Markets continue their downtrend; decline throughout the week

Indian markets were unable to get any respite on Friday and continued their decline for the fourth consecutive day, tailing tepid global cues and on concern that better than expected economic data from US will lead the Federal Reserve to go for stimulus tapering sooner than expected. Markets were also weighed down by some weak earnings numbers, while the continued rupee depreciation kept the sentiments weak for yet another day.

On the global front there was sharp sell-off, after the US markets closed lower overnight reacting negatively to the report that gross domestic product rose by 2.8 percent in the third quarter, much better than expected 2 percent. The Asian markets followed the suit and majority of them suffered sharp cuts making it the longest streak of weekly losses in five months. Later the European markets too made a soft start; a day after European Central Bank unexpectedly slashed its key interest rate to a new record low 0.25% from 0.50%, negatively impacting the local equity markets.

Back home, the Indian markets never looked confident after making a sluggish start following the weakness in their global counterparts, making it a week of continuous fall, declining for all the trading sessions. Rupee continued its slide and pressured the markets too, though economic affairs secretary Arvind Mayaram assured that the currency will stabilise within a few days as strong inflows of NRI deposits and robust export proceeds are expected.  Traders remained in somber mood on report that emerging market growth, barring India, picked up pace in October and the HSBC Emerging Markets Index (EMI), stood at 51.7 in October significantly higher from 50.7 reported in September. There were some negative reactions to weak quarterly numbers that added pressure to the markets, shares of banking major PNB tanked after it reported net profit fall of huge 52.6 percent year-on-year to Rs 505 crore in the September quarter because of higher provisioning for bad loans. United Breweries too slumped after reporting net loss of Rs 18.57 crore for the second quarter ended September 30, 2013 as compared to a net profit of Rs 34.20 crore in same quarter last year. There were some scrip specific movements related to MSCI index changes, Nestle, Tech Mahindra, YES Bank, Allahabad Bank and PI Industries gained in early trade as they will enter the MSCI index on November 26. On the other hand Bank of India, Canara Bank, Unitech and Wockhardt reacted negatively to their exclusion.  

Finally, the BSE Sensex lost 156.62 points or 0.75%, to settle at 20666.15, while the CNX Nifty declined by 46.50 points or 0.75% to settle at 6,140.75.

The BSE Sensex touched a high and a low of 20821.01 and 20600.90, respectively. The BSE Mid cap index was down by 0.15% and Small cap index plunged by 0.28%.

The top gainers on the Sensex were Tata Steel up 2.86%, L&T up 1.84%, Tata Motors up 1.29%, BHEL up 0.74% and SSLT up 0.50%, on the flip side HDFC down 3.77%, Maruti Suzuki down 2.17%, ONGC down 2.15%, Bajaj Auto down 2.04%, and HDFC Bank down 1.87%, were the top losers on the index. 

On the BSE Sectoral front, Realty up by 1.27%, Capital Goods up by 1.15%, Power up by 0.61%, Metal up by 0.35%, and Healthcare up by 0.31%, were the top gainers, while Consumer Durables down by 2.04%, Bankex down by 1.27%, Oil & Gas down by 1.19%, PSU down by 0.69%, and Auto down by 0.45%, were the top losers on the sectoral front.

Meanwhile, amid rising concerns over the low domestic coal production, Coal Secretary S K Shrivastava said that lack of adequate transportation infrastructure has been impacting India's coal production. Despite the world's fifth largest in terms of reserves and third-largest producer of coal, India's domestic output has failed to keep pace with demand over the past few years. At present, Indian domestic coal demand is around 35 percent higher than domestic supply, resulting into a high deficit of which a huge part is being met by costly imports from Indonesia, South Africa and Australia. In the previous fiscal, India imported $16 billion worth of coal.

S K Shrivastava further said that if transportations issues are addressed, through extending more railway lines to coal-rich areas such as Chhattisgarh and Jharkhand, domestic coal production can be increased to 50-60 million tonnes by the end of the 12th five year plan and 200-250 million tonnes by the end of the 13th plan. Meanwhile, coal secretary said that coal ministry is in talks with the Indian Railways to end these transportation woes.

Presently, Coal India is the only producer of domestic coal, which is also struggling to meet domestic requirement. Acute coal shortages in the country has become primary reason for power deficit in the country as coal-fired plants account for 57% of India's installed electricity capacity. Meanwhile, in order to meet India's growing coal demand, the government has planned to invite bids from private players to start coal mining in a public-private partnership (PPP) mode in the country, which would also end the monopoly of public sector unit Coal India. The government is likely to auction 10 coal blocks in the month of March next year.

The CNX Nifty touched a high and low of 6,185.15 and 6,120.95 respectively.

The top gainers on the Nifty were Ranbaxy Laboratories up by 3.93%, Tata Steel up by 2.92%, DLF up by 2.45%, Tata Motors up by 2.33% and Jaiprakash Associates up by 2.14%. On the other hand, Axis Bank down by 4.72%, PNB down by 4.50%, HDFC down by 3.69%, ACC down by 2.74%, and Mahindra & Mahindra down by 2.43%, were the top losers.

The European markets were trading in red, France's CAC 40 was down by 0.73%, Germany's DAX was down by 0.54%, and United Kingdom's FTSE 100 was down by 0.31%.

All the Asian markets concluded Friday’s trade in red as signs of strength in the US economy increased expectations that the Federal Reserve could start to roll back its stimulus earlier than expected. Investors are also eyeing the coming political meeting that will start in China this weekend - the so-called Third Plenum - where the new leadership is expected to provide an outline for economic policy for the next decade. China’s exports rose much faster than forecast in October after a surprise dip the previous month. Exports rose 5.6% from a year earlier, compared to a 0.3% drop in September. National Bureau of Statistics of China reported that Chinese Trade Balance fell to 0.00B, from 15.20B in the preceding month.

Indonesia’s central bank estimates that the economy will grow 5.7% this year, in line with its target of 5.5%-5.9%. The country posted 5.6% annual growth in the third quarter, the weakest in nearly four years, pulled down by weak exports and a slowdown in domestic demand. In October, annual inflation eased to 8.32%, but prices edged up 0.09% from the previous month. Department of Statistics Malaysia stated that Malaysian Trade Balance rose to 8.70B, from 7.10B in the preceding month.