Southbound journey continues for fifth consecutive day; Sensex ends below 18,500 mark

Prolonging their southbound journey for fifth day in a row, Indian benchmarks snapped the listless trading session with a cut of over half a percent. The day started on a sluggish note under impression of weakness in the other global markets, never looked confident, and ended the session below their crucial 5,650 (Nifty) and 18,500 (Sensex) levels. The traders’ sentiment took a hit with the lackluster response to the government’s much anticipated 2G spectrum auction. The much-talked 2G mobile phone spectrum auction virtually flopped with just Rs 9,407 crore being garnered in the process contrary to the high valuation estimated by the CAG in its report. The government was targeting a minimum of Rs 28,000 crore from the sale of 2G spectrum in the GSM band and the tepid response may upset its efforts to meet the revised fiscal deficit target of 5.3 percent of GDP.

Meanwhile, investors reacted depressingly to the revision in August inflation numbers. A sharp upward revision in the August numbers overshadowed the lower-than-expected October figure. The August WPI inflation was revised to 8.01 percent from the provisional 7.55 percent. However, inflation numbers eased marginally in the month of October. Inflation declined marginally to 7.45 percent in October even though prices of food items like rice, wheat pulses and potato showed a rise.

The sentiments were further weighed down by the concerns over global growth recovery coupled with US fiscal cliff tensions and bailout uncertainty of Spain and Greece. Asian stocks mostly fell on Thursday as investors reacted to the prospect of drawn-out negotiations over the looming US ‘fiscal cliff’ by shedding riskier assets, but Japanese equities bucked the trend as a sharp slide in the yen lifted exporters’ shares. Moreover, European markets also traded in the red during early deals as anti-austerity strikes across southern Europe and Greece’s unresolved debt crisis put the euro zone’s troubles back in focus.

Back home, market witnessed slight recovery in late trade after Finance Minister said most state-run banks need an infusion of additional capital and a decision will be taken in the next few weeks. Further, FM urged RBI to start working on issuing final guidelines for granting licenses to new banks and receiving applications from the interested entities in anticipation of Banking Regulation Act (BRA) being amended.

On sectoral front, some amount of pressure also came in from software pack as it tumbled about two percent after the IT industry body Nasscom lowered its growth expectation for the industry this financial year. Nasscom now expects the export growth in dollar terms to be at the lower end of the 11-14% that it had forecast in February. Moreover, fall of over one and half a percent in Metal space too dampened the sentiments. Stocks like SAIL, Hindalco, Sterlite Industries, Tata Steel, Jindal Steel & Power and Hindustan Zinc all edged lower after LMEX, a gauge of six metals traded on the London Metal Exchange dropped 0.32% on November 14, 2012. However, the losses remain capped as telecom operator Bharti Airtel and Idea Cellular gained after 2G auction. Bharti was the provisional bidder in only one circle (Assam Circle) while Idea Cellular was provisional bidder in 8 circles. The cut also remain limited as stocks from consumer durables counters remained jubilant encouraged by the Diwali purchase.

The NSE’s 50-share broadly followed index Nifty declined by over thirty five points to end below its psychological 5,650 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex dropped by about one hundred and fifty points to finish below the psychological 18,500 mark. However, broader markets tried hard to get some traction and ended mixed.

The overall volumes stood above Rs 1.40 lakh crore, which remained on the lower side as compared to that on November 12, 2012. The market breadth remained in favor of declines as there were 1,201 shares on the gaining side against 1,626 shares on the losing side while 98 shares remain unchanged.

Finally, the BSE Sensex lost 147.50 points or 0.79% to settle at 18,471.37, while the S&P CNX Nifty declined by 35.95 points or 0.63% to end at 5,631.

The BSE Sensex touched a high and a low of 18,593.54 and 18,408.69, respectively. The BSE Mid-cap index was down by 0.17% and Small-cap index was up by 0.28%.

Bharti Airtel up 2.95%, BHEL up 1.01%, HDFC up 0.88%, Hindustan Unilever up 0.81% and Coal India up by 0.59% were the major gainers on the Sensex. On the flip side, Tata Steel down 2.66%, ITC down 2.57%, Jindal Steel down 2.32%, TCS down 2.23% and Wipro down by 2.19% were the major losers on the index.

The few gainers on the BSE sectoral space were Realty 1.97%, Consumer Durables (CD) up 1.64% and Power up by 0.13%. While, IT down 1.79%, Metal down 1.66%, Auto down 0.88%, HC down 0.81%, Oil & Gas down 0.65% and PSU down 0.60% down by 0.16% were major losers on the BSE sectoral space.

Commerce and Industry Minister Anand Sharma, realizing the difficulty of achieving a target of $360 billion exports, is planning to meet Finance Minister, P Chidambaram, seeking subsidy on loans for certain sectors to boost industrial production and exports. However, minister also expressed concerns over the contraction in the industrial production measured on IIP in September.

Discussions has been made on adding more sectors under the interest subvention (scheme), like all the SMEs have been given interest subvention of two percent. Though, exports are on decline since May and contracted by 1.63 percent last month, the trade deficit widened and rose to record $21 billion in October. Further, there has been decline in demand from the traditional markets of the US and Europe, Sharma added. He further said that the government is in constant touch with all stakeholders including the industry chambers.

Amid continuing decline in overseas shipments, the Director General of Foreign Trade (DGFT) is reviewing performance of different aspects of the exporting sectors and is likely to complete the exercise in a couple of days. Merely after that, the government may come out with some support measures for the sector to arrest the decline.

The S&P CNX Nifty touched a high and a low of 5,651.65 and 5,603.55 respectively.

The top gainers on the Nifty were Bharti Airtel up 2.83%, Kotak Bank 2.81%, DLF up 2.76%, IDFC Bank up 1.67% and Cairn up by 1.63%.

The top losers on the index were Ultratech Cement down 3.49%, ITC down 2.87%, Tata Steel down 2.54%, Jindal Steel down 2.46% and Grasim down by 2.45%.

European markets were trading in red. France’s CAC 40 down 0.31%, Germany’s DAX down 0.50% and Britain’s FTSE 100 down by 0.38%.

Asian markets made a weak ending on Thursday and while the Japanese market was up by around 2% most of the Asian peers ended with cut of over a percent. Japanese Nikkei surged on speculation that a change of government may result in more stimulus for the economy. On the other hand Chinese Shanghai Composite declined by over a percent as Xi Jinping replaced Hu Jintao as head of the Chinese Communist Party. However, data showed a slowdown in China may be ending.

Jakarta Composite and KLSE Composite remained closed.