Markets crashes below crucial levels on weak global cues

It turned out to be carnage across the Dalal Street on Friday as market-men grew increasingly pessimistic amid increasing uncertainty over the US fiscal cliff. Indian stock markets went through a brutal butchery with benchmark equity indices slipping below their psychological 19,550 (Sensex) and 5,850 (Nifty) levels by the end. However, some relief came in from Planning Commission Deputy Chairman Montek Singh Ahluwalia’s comment that government is doing a lot to push growth but the impact of its efforts will be felt in the second half of the fiscal when the expansion rate will show some improvement. But, nervous market participants resorted to ruthless across the board profit booking following the disappointing start of European stock markets after US House Republicans late the prior day cancelled their so-called Plan B vote to avert the fiscal cliff before the end of the year.

The Asian markets too dampened the sentiments in the domestic markets with shutting shop entirely in the red on Friday as early optimism for progress on the US fiscal cliff was dented after Republican lawmakers canceled a vote on a tax-cut plan. Back home, market-men again turned jittery on weak economic report that retail inflation, based on Consumer Price Index (CPI) for agricultural and rural labourers, increased in November due to increase in prices of food items.

The selling got intensified as the anemic rupee slipped back to 55 against the American currency in the late trade on good dollar demand from banks and importers in view of higher dollar overseas amidst fall in equity market. Investors also shrugged some positive developments like foreign direct investment (FDI) inflows into India, which jumped 67% in October to $1.94 billion, a government statement said on Friday, but inflows for the current financial year were still down. Meanwhile, global rating agency Standard and Poor’s (S&P) estimated India to grow by 6.5% during 2013, amidst the possibility of global economic recovery continuing during the year.

All the 13 sectoral indices on the BSE faced the brunt of selling pressure with realty counter losing the most by over three percent followed by metal pack which lost over two percent on the back of profit booking after a rally of five straight days as LMEX, a gauge of six metals traded on the London Metal Exchange, dropped 0.85% on Thursday, December 20, 2012. Some amount of pressure also came in from oil and gas sector led by one and a half percent fall in Reliance Industries. Even Information Technology stocks, which staged resilience for almost entire trading session, surrendered to the profit booking in the last hour of trade.

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

The overall volumes stood above Rs 2.50 lakh crore, which remained on the higher side as compared to that on Thursday. The market breadth remained in favor of declines as there were 979 shares on the gaining side against 1,939 shares on the losing side while 101 shares remain unchanged.

Finally, the BSE Sensex shaved off 211.92 points or 1.09% to settle at 19,242.00, while the S&P CNX Nifty plunged by 68.70 points or 1.16% to end at 5,847.70.

The BSE Sensex touched a high and a low of 19,394.55 and 19,221.12, respectively. The BSE Mid-cap index was down by 1.47% and Small-cap index was down by 1.47%.

The top gainers on the Sensex were, TCS up 0.78% and ITC up 0.03%, while, Jindal Steel down by 3.52%, Sterlite Industries down by 3.23%, Bharti Airtel down by 3.08%, Hindalco down by 2.68% and Sun Pharma down by 2.22% were the top losers on the index.

There was no gainer on the BSE Sectoral space were, while Realty down 3.51%, Metal down 1.80%, Health Care (HC) down 1.70%, Capital Goods (CG) down 1.66% and Power down 1.63% were top losers on the space.

Meanwhile, though down for the financial year, foreign direct investment (FDI) inflows into India rose 67 percent in October to $1.94 billion. However, the total FDI inflows in the first seven months for the current fiscal year that began in April were down 42 per cent from a year earlier at $14.79 billion.

Foreign direct investment (FDI) inflows into India in the first half of 2012 declined by 42.8 per cent to $10.4 billion, according to the global investment trend monitor of the United Nations Conference on Trade and Development.

Global FDI inflows declined by 8 per cent in the first half as the world economy endured new setbacks between April and June. The contraction in inflows was mainly on account of a decline of $37 billion in inflows into the US and a $23 billion fall in inflows into BRIC countries (Brazil, Russia, India and China), the report said.

The S&P CNX Nifty touched a high and a low of 5,888.00 and 5,841.65 respectively.

The top gainers on the Nifty were ITC was up 0.82% and TCS up 0.48%.

The top losers on the index were JP Associates down by 4.44%, Jindal Steel down by 3.95%, IDFC down by 3.59%, Sesa Goa down by 3.14% and Hindalco down by 3.09%.

The European markets were trading in red, France’s CAC 40 down by 0.47%, Germany’s DAX down 0.92% and the United Kingdom’s FTSE 100 down by 0.95%.

Asian markets went home with a red mark on Friday after Republican lawmakers cancelled a vote on a tax-cut plan, increasing doubts over the US economic condition. Meanwhile, Japan’s Nikkei closed in negative territory as the yen’s upmove weighed on Japanese exporters. Hong Kong closed lower, dragged by energy firms like Petroleum & Chemical Corp., which was down by 1.4%, while South Korean market ended lower with heavyweight Samsung Electronics’ decline by 4.1%.