Indian benchmarks plummet as global uncertainty remains primary overhang

The carnage at Indian stock markets prolonged for yet another session as the benchmarks continued to sway to the tune of depressing global developments and deposed another over a percentage points on Tuesday. Sentiments in the domestic markets are continuously deteriorating session after session as lack of significant upside triggers on the domestic front and depressing developments from the global front continue to dissuade investors from Indian equities. Trade remained lackluster for most part of the day as investors were reluctant to initiate large bets and evidently preferred to indulge only in stock specific activity amid a slew of earnings announcements. Sentiments globally were unenthusiastic as Asian peers traded on a weak note while European counterparts got bludgeoned. Investors’ took to risk aversion globally amid mounting worries over the ability of new governments in Greece and Italy to tackle the sovereign debt trouble by undertaking necessary fiscal reforms. The sharp rise in French yields fuelled risks that the two-year debt crisis may spread to the region’s second largest economies while Mario Monti, Italy's Prime Minister in-waiting, struggled to get political parties to help form his new Cabinet. Apart from the uncertainties on the political front, the surging borrowing costs in the European region dampened investors’ morale. Back home, the frontline indices traded on an unenthusiastic note for most part of the day as marketmen looked at every rise as opportunity to take profits off the table from the risky asset class as there weren’t any encouraging factors that could halt the unrelenting selling pressure.

Earlier on Dalal Street, the benchmark got off to a negative opening and the indices slipped below the psychological 5,150 and 17,100 levels in the early moments of trade since investors largely remained influenced by the cautiously pessimistic sentiments prevailing in Asian markets. Thereafter, the bourses failed to capitalize on the early momentum and kept see-sawing around the neutral till mid noon trades. However, the key gauges suffered a setback in the last leg of trade as sudden bouts of profit booking emerged in the local markets following the somberness prevailing in  European markets, post which the indices could not stage any kind of recovery and extended the sorrow of closing in the negative territory for fourth straight session. Eventually the NSE’s 50-share broadly followed index Nifty got butchered by over one and half a percent to settle below the crucial 5,100 support level while Bombay Stock Exchange’s Sensitive Index Sensex deposed over two hundred points and closed below the psychological 16,900 mark. Moreover, the broader markets continued to bear the brunt of hefty position squaring and suffered nasty lacerations of over two and half a percent, underperforming their larger peers by a fat margin. On the BSE sectoral space, the high beta Realty index once again remained a top laggard in the space and got heavily pounded by over five percent after majors like DLF and HDIL nosedived by a massive 6.66% and 8.29% respectively. The Capital Goods and Power pockets too went home by huge over two percent cuts. Thanks to the across the board sell-off there appeared no gainer in the sectoral space however, investors commended individual stocks like drug-maker Cipla and auto major Tata Motors for their second quarter earnings announcement as they went home with smart gains of 6.51% and 1.91% respectively. The markets plunged on larger volumes of over Rs 1.45 lakh crore while the turnover for NSE F&O segment too remained on the higher side as compared to Monday at over 1.33 lakh core. The market breadth remained abysmal as there were 629 shares on the gaining side against 2230 shares on the losing side while 101 shares remained unchanged.

Finally, the BSE Sensex shaved off 236.07 points or 1.38% to settle at 16,882.67, while the S&P CNX Nifty plunged by 79.85 points or 1.55% to close 5,068.50.

The BSE Sensex touched a high and a low of 17,172.09 and 16,837.56 respectively. The BSE Mid cap and Small cap index down by 2.58% and 2.77% respectively.

The major gainers on the Sensex were Cipla up 6.51%, Tata Motors up 1.91% and HDFC Bank up 0.23%. While, DLF down 6.66%, JP Associate down 5.84%, Mahindra & Mahindra down 3.97%, ICICI Bank down 3.70% and L&T down 2.81% were the major losers on the index.

There was no gainer on the BSE sectoral space. While Realty down 5.22%, Capital Goods (CG) down 2.77%, Power down 2.14%, Bankex down 2.02% and Consumer Durables (CD) down 1.91% were the major losers on the BSE sectoral space.

Meanwhile, India’s public sector oil marketing companies (OMCs) are likely to announce a reduction in petrol prices after the meeting of chief executives of the three downstream companies, which is scheduled on November 16. The stability in American dollar and softening international crude oil prices are seen as the chief reasons behind the plans of petrol price cut.

The companies are expected to announce a cut of around Rs 2 per litre in petrol prices, which would come in contrast with the Rs 1.80 per litre petrol price hike effected earlier this month. The price cut once announced will be the first cut in about three years and the first in the eighteen months since the government completely decontrolled gasoline prices in June 2010.

The small window of opportunity to reduce the fuel prices has also emerged due to the softening in Singapore prices, which has partially offset the impact of a declining rupee. According to reports, petrol prices averaged $115.8 per barrel in November against $121 per barrel price taken at the time of the Rs 1.80 per litre hike in petrol price. Also, the rupee has averaged Rs 49.20 per US dollar, which is less than the October average.

State-owned OMCs earlier this month hiked the petrol price by Rs 1.80 per litre, the fourth increase this year, as the rupee fell from Rs 46.29 a dollar to Rs 49.40 a dollar. The S&P CNX Nifty touched a high and low of 5,158.75 and 5,052.85, respectively.

The top gainers on the Nifty were Cipla up 6.30%, Tata Motors up 2.14% and Grasim up 0.30%. On the flip side, DLF down 7.43%, JP Associate down 6.89%, RCOM down 5.26%, Siemens down 4.84% and Axis Bank down 4.24% were the top losers on the index.

The European markets were trading in red. France's CAC 40 down 1.95%, Britain's FTSE 100 down by 1.01%, and Germany's DAX down by 2.00%.

After witnessing gimps of glory in previous two sessions’ Asian markets have witnessed a steep cut on Tuesday’s trade amid concerns over whether newly formed governments in Italy and Greece can contain their debt crisis as Spanish and Italian government-bond yields climbed. Markets remained buoyed in past two days as Greece and Italy moved to form new governments and embarked on other steps to get their debt troubles under control. But a worrisome sign emerged late Monday when the Italian government sold five-year bonds at 6.29 percent interest, the highest interest rate since 1997. Italy paid a much lower rate of 5.32 percent at a similar auction only last month.

All the Asian equity indices barring Shanghai composite snapped the day’s trade in the red. Seoul Composite remained the biggest loser, down by about a percent followed by Hang Seng and Nikkei down by 0.82% and 0.72% respectively. However, Chinese benchmark ended flat on Tuesday as investors continued to wait for clear signs of a shift in Beijing’s monetary policy.