Markets suffer last minute sell-off to end in red

Domestic equity markets once again witnessed a volatile day of trade with government finally passing the last hurdle in its decision of allowing FDI in multi-brand retail. Markets that have made a positive start taking positive cues from the global markets could not hold up to their gains and slipped into red terrain in the very first hour, though there was immediate recovery too that lasted till noon session after which the markets once again slipped into red and suffered sharp cut in the final moments despite the government’s win in Rajya Sabha. Though, the voting factor was already discounted on the street after Bahujan Samaj Party Chief Mayawati announced last day of voting in favour of the government on the issue. The markets were concerned on report of a one metre-high tsunami hitting northeast Japan.

During the day, Finance Minister P Chidambaram tried to console the markets by saying that the government will be able to accommodate the enhanced outgo within the present limit and don’t need any additional borrowing in the remaining part of the current fiscal to meet its budgeted market borrowing at Rs 5.7 lakh crore during the current fiscal to bridge the expenditure-revenue gap.

The global cues remained somewhat positive as the US markets closed higher on getting report of bigger than expected drop in initial jobless claims for the week, while most of the Asian peers ended in green taking cues from the Chinese market that inched higher on report that the government will continue proactive fiscal and prudent monetary policies. Though the European markets lost their initial gains after UK manufacturing production fell more than expected.

Back home, the markets that despite remaining in red traded range-bound during the second half, suffered some sell-off in last, before going for a weekend. Though, markets snapped the politically crucial and volatile week with gain of about half a percent. The broader markets that have showed good traction in early trade too lost their direction for the day and closed marginally lower. On sectoral front realty witnessed maximum profit booking, and the metal and banking indices too came under pressure. The IT sector too continued its bear run, losing another one percent as after the fear of Cognizant Tech issuing lower revenue growth guidance for 2013, the Indian behemoth Infosys’ top management indicated that the company may miss its organic growth guidance of 5% for the current year because of delays in decision-making, ramp-downs in certain projects. The Aviation sector gave a mixed response to the Civil Aviation Minister Ajit Singh making a call to state chief ministers to reduce taxes on aviation fuel. The move is aimed at reducing costs for airlines, which accounts for nearly 50 per cent of domestic airlines costs.

Finally, the BSE Sensex lost 62.70 points or 0.32% to settle at 19,424.10, while the S&P CNX Nifty declined by 23.50 points or 0.40% to end at 5,907.40.

The BSE Sensex touched a high and a low of 19,561.87 and 19,363.13, respectively. The BSE Mid-cap index was down by 0.08% and Small-cap index was down by 0.10%.

Maruti Suzuki up 1.94%, Tata Power up 0.87%, BHEL up 0.77%, Mahindra & Mahindra up 0.74% and Hindalco up by 0.69% were the major gainers on the Sensex, while Sterlite down 2.25%, Tata Steel down 1.19%, TCS down 1.13%, Reliance down 0.89% and Sun Pharma down 0.85% were major losers on the index.

The only gainers on the BSE sectoral space were Consumer Durables (CD) up 0.53% and Auto up 0.51%, while Realty down 1.68%, IT down 0.98%, TECk down 0.96%, Metal down 0.77% and Bankex down 0.52% were major losers on the BSE sectoral space.

Meanwhile, pressing for some specific measures to bridge the difference between expenditure and revenue, the Parliamentary Committee termed the government's approach to deal with worsening fiscal situation as 'lackadaisical.’ The report, which was tabled in the Lok Sabha on Dec 6, said the government's reply on steps being taken to contain fiscal deficit are illusive on specific details.

The Standing Committee on Finance, which is headed by senior BJP Leader Yashwant Sinha strongly, recommended that the government must take specific measures with reference to sectors/schemes to contain the deficit. The Committee also noted that the fiscal deficit in 2012-13 is likely to be 5.3%, as against 5.1% according to the Budget.

The Committee report also considered the views of the government on the possibility of rating of Ministries based on their overall performance with regard to timely utilization of budget funds. Report also advised the Finance Ministry to set up expert group to rationalize the existing demands of Ministries and departments according to the Central assistance schemes, block grants and state planned schemes.

The S&P CNX Nifty touched a high and a low of 5,949.85 and 5,888.65 respectively.

The top gainers on the Nifty were Maruti up 1.83%, M&M up 0.99%, Tata Power up 0.92%, JP Associates up 0.91% and Lupin up by 0.87%.

The top losers on the index were DLF down 3.24%, Axis Bank down 2.95%, Sesa Goa down 2.55%, HCL Tech down 2.01% and Tata Steel down 1.75%.

European markets were trading in red. France’s CAC 40 down 0.06%, Germany’s DAX down 0.02% and Britain’s FTSE 100 was down by 0.04%.

Asian markets went home on a mixed note, with Shanghai Composite heading for its longest streak of weekly gains in three months, following Wall Street, which ended higher on Thursday, as initial weekly claims for jobless benefits in the US decreased in the latest week. Markets in Hong Kong ended marginally lower in cautious trading session ahead of economic data due to be released over the next few days. Meanwhile, Japan’s Nikkei went home with red mark, as the yen remained firm against the dollar.