Markets suffer last minute sell-off to end in red; WPI inflation eyed

Indian equity indices, erasing all their good work in initial trade, ended the session in the red for fifth consecutive trading session on Thursday as investors sold-off riskier assets in late trade amid fears that country’s headline inflation may quicken further in November, thereby deterring the Reserve Bank of India from cutting interest rates in the monetary policy next week. Sentiments also remained fragile in absence of any constructive work being done in Parliament, with Samajwadi Party (SP) creating a ruckus over the quota bill and an angry deputy chairman PJ Kurien asking that its member be evicted.

Supportive cues from Asian markets provided the much needed support to local markets in first half with most of the Asian equities ended in the green after the US Federal Reserve took new stimulus steps to bolster the economy. The Fed said, it will buy $45 billion in Treasuries each month on top of the $40 billion per month of mortgage-backed bonds it started buying in September. However, disappointing cues from European market took their toll on domestic sentiments in second half and dragged the BSE’s Sensex below the psychological 19,250 level. Investors mainly resorted to profit booking following the decline in European markets after Federal Reserve Chairman Ben Bernanke on December 12, 2012, warned of the US fiscal-cliff impact.

Back home, fall of over two and a half percent in FMCG segment did the major damage to the markets with Hindustan Unilever down by about two per cent for the second day, on concerns that it may face higher royalty payments to its parent Unilever PLC. Concerns came after Unilever Indonesia agreed on December 12 to pay a higher royalty payment to the parent company. Some selling was also witnessed in banking stocks, namely, HDFC Bank, SBI, Canara Bank and Bank Of India on dampened hopes of rate cut, with investor’s now turning focus to November Inflation, due to release on December 14, 2012.

Selling pressure intensified in late trade after cement companies like ACC and Ambuja Cements, both Holcim Group companies, dipped almost 2 per cent each in late noon deals after ACC said its board has approved for payment of 1 per cent of the net annual sales of the firm as technology and know-how fees to Switzerland’s Holcim with effect from January 1, 2013. Shares of public sector oil marketing companies fell as Oil Minister Veerappa Moily early this week said the government is likely to increase the limit of subsidized cooking-gas supplies to nine 14.2-kilogram cylinders per family a year from six now. Additionally, Telecom stocks staged a mixed close ahead of government meeting for discussing the recommendations made by the Empowered Group of Ministers (EGoM) on pricing of spectrum that remained unsold in the recently conducted auction on November 14, 2012.

The NSE’s 50-share broadly followed index Nifty declined by over thirty points but managed to hold its psychological 5,850 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex dropped by over one hundred and twenty points to finish below the psychological 19,250 mark. Moreover, broader markets butchered badly during the session and ended with a cut of about a percent.

The overall volumes stood above Rs 1.80 lakh crore, which remained on the higher side as compared to that on Wednesday. The market breadth remained in favor of declines as there were 1,106 shares on the gaining side against 1,834 shares on the losing side while 120 shares remain unchanged.

Finally, the BSE Sensex lost 126.00 points or 0.65% to settle at 19,229.26, while the S&P CNX Nifty declined by 36.50 points or 0.62% to end at 5,851.50.

The BSE Sensex touched a high and a low of 19,421.72 and 19,196.75, respectively. The BSE Mid-cap index was down by 1.16% and Small-cap index was down by 0.97%.

The top gainers on the Sensex were, Tata Motors up 3.96%, Jindal Steel up by 1.76%, Bharti Airtel up 1.54%, Bajaj Auto up 1.35% and ICICI Bank up 0.80%, while, ITC down by 3.55%, Sterlite Industries down by 3.27%, Cipla down by 2.14%, Hindalco Industries down by 2.03% and Hindustan Unilever down by 1.91% were the top losers on the index.

On the BSE Sectoral front, Auto up 0.88% and Oil & Gas up 0.08% were the only gainers, while Consumer Durables (CD) down 2.73%, FMCG down by 2.64%, Realty down by 1.62%, Metal down by 1.16% and Capital Goods (CG) down by 1.16% were the top losers in the space.

Meanwhile, during 2011-12, the exports of the Indian pharmaceuticals have achieved a record growth of 23.34% in US dollar terms.  According to the Director General of Pharmaceuticals Export Promotion Council of India (Pharmexcil) P V Appaji, “the exports growth story is one to be proud of”. The total exports, since last five years, have grown by 16% CAGR.

In the last fiscal, North America stood as the most favourable export destination with a 33 percent growth. According to Pharmexcil, pharma shipments to Oceania too have shown a rise of 43%, however, the overall turnover is small, as Australia and New Zealand are not yet fully tapped and higher growth rates can be expected in near future.

In an endeavor to encourage the $22 billion Indian pharma sector, Pharmexcil will be organizing a three-day show 'iPHEX 2013' in Mumbai in 2013 under the support of Ministry of Commerce & Industry. According to the IPHEX Committee Chief - Bhavin Mehta, more than 400 Indian pharmaceuticals firms are expected to showcase their products, which include formulations, APIs, nutraceuticals, health services and biotechnology products.

This show will provide a platform to the international buyers and regulators to evaluate the world’s third largest (in terms of volume) Indian pharma industry and will enable the council and its members to promote brand India - the quality and affordability aspect of Indian pharmaceutical sector.

The S&P CNX Nifty touched a high and a low of 5,907.45 and 5,841.35 respectively.

The top gainers on the Nifty were Tata Motors was up 4.05%, Jindal Steel up 2.06%, Bharti Airtel up 1.14%, Bajaj Auto up 0.99% and ICICI Bank was up 0.87%.

The top losers on the index were ITC down by 3.60%, Sesa Goa down by 3.25%, BHEL down by 2.34%, Reliance Infra down by 2.17% and JP Associates down by 2.15%.

The European markets were trading in red, France’s CAC 40 down by 0.08%, Germany’s DAX down 0.58% and the United Kingdom’s FTSE 100 down by 0.25%.

Asian markets went home on mixed note after US Federal Reserve added more monetary stimulus, which revealed that it will not lift interest rates until unemployment was under control. Japan’s Nikkei ended higher after touching eight-month high as yen extended its weakness. However, mainland Chinese shares closed lower, weighted by weakness in the resource sector, while Hong Kong markets plunged on mild profit-taking pressure. South Korean and Taiwanese shares made strong advances on fresh U.S. Federal Reserve policy.