Markets remain under pressure; Nifty lurches below 6000 mark

Indian equity markets extended losses in the late morning session on Wednesday amid heavy selling pressure in banks. The Sensex slipped by 278 points, while the Nifty fell below 6000 level. The market sentiments were dampened after central bank has tightened liquidity further and made it even difficult for the banks to access funds with measures by lowering the amount banks can borrow or lend under its daily liquidity window. The RBI also stated that banks now needed to maintain 99% of their daily cash reserve ratio requirements - the deposits they must set aside - with the RBI, compared with 70% prevailing until now. These measures are expected to increase demand for rupees and reduce the currency volatility, but it has raised concerns about the collateral risks to the economy.  After RBI’s measures, rupee appreciated against dollar but only in a marginal way, which again raise concerns that RBI will take stronger action to create demand for the currency, such as raising banks' reserve requirements. On Sectoral front, bank, realty, metal, capital goods and automobile stocks were reeling under a severe bout of selling pressure, while information technology stocks are finding fairly good support.

On the global front, most major Asian markets retreated after a gauge of Chinese manufacturing dropped to a 11-month low, with Japanese shares falling on a firmer yen and a pullback in the Standard & Poor’s 500 Index. Back home, the market breadth was favouring the negative trend; there were 1377 shares on the losing side against 480 shares on the gaining side, while 104 shares remained unchanged.

The BSE Sensex is currently trading at 20,023.65, down by 278.48 points or 1.37% after trading in a range of 20,252.70 and 20,001.24. There were 6 stocks advancing against 24 declines on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 1.76% and Small cap index down by 1.31%.

The top gaining sectoral indices on the BSE were, TECk up by 0.63% and IT up by 0.63%, while Bankex down by 4.54%, Realty down by 2.99%, Capital Goods down by 2.75%, Metal down by 2.52%, PSU down by 2.02% were the top losers on the BSE.

The top gainers on the Sensex were Bharti Airtel up by 1.94%, Wipro up by 1.67%, Sun Pharma up by 1.57%, TCS up by 1.38% and Cipla up by 0.34%. On the flip side, ICICI Bank was down by 4.15%, Jindal Steel was down by 3.97%, Sterlite Industries was down by 3.90%, SBI was down by 3.56% and HDFC Bank was down by 3.53% were the top losers on the Sensex.

Meanwhile, Petroleum and Natural Gas Minister Veerappa Moily has ruled out reconsidering over gas pricing policy, saying that the Cabinet Committee on Economic Affairs has taken the decision and there was no proposal before the government to reconsider the new gas pricing policy. Moily said that, the government doesn’t want to change it as the enhancement of gas price is in the favour of nation’s development, although, the decision of gas price hike has attracted criticism, particularly from the Left parties.

Moily further added that, in a bid to raise energy production to 800 MW from 32 MW at present, ONGC would accord priority to make available 20 lakh cubic metres of gas per day to the Puducherry Power Corporation in Karaikal and the state run company has agreed to fulfill this obligation on a priority basis and would also ensure transportation of the gas within two years. The state run PSU company would also associate itself with the state government in setting up a super speciality hospital at Karaikal.

This issue was discussed with Lt. Governor of Puducherry Veerendra Kataria and Minister of State in PMO V Narayanasamy too was keen on augmenting power generation in the state. Minister of State for Petroleum and Natural Gas, Panabaka Lakshmi too supported the same. Meanwhile, Chief Minister N Rangasamy had assured that accelerating government’s initiatives like acquiring land and other allied work will boost energy production.

Further, Veerappa Moily said that GAIL’s pipeline project would help people of Tamil Nadu, particularly, farmers and would not have negative impact on agriculture. Such project, covering around 16,000 km all over the country, has already benefited farmers, apparently referring to the objections by the Tamil Nadu government in this regard.

The CNX Nifty is currently trading at 5,972.05 down by 105.75 points or 1.74% after trading in a range of 6,047.25 and 5,962.75. There were 6 stocks advancing against 44 declines on the index.

The top gainers of the Nifty were Bharti Airtel up by 2.08%, Sun Pharmaceuticals up by 1.67%, TCS up by 1.41%, Cipla up by 0.18% and HCL Tech up by 0.12%. On the flip side, IDFC down by 7.70%, IndusInd Bank down by 6.71%, Axis Bank down by 5.97%, JP Associates down by 5.78% and Kotak Bank down by 5.51% were the major losers on the index.

Most of the Asian equity indices were trading in red; Shanghai Composite declined 0.60%, Hang Seng slipped 0.08%, Jakarta Composite dropped 0.32%, Nikkei 225 decreased 0.32% and Taiwan Weighted was down by 0.22%.

On the flip side, KLSE Composite rose 0.16%, Straits Times increased 0.30% and Seoul Composite was up by 0.42%.