Post Session: Quick Review

Fed’s minutes of October meeting, which hinted taper being around the corner, threw equity markets across the globe, including ours, into a tizzy. Besides, the daunting set-up, global rating agencies, Fitch rating report highlighting India’s difficulty in transition, reflected by sharp depreciation of Indian currency in mid 2013, following an extended period of low growth, high inflation and a widening in the current account deficit, also underpinned profit-booking at Dalal Street.

The freefall of local equity markets was also on reports which pointed at lower foreign buying in India. As per SEBI’s data, foreign institutional investors (FIIs) bought shares worth Rs 80 crore on Wednesday compared with more than Rs 1000 crore each on Monday and Tuesday. Nothing seemed solacing sentiment, not even the optimistic statements by Finance Minister, who assured markets of not breaching fiscal deficit target of 4.8% of gross domestic product in 2012/13 under any circumstances.

Thus, in an extremely disappointing session of trade, both Sensex and Nifty, collapsed like house of cards and settled near the psychological 20,250 and 6000 levels respectively, with loss of close to two percent to register their biggest single day loss since September 3. Broader indices too suffered blow, but that was less nasty as compared to frontline indices, as they ended with loss of close to a percent.

On the global front, while Japanese shares outperformed on Thursday on a weaker yen, rest of Asian equity markets fell on fears of a reduction in US stimulus and weak Chinese manufacturing data. On the macro-front, HSBC's China flash purchasing manager's index (PMI) for November fell to 50.4 from a seven-month high of 50.9 in October, sparking doubts about the sustainability of the mainland's economic recovery. Meanwhile, European shares, acting no different also faltered on Fed’s tapering fears.

Closer home, with across the board selling pressure, none of the sectoral indices were spared, , the worst hit were stocks belonging to Capital Goods, Banking,  and realty pivotal. Banking stocks ran into rough weather after global rating agency, Fitch Rating highlighted that modest economic recovery continues to undermine India's banking sector, which is facing a combination of weakening asset quality, eroding profit and declining capital. Additionally, sugar stocks, which rallied by up to 20% on Wednesday ahead of the meeting of a group of Union ministers to discuss a relief package for the crisis-ridden industry, which could include interest-free bank loans, soured today on profit-booking. But today, all sugar stocks, Bajaj Hindusthan, Shree Renuka Sugar, Ballrampur Chini and EID Parry, which were down and out in the range of 1-5%, turned lower after reports suggested that UP government retained last year’s higher state advised price (SAP) of Rs 280 per quintal for sugarcane for the 2013-14 crushing season which began in October. The market breadth on the BSE ended in red; advances and declining stocks were in a ratio of 944: 1529, while 138 scrips remained unchanged. (Provisional)

The BSE Sensex lost 372.84 points or 1.81% to settle at 20262.29. The index touched a high and a low of 20579.26 and 20189.23 respectively. Among the 30-share Sensex, 1 stock gained, while 29 stocks declined. (Provisional)

The BSE Mid cap and Small cap indices ended lower by 1.05% and 0.76% respectively. (Provisional)

On the BSE Sectoral front, Capital Goods down by 2.29%, Bankex down by 2.20%, Realty down by 1.96%, PSU down by 1.95% and Power down by 1.91% were the top losers, while there were no gainers in the space. (Provisional)

The only gainer on the Sensex was Maruti Suzuki up by 0.27%, while, SSLT down by 3.51%, HDFC down by 2.34%, L&T down by 2.71%, NTPC down by 2.69% and BHEL down by 2.59% were the top losers in the index. (Provisional)

Meanwhile, Fitch Ratings, in its report released on Thursday, highlighted that India's narrowing current account deficit will be inadequate to shield the country from pressures tied to Fed tapering. However, in a bit of relief, Fitch underscored that the spillover effects of the Indian rupee's weakness have not significantly hurt India's creditworthiness and hence do not trigger any ratings action at this point.

Further, the global rating agency added that country’s ratings at 'BBB-minus', the lowest investment grade rating, already factors in both the sovereign's vulnerabilities and tolerance for volatility in global financial market conditions. Nevertheless, it added that sharp depreciation of the rupee in mid-2013 highlights India's difficult transition following an extended period of low growth, high inflation and a widening in the current account deficit.

Meanwhile, in a bit of positive, Fitch opined that the economy has not lost much of the momentum on the back of 'resilient' agriculture and exports, and predicted economic growth of 4.8% for the economy in 2013/14 and 5.8% in 2014/15.

Additionally, the agency although averred that it expected fiscal deficit to remain under pressure, especially ahead of the general elections due next year, it also expected government to clamp down on spending.

Furthermore, Fitch has forecasted current account deficit to decline to 3.1% of GDP in FY14 (versus 4.8% in FY13), on account of measures undertaken to curb gold imports, a weaker exchange rate, and softer domestic demand.

India VIX, a gauge for markets short term expectation of volatility gained 1.48% at 21.14  from its previous close of 20.83 on Wednesday. (Provisional)

The CNX Nifty lost 115.65 points or 1.89% to settle at 6,007.25. The index touched high and low of 6,097.35 and 5,985.40 respectively. Out of the 50 stocks on the Nifty, 2 ended in the green, while 48 ended in the red.

The only gainers of the Nifty were Maruti Suzuki up 0.43% and Cairn up by 0.28%. The key losers were IndusInd Bank down by 3.82%, ACC down by 3.74%, Ambuja Cements down by 3.73%, PNB down by 3.63% and Axis Bank down by 3.42%. (Provisional)

Most of the European markets were trading in red with, France’s CAC 40 down by 0.76%, Germany’s DAX down by 0.46% and the United Kingdom’s FTSE 100 down by 0.04%.

The Asian markets barring Nikkei 225 concluded Thursday’s trade in red as investors in the region took US Federal Reserve minutes that showed the central bank’s policy makers are still considering winding down stimulus in the coming months as a cause for concern. Decelerating manufacturing activity in China weighed on Shanghai shares, while a weaker yen boosted equities in Japan. China’s manufacturing growth is easing, partly due to a decline in export orders. The flash version of the HSBC/Markit China manufacturing Purchasing Managers’ Index slipped to 50.4, compared to last month’s final reading of 50.9. The result, which marked a two-month low for the PMI, was also well below the official government version of the PMI, which hit 51.4 in October.

The Bank of Japan kept its policy rates and asset-purchasing program unchanged, as widely expected. The decision, which came just three weeks after the central bank’s previous policy statement, was unanimous. It also made no changes to its assessment of the economy, which it stated that it has been recovering moderately as exports have generally been picking up. The central bank kept its growth projection for the fiscal year beginning April 2014 unchanged at 1.5%. The Singapore’s gross domestic product rose more-than-expected in the last quarter. The Statistics Singapore stated that Singaporean GDP rose to a seasonally adjusted 5.8%, from 5.1% in the preceding quarter.