Market turns turtle on late hour selling

Indian markets after consolidating in last session suffered brutal selling on Wednesday; there were rounds of volatility intraday with markets slipping to their lows; however there were subsequent value buying too at lower levels that supported the markets and kept the overall trade range-bound with both the major indices finding stiff resistance at 62500 (Nifty) and 20900 (Sensex) levels for most part of the day, but sudden and sharp late hour profit booking dragged the markets lower and Nifty marked its biggest one day loss since September 30.

The sluggishness in the local markets were mainly induced by the weak trade in the global indices, where the US markets ended lower, while the Asian markets mostly ended in red, as the Federal Reserve Chairman Ben S. Bernanke said that low US interest rates will continue long after the central bank ends its program of bond buying.  The European markets too made a soft start and weighed on the sentiments of the local markets recovery attempts.

Back home, markets for most part of the day lacked any trigger to move in either direction and remained range-bound till the last hour when sudden selling dragged the bourses to their lows. The Rupee choppiness weighed on the sentiments too, which moved down on demand for dollars by state-run oil refiners. However, there was some cautiousness since beginning, as the Paris-based Organisation for Economic Co-operation and Development (OECD) said that Indian economy is expected to improve marginally in the current financial year with its GDP at market price projected to expand by 3.4 percent from 3.3 percent in the previous fiscal. Sectorally, though non of the indices was spared in the last minute onslaught but the major drag were the banking, consumer durables, oil & gas and capital goods. However, the broader indices showed smart resilience and when benchmarks lost over a percent they managed to end flat. There was some buzz in the sugar companies located in the state of Uttar Pradesh and all the sugar stocks were seen in demand on reports that the Centre has convened a high-level meeting to discuss a relief-package for the crisis-ridden sugar industry in Uttar Pradesh and Maharashtra after 65 private mills, including Bajaj Hindusthan, Balrampur Chini Mills and Dhampur Sugar, announced suspension of operations, following an impasse over announcement of state sugarcane price. On the other hand, the PSU oil marketing companies gave a mixed signal despite oil minister M Veerappa Moily saying that the diesel prices will be deregulated in six months with gradual price increases.

Finally, the BSE Sensex plunged by 255.69 points or 1.22%, to settle at 20635.13, while the CNX Nifty declined by 80.45 points or 1.30% to settle at 6,122.90.

The BSE Sensex touched a high and a low of 20895.30 and 20579.94, respectively. The BSE Mid cap index was down by 0.10%, while the Small cap index gained 0.23%.

The top gainers on the Sensex were Coal India up 1.83%, SSLT up 0.95%, Tata Power up 0.76%, and Tata Steel up 0.48%, on the flip side ICICI Bank down 2.84%, Hindalco Inds down 2.50%, Bharti Airtel down 2.44%, Hero MotoCorp down 2.07%, and Bajaj Auto down 1.97%, were the top losers on the index.

On the BSE Sectoral front, Metal up by 0.16%, was the only gainer, while Bankex down by 1.76%, Consumer Durables down by 1.63%, Auto down by 1.23%, Teck down by 1.21%, and Capital Goods down by 1.17%, were the top losers on the sectoral front.

Meanwhile, in a move to accelerate the flow of long-term investments in various infrastructure projects and to provide a boost to country’s infrastructure development, the government is planning to establish infrastructure trust fund soon. This infrastructure fund is to be set on the same lines, as the Real Estate Investment Trust (REIT) prevalent in other countries. Under the infrastructure trust fund structure, underlying revenue of projects will be transferred to a trust and the trust will then issue units to investors, including foreign investors, who want to buy the units.

The government has identified development of infrastructure in the country a most critical prerequisite for supporting the growth momentum of the economy. It has been taking various measures to help fund the infrastructure sector, which is estimated to require around $1 trillion investment for the 12th Five Year Plan (2012-17). 

The government has also introduced Infrastructure Debt Fund (IDF), which is aimed at accelerating and enhancing flow of long term debt for funding infrastructure development. Recently, India Infrastructure Finance Company (IIFCL) launched its first Infrastructure Debt Fund (IDF) with targeted initial corpus of $1 billion. Further, in order to speed up the implementation of infrastructure projects, the government has also set up Cabinet Committee of Investment (CCI) and special project monitoring group. Furthermore, ‘Public Private Partnership (PPP)' programme has also been implemented in order to bring in adequate resources for setting up of a sound and efficient infrastructural base.

The CNX Nifty touched a high and low of 6,204.35 and 6,106.95 respectively.

The top gainers on the Nifty were Coal India up by 1.83%, SSLT up by 1.22%, Tata Power Company up by 0.44%, and ACC up by 0.09%. On the other hand, ICICI Bank down by 3.57%, Jaiprakash Associates down by 3.52%, BPCL down by 3.01%, Hindalco Industries down by 2.82%, and IndusInd Bank down by 2.61%, were the top losers.

The European markets were trading in red, France's CAC 40 was down by 0.10%, Germany's DAX was down by 0.11%, and United Kingdom's FTSE 100 was down by 0.29%. 

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.