Sensex dives below its crucial 20,000 mark; Realty, Auto drag

Stock markets in India staged an unenthusiastic performance on Thursday with both the frontline indices snapping the session below their crucial 6,050 (Nifty) and 20,000 (Sensex) levels. The domestic gauges, after making a good start supported by encouraging cues from US markets, shed over half a percent as selling pressure in the infra stocks and butchery in midcap indices dampened investors confidence. Sentiments also got undermined after banking counters throbbed by over half a percent ahead of the Reserve Bank of India’s (RBI) quarterly monetary policy review scheduled on January 29. Traders remained cautious despite Finance Minister P Chidambaram sought to bury differences with the RBI, saying the central bank had the final call on monetary policy. Till now, the finance ministry has been suggesting to shift to a monetary easing stance given the severe moderation in industrial growth and a decline in exports. Traders are now expecting a modest 25 basis points (bps) rate cut against the previous expectation of generous 50 bps.

Selling got intensified in late trade due to sharp sell-off in high beta realty counter led by massive selling in HDIL and IVRCL stocks. HDIL tumbled by over 23 percent after the company’s promoter sold around 50 lakh shares in secondary market. Some rumors of bankruptcy and defaults were also there which was totally denied by the company’s vice-president during the trade. The Metal and Banking pockets too suffered severe pounding and plunged around two percent.

Global cues too remained sluggish as the IMF chief Christine Lagarde warned of threats ahead and said that the world’s major economies including Europe, the US and Japan need to get their house in order. European counters made sluggish opening as investors braced for the year’s first reading on euro zone business activity for 2013 after data showed that France, the region’s second-biggest economy, may be in recession. Moreover, most of the Asian counters ended the session in the red amid some gloom over Apple Inc.’s latest earnings and forecast. Meanwhile, South Korea’s economy grew 0.4 percent in the fourth quarter of 2012 on a quarterly basis but, fell short of around 0.8 percent growth that the Bank of Korea had projected as recently as in October.

Back home, some pressure also came in from Aviation sector as stocks like Kingfisher, Spicejet and Jet Airways edged lower after the Supreme Court ruled that air travellers should not pay transaction fee and that the aviation regulator should review the wide variation in air fares by airlines. However, the losses remain capped up to certain level as buying in software stocks provided some strength to the bourses on weak rupee. The rupee was trading at 53.75/76 versus its previous close of 53.66/67 at the time of equity markets closing. A weak rupee boosts revenue of IT firms in rupee terms as the sector derives a lion's share of revenue from exports.

The NSE’s 50-share broadly followed index Nifty declined by over thirty points to end below the psychological 6,050 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex tumbled by over hundred points to finish well below the psychological 20,000 mark. Moreover, broader markets too butchered badly and snapped the session with a cut of about two and a half percent.

The overall volumes stood above Rs 2.30 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 535 shares on the gaining side against 1,674 shares on the losing side while 776 shares remain unchanged.

Finally, the BSE Sensex lost 102.83 points or 0.51% to settle at 19,923.78, while the S&P CNX Nifty declined by 34.95 points or 0.58% to end at 6,019.35.

The BSE Sensex touched a high and a low of 20,072.28 and 19,884.20, respectively. The BSE Mid cap index declined by 2.51% and Small cap index was down by 2.44%.

The top gainers on the Sensex were, Hindustan Unilever up by 1.86%, ITC up by 1.64%, L&T up by 1.56%, TCS up by 1.06% and ONGC up by 1.01%, while, Tata Motors down by 5.91%, Gail India down by 4.66%, Cipla down by 3.67%, Hindalco down 3.39% and Sterlite Industries down by 2.53% were the top losers on the index.

The top gainers on the BSE Sectoral space were FMCG up by 1.03%, IT up 0.37% and Capital Goods (CG) up 0.36%, while Realty down 4.19%, Auto down 2.51%, Power down 1.97%, Metal down 1.84% and PSU down 1.52% were top losers on the sectoral space.

Meanwhile, assuring global investors that the country's growth story is intact, India's Commerce and Industry Minister Anand Sharma during the World Economic Forum (WEF) annual meet said ‘I can see that foreign companies are interested in participating in India's growth story. Foreign partners can be assured of investment with a policy regime that is investor friendly, growth-oriented, open and transparent.’

The six-day long WEF annual meet, which will see participation of many Indian business and political honchos as well as global leaders, began in Davos on January 22 and fiscal woes in the world economy are expected to dominate discussions. Sharma also noted that top CEOs of various companies, have appreciated the recent policy decisions regarding multi-brand retail, civil aviation and banking amendments.

The government recently liberalized foreign direct investment policy in sectors like retail allowing 51% FDI in multi-brand retail, hiking the cap to 100% in single-brand retail and permitting foreign airlines to buy 49% stake in Indian carriers. Moreover, the economy for the year 2011-12, recorded a growth of 6.5% and is expecting an economic expansion of 5.7% in the current fiscal. Despite the global economic woes, India has been registering decent growth.

The S&P CNX Nifty touched a high and a low of 6,065.30 and 6,007.85 respectively.

The top gainers on the Nifty were L&T up by 1.79%, HUL up by 1.78%, ITC up by 1.45%, TCS up by 1.38% and Kotak Bank up by 1.23%.

The top losers of the index were Tata Motors down by 6.12%, JP Associates down by 5.64%, GAIL down by 4.63%, Cipla down by 3.98% and Hindalco down by 3.82%.

The European markets were trading mixed, France’s CAC 40 up by 0.19%, United Kingdom’s FTSE 100 up by 0.34% and Germany’s DAX down by 0.05%.

Most Asian market ended lower on Thursday as positive Chinese manufacturing data was dominated by lower than expected results from Apple Inc. Meanwhile, China's HSBC flash purchasing managers' index (PMI) rose to 51.9 in January to a two-year high, indicating a bounce in manufacturing activity and recovery in the world's second largest economy. Shanghai Composite closed in negative territory after surrendering early gains, after North Korea said it would carry out a nuclear test that will target the United States, dramatically stepping up its threats against a country. China's positive data helped Japan's Nikkei to end higher, as firms with high exposure to the Chinese economy snatched gains.

Stock markets in Indonesia and Malaysia remained close for the trade today.