D-Street witnesses wild swings in late trade; registers fourth straight downfall

It turned out to be a rollercoaster ride for the frontline indices which showed wild swings in the dying hours of trade only to quintuple the sorrow of closing in the negative terrain. The session was characterized by high amount of volatility as the indices tried hard to claw beyond the psychological 5,100 and 16,900 levels but it seemed like the bears had the last say as they stalled the resurgence of the benchmarks twice in the session and took profits off the table. Sentiments in domestic markets were dampened amid the lingering turbulence in the Euro-zone as the local gauges largely remained influenced by the moves in European equity markets. Lack of clarity over the action plan from Italy and rallying bond yields of Euro-zone nations including France, Belgium, Austria and Spain triggered a new wave of selling pressure. However, some recovery was evident in the domestic bourses after Italian borrowing costs fell back below the 7% threshold once the European Central Bank bought larger sizes and quantities of Italian debt. But the recovery was short lived as doubts over the success of ECB’s sovereign bonds buying act surfaced. Marketmen also remained on the edge amid somber leads from Asian peers where some indices even witnessed over two percent lacerations. Back home, fears of slowdown in the economy kept investors nervous while the free fall in rupee also added to the woes as the currency made fresh 32 month lows in the session before coming near previous day's closing value. Reports that India’s September services export receipt declined by 5.63% month on month too did its bit in undermining sentiment. The services sector contributes over 50% to India's GDP. Meanwhile, India’s state run oil marketing firms slashed petrol prices for the first time in almost three years after an increase this month sparked protests by the opposition and some members of the ruling coalition. The move sparked sharp sell-off in stocks like IOC, BPCL and HPCL in the range of 2-5%.

Earlier on Dalal Street, the benchmark got off to a negative opening since investors largely were influenced by the pessimistic sentiments prevailing in Asian markets. Thereafter, the bourses treaded on a southbound journey without any fervor through the first half. But in second half the key gauges showed signs of recovery on the back of positive cues from European counterparts. However, the indices succumbed to extreme volatility and touched lowest levels in the day only to bounce back in no time to the highest levels in the dying moments. Eventually the NSE’s 50-share broadly followed index Nifty, declined by over half a percent to settle below the crucial 5,000 support level while Bombay Stock Exchange’s Sensitive Index Sensex deposed over a hundred points and closed below the psychological 16,750 mark. Moreover, the broader markets continued to bear the brunt of hefty position squaring and suffered nasty lacerations of over a percent, underperforming their larger peers by quite a margin. On the BSE sectoral space, the Capital Goods index remained the top laggard in the space and got heavily pounded by close to four percent after heavyweights like BHEL and L&T nosedived by a massive over four percent. The Power and Oil & Gas pockets too went home with huge cuts while some short covering in Banking stocks helped Bankex index to pare its losses. On the other hand, the consumer durables and defensive FMCG counters bucked the somberness prevailing in the markets and settled with over half a percent gains. The markets declined on extraordinarily larger volumes of close to Rs 2 lakh crore while the turnover for NSE F&O segment too remained on the higher side as compared to Tuesday at over 1.79 lakh core. The market breadth remained abysmal as there were 899 shares on the gaining side against 1937 shares on the losing side while 106 shares remained unchanged.

Finally, the BSE Sensex lost 106.80 points or 0.63% to settle at 16,775.87, while the S&P CNX Nifty declined by 38.05 points or 0.75% to close 5,030.45.

The BSE Sensex touched a high and a low of 16,878.30 and 16,641.65 respectively. The BSE Mid cap and Small cap index down by 0.94% and 1.34% respectively.

The major gainers on the Sensex were Jindal Steel up 3.03%, SBI up 2.02%, M&M up 1.89%, ONGC up 1.74% and DLF up 1.30%. While, Jaiprakash Associates down 4.49%, BHEL down 4.15%, L&T down 4.04%, Sun Pharma down 3.03% and Hero MotoCorp down 2.73% were the major losers on the index.

The major gainers on the BSE sectoral space were Consumer Durables (CD) up 0.56%, FMCG up 0.51%, Metal up 0.15%, Realty up 0.12%. While Capital Goods (CG) down 3.88%, Power down 2.02%, Oil & Gas down 1.27%, IT down 0.92% and Health Care (HC) down 0.84% were the major losers on the BSE sectoral space.

Meanwhile, in a move to give some relief to Euro-zone crisis hit local importers and exporters, the Reserve Bank of India (RBI) has increased the ceiling rate on export credit in foreign currency by 150 basis points to London Interbank Offered Rate (LIBOR) plus 350 basis points from the present ceiling rate of LIBOR plus 200 basis points, with immediate effect till March 31, 2012.

The RBI said, ‘keeping in view the tight liquidity conditions and widening of credit spreads due to recent developments in international financial markets, it has been decided to increase the ceiling rate on export credit in foreign currency.’

The apex bank has further asked the banks not to impose any additional charges like service charge, management charge, except for recovery towards out-of-pocket expenses incurred. Similar changes would be applicable in interest rates in cases where EURO LIBOR is used as the benchmark.

The alteration in the rates of interest would be valid only to fresh advances and are subject to review after March 31, 2012, the RBI said. Further it also increased the ceiling interest rate on the lines of credit with overseas banks from 6-months LIBOR plus 100 basis points to 6-months LIBOR plus 250 basis points.

The S&P CNX Nifty touched a high and low of 5,065.20 and 4,989.50, respectively.

The top gainers on the Nifty were Jindal Steel up 2.92%, Tata Steel up 2.75%, SBI up 2.72%, DLF up 2.63% and M&M up 2.11%. On the flip side, SAIL down 5.40%, BPCL down 4.42%, Siemens down 4.27%, GAIL down 3.62% and HCL Tech down 3.35% were the top losers on the index.

The European markets were trading in green. France's CAC 40 up 0.55%, Britain's FTSE 100 up by 0.24%, and Germany's DAX up by 0.51%.

The carnage on Asian equity indices prolonged for yet another day on fears that the debt crisis may spread to other euro zone nations as rising borrowing costs were affecting AAA- rated France. The political outlook remained unclear in Italy and Greece as they tried to push through severe austerity measures needed for bailout package and win the market confidence. The Italy Prime Minister designate, Mario Monti, is expected to unveil Italy’s new government on Wednesday. Moreover, the sentiments were also down as cash continued to flow out of European government debt on Tuesday, triggered by a less-than-stellar auction of Spanish treasury bills, pushing yields on Italian bonds above the key psychological 7.0% again and hitting even fiscally strong Northern European nations, such as Triple-A-rated France, Austria, the Netherlands and Finland.

Meanwhile, Chinese benchmark declined over two and a half percent on Wednesday, the biggest fall in nearly two months, dragged by financial and property issues after the International Monetary Fund warned that China’s biggest commercial banks face systemic risks. The IMF warned on Tuesday that China’s biggest commercial banks face systemic risks if a combination of credit, property, currency and yield curve shocks that could be withstood in isolation were to occur together.