Post Session: Quick Review

Indian equity markets witnessed sharp correction of over a percent on Wednesday after three consecutive sessions’ of up-move, as bears vigorously came out of slumber. In the lackluster session of trade, much of the damage was done to the bourses in last hour of trade, when investors timidly pressed sales on every possible stock they held onto. The sudden knock towards the fag end of the trade, led Nifty and Sensex log its biggest one day loss since September 30 and November 5 near the psychological 6,100 and 20,600 levels respectively. Meanwhile, the story was bit different for broader indices, which concluded on mixed note, with Smallcap index eking out slender gain and Midcap index ending with a cut of over two tens of a percent.

Lack of positive triggers at home front amidst negative global set-up mainly encouraged traders in squaring off their position by close of trade today. Besides, sentiment also took a hit after Organisation for Economic Cooperation and Development (OECD) pegged India's FY-14 growth at 3.4%, almost same as the 3.3% growth recorded last year. According to OECD, the rupee depreciation was putting pressures on inflation, public finances, companies and banks with high external debt, led to this no growth kind of India’s GDP estimation.

On the global front, Asian shares mostly tracked lower Wall Street stocks on Wednesday but dovish comments from Federal Reserve Chairman Ben Bernanke limited their losses to some extent. Fed Chairman Bernanke reiterated, the Fed would maintain its ultra-easy policy for as long as needed and would taper bond-buying only when it was sure that labour market improvements would continue. Meanwhile, European shares too mirroring the subdued mood of Asian counterparts, were trading lower on prevailing caution as to when US Federal Reserve might scale back its stimulus program and disappointing corporate results weighing on Wall Street.

Closer home, sectorally, while Banking, Consumer Durable and Oil & Gas pivotals were the top laggards’ metals managed to end in green.  Meanwhile, in stock specific activities, sugar stocks staged a smart rally ahead of high-level meeting scheduled to be held later part of the day, to discuss a relief-package for the crisis-ridden sugar industry in Uttar Pradesh (UP) and Maharashtra, which is likely to include, interest-free loans from banks, hike in import duty, increase in ethanol blending to 10% from 5% among other things. The meeting, which is likely to be attended by Finance Minister P Chidambaram, Agriculture Minister Sharad Pawar, Commerce Minister Anand Sharma and Aviation Minister Ajit Singh, assumes significant for sugar industry as about 65 sugar mills, including industry leaders like Bajaj Hindusthan , Balrampur Chini and Dhampur Sugar, have suspended operations saying it was unviable for them to buy cane from the farmers at the prices set by the state government. Shares of other stocks like Oudh Sugar, Shree Renuka, Mawana Sugar and Dwarikesh Sugar, with this development shot higher in the range of 5-12%. However, Oil Marketing companies, viz, BPCL, HPCL and IOC, which edged higher on assurance of diesel regulation in next six months by Oil Minister, M. Veerappa Moily, also succumbed to selling pressure by the close of trade.  The market breadth on the BSE ended in red; advances and declining stocks were in a ratio of 1244: 1273, while 141 scrips remained unchanged. (Provisional)

The BSE Sensex lost 255.69 points or 1.22% to settle at 20635.13. The index touched a high and a low of 20895.30 and 20579.94 respectively. Among the 30-share Sensex, 3 stocks gained, while 27 stocks declined. (Provisional)

The BSE Mid cap index ended down by 0.18% and Small cap index was up by 0.20%. (Provisional).

