Markets see no respite; declines for the sixth straight session

Tuesday despite a good beginning could not bring any relief to the Indian markets, which extending their losses for the sixth straight session closed with cut of around another a percent. Benchmark indices that moved higher in early trade bucking the sluggishness in the regional peers could not hold up to their gains for long and in afternoon slipped into red from where they could not recover, instead the selling intensified towards the closing and they ended at their lowest point of the day. The continuous decline in the domestic currency that took it to its two months low, too weighed on the market sentiments, while traders eyed the important macro data release of IIP and CPI inflation.

On the global front, while the US markets managed a positive closing overnight, the Asian markets ended mixed with some of the indices snapping the session marginally in red. However, the Japanese markets took the lead, following the yen's weakness against the US dollar. On the economic front, the index measuring tertiary industry activity in Japan was down a seasonally adjusted 0.2 percent on month in September, at 100.1. That misses forecasts for an increase of 0.2 percent following the 0.7 percent gain in August. The European markets too remained sluggish and made a soft start, adding pressure to the domestic markets.

Back home, the markets after a surprisingly positive start went through rounds of volatility during the day. Traders continued booking profits at every opportunity and had dragged the markets into red in the very first hour of trade but soon recovery was seen though that too did not lasted long, both the major indices slipped into red in late morning trade. There was bounce back in noon trade that took the markets out of red but there were no major support that could have kept the indices in green for long and traders awaiting the IIP and CPI numbers preferred to remain on sidelines. While, the CPI is placed on the higher side at around 10%, there might be some improvement in the overall IIP data for the month of September, given the strong growth in core sector. There were mixed set of earnings and that too were unable to give any direction to the markets. Canara Bank reported a fall of 5.29% in its net profit at Rs 625.94 crore for the quarter ended September 30, 2013 and Corporation Bank reported a fall of 96.18% in its net profit at Rs 15.47 crore for the quarter. On the other hand, Britannia Industries posted a rise of Rs 109.82% in its net profit at Rs 95.68 crore. Sectorally, barring the defensive FMCG all other indices closed in red on the BSE with metal and power taking the maximum beating, while the rate sensitive auto and banking index too suffered cut of over one and half a percent. The auto stocks were additionally under pressure with SIAM reporting that domestic passenger car sales segment, declined by 3.88% to 163,199 units for the month of October compared with 169,788 in the same month of 2012. 

Finally, the BSE Sensex lost 209.05 points or 1.02%, to settle at 20281.91, while the CNX Nifty plunged by 60.75 points or 1.00% to settle at 6,018.05.

The BSE Sensex touched a high and a low of 20584.22 and 20262.22, respectively. The BSE Mid cap index was down by 0.78%, while the Small cap index lost 0.76%.

The top gainers on the Sensex were ITC up 0.87%, Mahindra & Mahindra up 0.71%, Wipro up 0.22%, and Sun Pharma up 0.21%, on the flip side Tata Motors down 4.53%, SSLT down 3.35%, Tata Power down 2.70%, ICICI Bank down 2.43%, and Tata Steel down 2.15%, were the top losers on the index. 

On the BSE Sectoral front, FMCG up by 0.56%, was the only gainer, while Metal down by 1.80%, Power down by 1.75%, Auto down by 1.62%, Bankex down by 1.62%, and Capital Goods down by 1.53%, were the top losers on the sectoral front.

Meanwhile, in a move to attract higher capital inflow into the country, the Reserve Bank of India (RBI) has allowed SEBI-registered qualified foreign investors (QFIs) and foreign institutional investors (FIIs) to invest in the credit enhanced bonds up to a limit of $5 billion.

The central bank has said that these investments by foreign investors would be within the overall limit of $51 billion earmarked for corporate debt and investment opportunity has also been extended to long term investors registered with SEBI such as Sovereign Wealth Funds (SWFs), Multilateral Agencies, Pension/ Insurance/ Endowment Funds and Foreign Central Banks. The present limits for investments by QFIs, FIIs and long term investors registered with SEBI in Government securities is $30 billion.

Foreign investment is considered crucial for economic development, as a rise in capital inflow will help support the rupee, which has further started depreciating amid rising demand for the US dollar. Recently, the rupee breached the 63 mark against the US dollar for the first time since September 30. Despite the various efforts of Indian authorities to enhance capital inflow, FIIs have pulled out Rs 2,916 crore from debt securities so far this month and have withdrawn Rs 53,070 crore from the debt market since the beginning of year owing to the rising worries over the US Fed tapering.

The CNX Nifty touched a high and low of 6,108.70 and 6,011.75 respectively.

The top gainers on the Nifty were Ranbaxy Laboratories up by 1.51%, Mahindra & Mahindra up by 0.93%, ITC up by 0.93%, Cairn India up by 0.60% and Sun Pharmaceuticals Industries up by 0.41%. On the other hand, Jaiprakash Associates down by 4.88%, Tata Motors down by 4.27%, Axis Bank down by 3.38%, DLF down by 3.31%, and Tata Power Company down by 3.19%, were the top losers.

The European markets were trading in red, France's CAC 40 was down by 0.25%, Germany's DAX was down by 0.21%, and United Kingdom's FTSE 100 was down by 0.15%.  

The Asian markets concluded Tuesday’s trade on mixed note with Japanese stocks outperformed Asian markets for the second straight session as the yen weakened to its lowest level in seven weeks. In China, the region was cautious as investors waited for the outcome of China’s Third Plenum - a major political meeting that is expected to result in the new government producing a policy blueprint for the next decade. The meeting started on Saturday and is expected to finish later on Tuesday. Banks in China lent less than expected in October as the central bank prioritizes managing risks and controlling inflation over boosting the economy. New yuan lending totaled 506.1 billion yuan ($83 billion) last month, up 700 million yuan from October last year.

Strong sentiment in the mid- to low-end housing segment lifted new home sales in Shanghai to a six-week high. The purchases of new homes, excluding government-subsidized affordable housing, rose 8.2% week on week to 406,600 square meters during the seven-day period ended on Sunday. Household confidence in Japan rose less-than-expected last month. Japanese Household Confidence rose to a seasonally adjusted annual rate of 41.2, from 45.4 in the preceding month. Philippines Industrial Production fell to a seasonally adjusted annual rate of 16.3%, from 18.3% in the preceding month.