the downward trajectory of economic growth and could help avert a credit ratings downgrade. But, sentiments got hampered after some mobile carriers like Bharti Airtel, RCom and Idea Cellular fell sharply as competitiveness in the sector is expected to increase with the widely expected entry of Reliance Industries into the sector, although the energy conglomerate has not confirmed its intentions.

The sharp drag down in stock markets in mid noon trades was witnessed due to subdued global cues as European counters traded in the red in early deals, with stocks in Spain leading the fall, as anti-austerity protests in Spain served as a reminder of impediments faced by the region's leaders in quelling the debt crisis. Moreover, most of the Asian equity indices snapped the day’s trade in the negative terrain after a US Federal Reserve head said the central bank's huge stimulus plan unveiled this month might not boost the economy as much as hoped.

Back home, some amount of pressure also came in from metal space and stocks like Sterlite Industries, Tata Steel, SAIL, Sesa Goa, National Aluminium Company and Hindalco edged lower as global growth jitters cast doubt on future demand for commodities.  However, the downside in local bourses was limited as FMCG stocks surged on favourable outlook for Rabi or winter crops due to the moisture available in the soil following wide-spread rains in August and September. At the same time, realty stocks too aided the sentiment to some extent as hopes of controversial Land Acquisition, Rehabilitation and Resettlement Bill seeing the light of the day cheered investors’. Even cement stocks, viz. ACC, UltraTech Cement and Prism Cement, firmed up on optimism of higher demand as monsoon season comes to an end. Meanwhile, pharma stocks rose on buzz that the government is set to ease foreign direct investment norms for the pharmaceutical sector.

The NSE’s 50-share broadly followed index Nifty, fell by about ten points but held its psychological 5,650 support level, while Bombay Stock Exchange’s Sensitive Index - Sensex declined by about sixty points to finish below the psychological 18,650 mark. However, the broader markets traded with traction through the session outperforming benchmarks and ended the trade with a gain of about half a percent. Meanwhile, the market breadth was divided equally as there were 1,442 shares on the gaining side against 1,447 shares on the losing side while 120 shares remain unchanged.

The BSE Sensex lost 62.24 points or 0.33% to settle at 18,632.17, while the S&P CNX Nifty declined by 10.45 points or 0.18% to close at 5,663.45.

The BSE Sensex touched a high and a low of 18,670.48 and 18,573.18 respectively. Moreover, the BSE Mid cap index was up by 0.27% and Small cap index up by 0.65%. 

Cipla up by 2.66%, Hero MotoCorp up by 1.59%, SBI up by 1.41%, ITC up by 1.04% and Wipro up by 0.70% were top gainers on the Sensex, while Bharti Airtel down 3.93%, Coal India down 2.81%, Hindalco Industries down 2.22%, Tata Motors down 2.14% and Dr Reddys Lab down 1.57% were top losers on the index.

The major gainers on the BSE sectoral space were, FMCG up 0.65%, Health Care (HC) up 0.57%, Realty up 0.29%, Oil & Gas up 0.14% and Consumer Durable (CD) up 0.06%, while Metal down 1.17%, TECk down 0.68%, PSU down 0.57%, Capital Goods (CG) down 0.51% and Power down 0.40% were top losers on the BSE sectoral space.  

Meanwhile, watering down the speculation of a rate cut, the Reserve Bank of India’s Governor D Subbarao has said that inflation rate is still at unacceptable levels and efforts should be made to rein in prices further to provide relief, especially, to poor people. He said that rising prices, had affected one and all and that it was one of the bank's priorities to contain it.

Subbarao said, 'In the last two years, we have been able to bring down the rate of inflation but I admit that inflation is still high and it should further come down.’  He further said that Rs 5 per litre diesel price hike would raise inflation rate in the short run and might cause inflation but in long term it is good for economy including for inflation.

He also expressed hope that banks would lower their lending rate in response to the recent cut in the CRR and it is a challenge for banks to keep the lending rates low. Last week, Reserve Bank reduced CRR by 0.25 per cent but refrained from reducing lending rates in view of high inflation. The RBI decision released Rs 17,000 crore of primary liquidity into the system, which the apex bank said would ensure adequate flow of credit to productive sectors of the economy. 

The S&P CNX Nifty touched a high and low of 5,672.80 and 5,638.65 respectively.

The top gainers on the Nifty were ACC up by 3.88%, Ambuja Cement up by 3.87%, Cipla up by 2.62%, Axis Bank up by 2.16% and SBI up by 1.37%. On the flip side, Bharti Airtel down by 3.83%, IDFC down 3.31%, Coal India down 3.15%, Hindalco Industries down 2.63% and Tata Motors down by 2.25% were top losers.

The European markets were trading in red, France's CAC 40 down by 2.06%, Germany's DAX down by 1.62% and United Kingdom’s FTSE 100 down by 1.15%.

Asian markets ended mostly in red on Wednesday after US Federal Reserve head’s statement that the central bank's huge stimulus plan unveiled this month might not boost the economy as much as hoped. Fall in Japan and Hong Kong’s stocks amid continued worries over territorial dispute between China and Japan also added pressure on the markets. Nikkei ended lower, on the back of speculation about yen-weakening intervention by Japanese authorities. Meanwhile, Seoul closed with red mark on growth worries.