On the BSE Sectoral front, Bankex down by 2.37%, Consumer Durables down by 1.61%, Oil & Gas down by 1.42%, Capital Goods down by 1.38% and Teck down by 1.33% were the top losers, while there were no gainers in the space. (Provisional)

The top gainers on the Sensex were Coal India up by 1.98%, SSLT up by 1.14% and Tata Power up by 0.57%, while, ICICI Bank down by 3.44%, Bharti Airtel down by 2.81%, Hindalco Industries down by 2.62%, SBI down by 2.23% and Maruti Suzuki down by 2.16% were the top losers in the index. (Provisional)

Meanwhile, as per the Paris-based think tank Organisation for Economic Cooperation and Development (OECD), Indian economy's growth is likely to improve marginally with its GDP at market price projected to expand by 3.4 percent in the current financial year from 3.3 percent in the previous fiscal. Presenting a somber picture of India's economic outlook, the OECD, a grouping of mostly developed nations, has said that rupee depreciation is putting pressures on inflation, public finances, corporate and banks with high external debt exposure.

By adding further, OECD said that supply side bottlenecks will continue to restrain growth adding to the inflationary pressure and the current account deficits (CAD). The WPI inflation accelerated to eight-month high of 7 percent in the month of October on y-o-y basis as against 6.46 percent in September, while, CAD widened to a record high of 4.9% of GDP in the first quarter of current fiscal. Though, OECD welcomed India's new monetary policy framework that puts more weight on inflation as a policy anchor, added that, to contain inflationary pressures the fiscal deficit is required to be reduce and supply constraints that limit growth are to be dealt with.

Moreover, OECD added that India's economic activity is expected to recover gradually on the back of implementation of infrastructure projects cleared by the Cabinet Committee on Investment (CCI), increasing exports as depreciation in rupee value has improved competitiveness of Indian exporters and clarity on political situation after the general election due in the spring 2014. OECD has pegged India's GDP growth at market price to be 5.1 percent in 2014-15 period and further rise to 5.7 percent in 2015-16 fiscal.

In order to boost economic growth, the organisation has expressed the need of strong regulatory system in the country and said that the government should give priority on reducing energy subsidies, implementing pending tax reforms, improving infrastructure and reforming the labour market. On global front, OECD expects that the pace of the global recovery will remain weak due to the worsened outlook for some emerging economies. The OECD projects world economy to grow 2.7 percent this year and accelerate to 3.6 percent in 2014. 

India VIX, a gauge for markets short term expectation of volatility gained 7.92% at 20.83 from its previous close of 18.30 on Tuesday. (Provisional)

The CNX Nifty lost 80.45 points or 1.30% to settle at 6,122.90. The index touched high and low of 6,204.35 and 6,107.05 respectively. Out of the 50 stocks on the Nifty, 5 ended in the green, while 44 ended in the red and one stock remains unchanged.

The major gainers of the Nifty were Coal India up 2.00%, SSLT up by 1.30%, Tata Power up by 0.19%, ACC up by 0.02% and Tata Steel up by 0.01%. The key losers were ICICI Bank down by 3.88%, JP Associate down by 3.52%, BPCL down by 3.13%, Hindalco down by 2.98% and IndusInd Bank down by 2.98%. (Provisional)

Most of the European markets were trading in red with, France’s CAC 40 down by 0.15%, Germany’s DAX down by 0.03% and the United Kingdom’s FTSE 100 down by 0.16%.

The Asian markets barring Shanghai Composite and Hang Seng concluded Wednesday’s trade in red after the Organization for Economic Cooperation and Development lowered its growth forecasts, and as investors adopted a cautious stance ahead of the release of the minutes from the latest Federal Reserve meeting. The OECD forecast only a modest amount of economic recovery next year, cutting its predictions overnight by around 0.5% to 3.6% in 2014. Asia’s largest economy escaped with only a mild reduction, as China’s growth forecast for 2014 was cut to 8.2% from 8.4%.

Japanese exports rose 18.6% from a year earlier in October to Y6.105 trillion marking the eighth straight month of expansion. The increase in the value of merchandise exports was better than a median forecast of a 17.3% rise. In September, exports rose 11.5% on year. Japan's trade deficit almost doubled to Y1.091 trillion, compared with a Y556.2 billion deficit in the same month of the previous year. The figure marked the 16th consecutive month in which Japan ran a trade shortfall, the longest string of monthly deficits on record.