Post session - Quick review

After taking a breather in the previous trading session, Indian equity markets resumed its declining trajectory, as traders preferred to keep their positions light ahead of Reserve Bank of India's (RBI) Credit Policy review scheduled on Tuesday, which may not offer any surprise amidst mostly negative global set-up. Benchmark equity indices after trading cautiously for the entire part of the session, ended down in dumps on Monday in absence of any positive catalyst.  Although select group of reports suggested India's central bank the Reserve Bank of India (RBI) slashing its key interest rate by 25 basis points at its policy review after last week's inflation data came well below expectations, and as economic growth remains sluggish. However, much of the drubbing came to the bourses, after Government in the Mid-Year Economic Review, lowered it’s GDP growth forecast to 5.7-5.9% this fiscal in much lower than 7.6 per cent projected in the Economic Survey. Additionally, investor’s also dumped local equities after Chief Economic Advisor to the Finance Ministry Raghuram Rajan reported, achieving the full year fiscal deficit target of 5.3 percent of gross domestic product being a difficult task. In the cautious session of trade, 30 share barometer index of Bombay Stock Exchange (BSE), Sensex, knocked off over 3/ 4 points to settle sub 19250 psychological level. Similarly, the wider 50-scrip S&P CNX Nifty of the National Stock Exchange (NSE), despite offloading over quarter points, concluded above 5850 bastion.  Meanwhile, the session clearly belonged to broader indices, which not only outperforming the frontline equity indices, but also the globe, went home with gains of over half a percent.

On the global front, most of the Asian pacific shares succumbed to profit-taking from last week's rally, barring China’s Shanghai Composite, Indonesia’s Jakarta Composite and Japan’s Nikkei 225, as investors wound down positions ahead of the holiday season amid worries that Washington won't avert the 'fiscal cliff' of tax hikes and spending cuts that could hurt the U.S. and global economy. However, The Liberal Democratic Party of Japan's election triumph drove the yen to a 20-month low against the dollar that propelled the Nikkei stock average to a 8-1/2-month closing high on expectations Japanese firms will have much better export earnings. Meanwhile, European shares continued to showcase negative trend given uncertainty surrounding U.S. budget talks.

Closer home, strong buying was witnessed in high beta-Metal, rate sensitive’s-Auto and defensive- Health Care (HC) counters, however, stocks from Information Technology, Oil & Gas and Fast Moving Consumer Goods counters, played the main malice behind the downtrend of Indian equity markets. However, hopes that Banking Amendment bill would be approved in Parliament this week, lifted the banking shares higher. Meanwhile, shares of selected multinational companies (MNC), namely, Elantas Beck India, Kennametal India, BOC India, Fairfield Atlas and Timken India, rallied up on a strong response from investors to Honeywell Automation of India’s offer-for-sale (OFS) issue which oversubscribed 7.4 times.  The market breadth on the BSE ended positive; advances and declining stocks were in a ratio of 1520:1374 while 134 scrips remained unchanged. (Provisional)

The BSE Sensex lost 72.48 points or 0.38% and settled at 19244.77. The index touched a high and a low of 19346.78 and 19221.87 respectively. 16 stocks were seen advancing while 14 stocks were declining on the index (Provisional)

The BSE Mid-cap index was up by 0.60% while Small-cap index was up by 0.47%. (Provisional)

On the BSE Sectoral front, Metal was up by 1.69%, Auto up by 0.56%, Health Care up by 0.49%, Power up by 0.41% and PSU up 0.33% were the top gainers, while TECk down by 1.45%, IT down by 1.35%, Oil & Gas down by 0.69%, FMCG down by 0.56% and CD down by 0.42% were the only losers in the space.

The top gainers on the Sensex were Sterlite Industries up by 4.42%, Hindalco Industries up by 3.38%, Jindal Steel up by 1.79%, Maruti Suzuki up by 1.74% and Cipla up 1.68%, while, Bharti Airtel down by 3.78%, TCS down by 2.74%, HDFC down by 1.80%, BHEL down by 1.73% and Wipro down by 1.66% were the top losers in the index. (Provisional)

Meanwhile, As per World Bank Chief Economist Kaushik Basu, the global economy will go through a very rough time in the next two years, since Euro-zone is still in recession and the crisis will take time to abate, however Europe has made several important moves since December 2011, by injecting some essential liquidity in the system.

Further according to Basu, over the next two years; there will be battles to repair the key issues and concerns for growth of the euro-zone that got exposed by the global financial crisis of 2008. After 2015, the global economy will firm up, with the emerging economies becoming the growth poles, while industrialized nations witnessing slower but steady growth.

On India’s economic outlook, Basu said its medium and long-term prospects are good as India saves and invests more than 30% and also the foreign direct investments into India have risen to a record figure in 2011-12. However, the country may see another ‘harsh’ year in terms of economic growth in 2013 as the European situation will remain very difficult up to end of 2014.

He added that fundamentally, India is very strong and the last couple of months have begun to give out good signals but it is time for India to invest in infrastructure and soft institutional sides of development. Citing an example Basu said, some countries like China have done well in investing in infrastructure in which India failed to do.  Calling over the recent slew of measures taken by the government, Basu said India should buck the global weak trend even though the global climate continues to be tough.

Further, the World Bank has projected India's growth of about 5.5% for this year and below 6% for 2013. For 2014 and 2015, it has projected economic growth close to be about 7%.

India VIX, a gauge for markets short term expectation of volatility gained 4.84% at 14.92 from its previous close of 14.23 on Friday. (Provisional)

The S&P CNX Nifty declined 22.70 points or 0.39% to settle at 5,856.90. The index touched high and low of 5,886.05 and 5,850.15 respectively. 26 stocks advanced against 24 declining ones on the index. (Provisional)

The top gainers on the Nifty were Hindalco Industries was up 3.42%, Sesa Goa up 2.85%, Jindal Steel up 1.90 %, Cipla up 1.89% and Grasim was up 1.64%. On the other hand, Bharti Airtel down 3.68%, TCS down by 2.98%, BPCL down by 1.84%, Siemens down by 1.73% and BHEL down by 1.65%, were the top losers. (Provisional)

The European markets were trading in red with, France’s CAC 40 down by 0.69%, Germany’s DAX down by 0.20% and the United Kingdom’s FTSE 100 down 0.52%.

Most Asian markets ended down, excluding giant Japan’s index, which closed higher in reaction to yen weakness on LDP parties’ victory with absolute majority in yesterday's general election mixed on Monday. Mainland China continued its positive journey after Friday's strong performance, while Hong Kong market went home with red mark, following other regional markets that slipped lower amid continued worries over U.S. fiscal cliff negotiations.