Tepid global cues lead to a soft start of domestic markets

Markets got another weak start on Friday, continuing their decline for the fourth day. There has been constant selling pressure in the markets after the Diwali session, however today, the weakness was largely induced by the fall in the global markets, as the better than expected economic data from US fanned fear that the Federal Reserve may reduce stimulus sooner than expected. On the domestic front too, there was not much that could support the markets, rather traders were concerned after global rating agency Standard & Poor’s last day affirmed their sovereign credit rating on India, adding that the outlook on Asia’s third-largest economy remains negative and said that they may lower the rating to speculative grade next year if the government that takes office after the general election does not appear capable of reversing India’s low economic growth. Back on street, metal has taken the lead in morning trade on expectation of good industrial data from China, while the IT was in jubilant mood taking the advantage of rupee weakness. On the other hand some rate sensitives, like consumer durables and realty were dragging the markets, while the broader indices were ruling flat.

The market breadth on the BSE was positive; there were 629 shares on the gaining side against 565 shares on the losing side, while 60 shares remained unchanged.

The BSE Sensex opened at 20785.20; about 37 points lower compared to its previous closing of 20822.77, and has touched a high and a low of 20821.01 and 20645.64 respectively. The index is currently trading at 20752.43, down by 70.34 points or 0.34%. There were 10 stocks advancing against 20 declines on the index.

The overall market breadth has made a strong start with 50.16% stocks advancing against 45.06% declines. The broader indices were trading in green; the BSE Mid cap up by 0.17% and Small cap index was up by 0.02%. 

The top gaining sectoral indices on the BSE were, Metal up by 0.35%, Health Care up by 0.33%, IT up by 0.16%, Auto up by 0.15% and Teck up by 0.02%, while Consumer Durables down by 1.35%, Realty down by 0.68%, Capital Goods down by 0.57%, Bankex down by 0.50% and Oil & Gas down by 0.44% were the top losers on the sectoral index.

The top gainers on the Sensex were Tata Motors up by 2.16%, Tata Steel up by 1.35%, SSLT up by 1.01%, Wipro up by 0.57% and BHEL up by 0.48%. On the flip side, HDFC was down by 1.78%, Gail India was down by 1.25%, ONGC was down by 1.13%, TCS was down by 1.04% and Maruti Suzuki was down by 1.03% were the top losers on the Sensex.

Meanwhile, despite the recent initiatives taken by the government to accelerate the reform process and prop up the snail paced economic growth, global rating agency Standard & Poor (S&P) has retained its negative outlook and affirmed its sovereign credit rating of ‘BBB-/A-3’ on India. However, in a blow, the rating agency has warned of a likely downgrade in 2014 if the new government fails to reverse India's low growth. It underscored that the current investment-grade ratings are supported by institutional strengths and foreign exchange reserves.

The rating agency had earlier in August this year had reiterated its negative outlook on India, citing concerns over India's fiscal and current account deficits. Further, these ratings just reaffirm the same negative outlook on India.

However, it remains to be highlighted that ever since the rating agency affirmed its negative outlook for India in August, both government and Reserve Bank of India took slew of measures to improve the macro-economic condition, which also resulted in a swift recovery in the Indian currency. Further, Finance Minister P Chidambaram in the last week also pointed over green shoots of Indian economy, i.e, good monsoon, rising exports, strong core sector growth and a lower-than-expected current account deficit, which were termed as good auguries for an economic revival.

The CNX Nifty opened at 6,170.15; about 17 points lower as compared to its previous closing of 6,187.25, and has touched a high and a low of 6,185.15 and 6,139.85 respectively. The index is currently trading at 6,167.00, down by 20.25 points or 0.33%. There were 16 stocks advancing against 34 declines on the index.

The top gainers of the Nifty were Tata Motors up by 2.12%, HCL Tech up by 1.78%, Tata Steel up by 1.37%, SSLT up by 1.01% and Lupin up by 0.94%. On the flip side, HDFC down by 1.88%, Axis Bank down by 1.66%, ONGC down by 1.27%, Gail down by 1.25% and TCS down by 1.11% were the major losers on the index.

The Asian equity indices were trading in red; Shanghai Composite was down by 22.68 points or 1.06% to 2,106.72, Hang Seng lost 134.50 points or 0.59% to 22,746.53, Jakarta Composite was down by 17.67 points or 0.39% to 4,468.44, KLSE Composite was down by 1.03 points or 0.06% to 1,805.58, Nikkei 225 shed 149.28 points or 1.05% to 14,079.16, Straits Times was lower by 15.00 points or 0.47% to 3,187.10, Seoul Composite was down by 10.87 points or 0.54% to 1,993.17 and Taiwan Weighted lost 43.67 points or 0.53% to 8,240.04.