Benchmarks witness massacre on feeble global cues

Indian markets witnessed butchery on Thursday with both the major indices losing over one and half a percent and closed near their lowest level in almost eight and a half weeks, breaching major crucial support levels, 19,400 (Sensex) and 5,900 (Nifty) on feeble global cues. A gap-down start of markets never looked in recovery mood and continued sliding till end, closing near the lowest point of the day. Selling was both brutal and wide-based as barring consumer durables, none of sectoral indices on BSE were spared. Counters, which featured in the list of worst performers, include Metal, Banking and Realty.

Major reason behind the blood bath was sluggish global cues as European markets made a lethargic start after minutes from the US Federal Reserve’s latest meeting illustrated different views over the bank’s monetary-easing program while, disappointing French manufacturing data too weighed on the sentiments. The manufacturing PMI for Germany rose to 50.1, a 12-month high, while the same reading for France climbed to 43.6, marking a 2-month high. The French reading, however, missed expectations. Meanwhile, Asian markets too went home with huge losses with Chinese Shanghai tumbling about three per cent due to a sell-off in the resource sector on the back of weaker global commodity prices, while financial stocks remained under pressure.

Back home, markets also remained jittery as the crucial Budget session of Parliament began today with the United Progressive Alliance (UPA) government set to face a stiff challenge because of the controversies surrounding the chopper deal. Metal shares like Jindal Steel, Tata Steel, Sterlite Industries and Hindalco melted between 3-5 per cent on news that the commodity prices have declined globally. Some pressure also came in after realty stocks tumbled as tussle over legislation to set up a real estate watchdog, pending since 2009, intensified after private developers rejected the proposal.

Sentiments also remained under pressure as financial shares like ICICI Bank, SBI, HDFC Bank and HDFC all edged lower in the trade after RBI data showed that the sector’s loan growth continues to be a concern. Moreover, RBI data showed banks registered an 8.7 per cent growth in advances this fiscal year, compared to 11.2 per cent in the previous year. Meanwhile, banks and financial institutions remained closed on the second day of two-day nationwide bandh called by major trade unions to protest against the anti-labour policies of the government. Shares of cigarette makers like VST Industries, Godfrey Phillips India and ITC also tumbled after the Gujarat state government proposed to increase the value-added tax on cigarettes.

The NSE’s 50-share broadly followed index Nifty declined by ninety points to end below the psychological 5,900 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex tumbled by over three hundred and ten points to finish below the psychological 19,400 mark. Moreover, broader markets too witnessed blood-bath and ended the session with a cut of over one and a half per cent.

The overall volumes stood above Rs 2.01 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 904 shares on the gaining side against 1,929 shares on the losing side while 128 shares remain unchanged.

Finally, the BSE Sensex shaved off 317.39 points or 1.62% to settle at 19,325.36, while the CNX Nifty plunged by 90.80 points or 1.53% to end at 5,852.25.

The BSE Sensex touched a high and a low of 19,554.65 and 19,289.70, respectively. The BSE Mid cap index down by 1.64% and Small cap index was down by 1.74%.

The only gainer on the Sensex was, Gail India up by 0.09%, while Jindal Steel down by 4.19%, Tata Steel down by 4.18%, Sterlite Industries down by 3.77%, ICICI Bank down by 3.77% and Hindalco down by 3.54% were the top losers on the index.

The only gainer on the BSE Sectoral space was Consumer Durables (CD) up 0.04%, while Metal down 3.23%, Bankex down 2.52%, Realty down 2.33%, Capital Goods down 2.07% and Oil & Gas down 1.77% were top losers on the sectoral space.

Meanwhile, in the upcoming Budget session, a bill to replace Directorate General of Civil Aviation (DGCA) by a new aviation regulatory body -- the Civil Aviation Authority (CAA) - with full operational and financial autonomy is expected to be tabled in Parliament. Civil Aviation Minister Ajit Singh said, ‘we are preparing a cabinet note on creating the CAA. We have sent a draft of the proposal to the law ministry and hope that we will be able to table the bill in the second half of this budget session itself.’

Disappointed over the past performance of the DGCA, Ajit Singh said that despite the increase in air passenger, aircraft movement over the past six years, the strength of DGCA, which is the regulatory body in the field of civil aviation, has gone up only in a marginal manner mainly due to the cumbersome recruitment process under the UPSC.

On the other hand, the proposed CAA, with full functional and financial autonomy, would be able to recruit its own staff, decide on their pay structure and the powers to fix and collect fees for rendering services like safety oversight and surveillance of air navigation services. As per the minister, the estimated cost of the CAA would be around Rs 112 crore and will be self financing. CAA will have a separate fund that would finance its entire expenses and will also get budgetary support.

Regarding the organization set up, Ajit Singh said that the proposed CAA would have a Chairperson, a Director General and 7-9 members, including five whole-time members. All of them would be appointed by the Centre on the recommendation of a Selection Committee headed by the Cabinet Secretary.

The S&P CNX Nifty touched a high and a low of 5,921.15 and 5,844.40 respectively. 

The top gainers on the Nifty were Cipla up by 0.18% and Sun Pharma up by 0.09%. On the flip side, the top losers of the index were Jindal Steel down by 4.47%, Tata Steel down by 4.10%, Reliance Infra down by 3.93%, Sesa Goa down by 3.91% and ICICI Bank down by 3.83%.

The European markets were trading mixed, France’s CAC 40 down by 1.94%, United Kingdom’s FTSE 100 down by 1.60% and Germany’s DAX down by 1.81%.

Asian equity markets ended lower on Thursday after minutes from the latest Federal Reserve policy meeting increased worries that central-bank policy-tightening moves will reduce global liquidity. Japanese stocks closed with red mark as investors indulged in selling in several front line stocks from across various sectors. Meanwhile, Chinese market went home on negative note, as sentiments were dampened following reports that the Communist government has mandated that cities that had extreme property price rise should impose restrictions on house purchases.