Indian bourses register first negative close in 2013; halt four sessions uptrend

After showcasing an awe-inspiring performance in previous few sessions, Indian frontline equity indices slipped into red on Monday’s session and registered their first negative close in 2013. Benchmark indices failed to extend the four sessions gaining momentum, as investors lacked conviction to take larger bets after witnessing a rally of over one and a half percent in previous four sessions. The psychological 6,050 (Nifty) and 19,800 (Sensex) levels have once again proved as though nuts to crack for the frontline indices as they failed to sail beyond those levels. Markets started the day in the flat-to-positive territory tracking positive cues from US markets. However, the domestic bourses failed to hold their neck in the green for longer period and slipped into the red in late morning session. The bulls never looked convinced to make a comeback during the entire session as traders played safer to take any bets in blue-chip stocks ahead of important events like IIP numbers and result announcements starting with IT bellwether Infosys later in the week.

Supportive cues from US markets provided the much needed support to local markets in first half. Investors’ morale got buttressed on the back of reports that nonfarm payrolls rose by 155,000 in December and the jobless rate stood at 7.8%, suggesting the budget battle in Washington over the fiscal cliff didn’t do much damage to the economy. The pace of hiring in December almost perfectly matched the level of job growth over the past two years.

However, disappointing cues from European market took their toll on domestic sentiments in second half and dragged the frontline gauges below the psychological 6,000 (Nifty) and 19,700 (Sensex) levels. Investors mainly resorted to profit booking following the decline in European markets moreover; lower closing in Asian markets after a positive start too dampened the sentiments.

Back home, some anxiety also came in from currency markets after Indian rupee slid by 13 paise to 55.03 against the dollar in late morning trade due to bouts of demand for the US currency from banks and oil importers amid firm cues overseas. The sentiments also soured after plan panel study highlighted that achieving 8.2% growth over the next five years (2012-17) will not be easy and a fresh approach to economic issues is needed to push growth. Earlier, the country’s apex policy making body - National Development Council (NDC) had already scaled down the average growth target for the 12th Plan to 8% from 8.2% envisaged earlier. The average growth rate was 7.9% in 11th Plan (2007-12).

However, bucking the trend PSU oil marketing companies viz. BPCL, HPCL and IOC extended their previous session’s rally triggered by reports that the government has formally started the consultation process for raising diesel and cooking gas prices. Shares of telecom companies like Reliance Communications (RCOM) and Tata Teleservices too gained after telecom minister Kapil Sibal reported that cabinet will soon decide the reserve price for the CDMA spectrum band. The EGoM, led by Finance Minister P Chidambaram, has referred the decision on the reserved price for CDMA to the Cabinet. Shares of metal companies took the limelight on the bourses in late noon deals on reports that the government has imposed 20% import tax on some China hot rolled (HR) flat steel to prevent market disruption to domestic industry.

The NSE’s 50-share broadly followed index Nifty declined by about thirty points to end below the psychological 6,000 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex rose by above ninety points to finish well above the psychological 19,700 mark. Moreover, broader markets outperformed benchmarks and ended the session in the positive terrain.

The overall volumes stood above Rs 1.10 lakh crore, which remained on the higher side as compared to that on Friday. The market breadth remained in favor of advances as there were 1,617 shares on the gaining side against 1,318 shares on the losing side while 131 shares remain unchanged.

Finally, the BSE Sensex lost 92.66 points or 0.47% to settle at 19,691.42, while the S&P CNX Nifty declined by 27.75 points or 0.46% to end at 5,988.40.

The BSE Sensex touched a high and a low of 19,856.43 and 19,654.46, respectively. The BSE Mid-cap index was up by 0.24% and Small-cap index ended higher by 0.55%.

The top gainers on the Sensex were, Maruti Suzuki up by 2.59%, Cipla up by 1.75%, Tata Steel up by 1.65%, Hindalco up by 1.32% and Sun Pharma up by 1.16%, while, L&T down by 2.35%, HDFC down by 1.68%, HDFC Bank down by 1.64%, Hindustan Unilever down 1.55% and Tata Power down by 1.18% were the top losers on the index.

The top gainers on the BSE Sectoral space were Metal up by 0.94%, Health Care up by 0.41%, Auto up by 0.37%, Oil & Gas up by 0.22% and IT was up by 0.20%, while Capital Goods (CG) down 1.47%, FMCG down 1.05%, Consumer Durables (CD) down 1.00%, Realty down 1.0% and Bankex down 0.62% were top losers on the sectoral space.

Meanwhile, planning Commission Member B K Chaturvedi headed meeting to oversee the massive debt restructuring scheme for ailing electricity distribution companies is scheduled on January 9. Representatives from Power and Finance Ministries as well as from some distribution companies among others will participate in the first meeting of a central panel for discussing concerns over power sector woes.

Measures mooted in debt restructuring scheme include significant tariff hikes and conversion of 50 per cent of their short-term debt into bonds backed by respective states, while one of the key proposals in the scheme is to ensure regular rationalization of tariff to cover cost of services. Low tariff is a major factor hurting the financials of discoms.

The accumulated losses of electricity distribution companies are estimated to be whopping Rs 2.46 lakh crore as on March 2012 and it was pegged at around Rs 1.9 lakh crore till March 2011.

Meanwhile, power ministry said that ‘the restructuring/re-scheduling of loan is to be accompanied by concrete and measurable action by the discoms/states to improve the operational performance of the distribution utilities.’ The Power Ministry had notified the financial restructuring scheme for state-owned discoms on October 5.

However, in the last 15 months, minimum 18 states have announced significant tariff increases during the period, with Tamil Nadu proposing as much as 37 per cent hike to improve the financial health of electricity distributing companies. The uncertain financial health of discoms has also raised concerns of loan defaults in the financial system.

The S&P CNX Nifty touched a high and a low of 6,042.15 and 5,977.15 respectively.

The top gainers on the Nifty were BPCL up by 3.26%, Maruti up by 2.49%, Cipla up by 2.05%, Cairn up by 1.59% and Sun Pharma up by 1.48%.

The top losers of the index were L&T down by 2.58%, JP Associates down by 2.57%, HUL down by 2.18%, HDFC down by 2.11% and HDFC Bank down by 1.67%.

The European markets were trading mixed, France’s CAC 40 down by 0.60%, Germany’s DAX down by 0.47% and the United Kingdom’s FTSE 100 up by 0.43%.

Asian markets ended mostly lower on Monday as investors booked profits after New Year’s rally, which had pushed markets to multi-month highs, despite of data showing that the US economy continuing on a path of slow but steady recovery. Hong Kong closed flat, as investors were affirmative about upcoming data, including inflation and trade figures, due out of Beijing soon. Japan’s Nikkei went home with red mark, as it remained under pressure on expectations that the Japanese central bank will further loosen monetary policy.