Mayhem continues for the second day; Nifty ends below 6000

The Mayhem at the Dalal Street enlarged on Thursday and there was no respite after the last session’s fall. Traders remained in selling mood throughout the day and at no point of time there was any recovery attempt with benchmarks losing their long held psychological bastions of 20250 (Sensex) and 6000 (Nifty). Both the benchmarks logged their biggest one day fall since September 3. There was selling by worried foreign investors who opted to reduce their holdings on raising concerns that US Fed will be going for tapering anytime soon. The fall was also aggravated by the weakness in rupee, which in tandem with the other emerging market currencies declined further.

The global markets remained in somber mood and gave cue of soft start for the Indian markets, as the US markets ended lower overnight after the minutes of Fed’s October meeting stated that many officials at the central bank think that it could decide to slow the pace of purchases at one of its next few meetings. The Asian pack made a soft start tailing the US markets and as Chinese manufacturing fell more than expected in a flash report. Some of the indices suffered cuts of over a percent with exception being the Japanese markets that surged by around two percent, as the yen weakened against the dollar and as the Bank of Japan though held off announcing any fresh measures to stimulate the economy, said it was “recovering moderately.”The European markets too made a sluggish start with major indices losing about a percent in opening trade.

Back home, the domestic markets after a sharp plunge in the early trade continued their decline throughout the day and the trade remained choppy with no serious attempt to break into green. Traders remained concerned with the Fed’s indication fearing that exodus of FIIs fund will once again began. As per the data FIIs bought shares worth Rs 80 crore on Wednesday, compared with more than Rs 1000 each on Monday and Tuesday. There were also reports of basket selling by foreign investors that led to sudden fall in the markets. Traders even overlooked World Bank president Jim Young Kim statement that India was expected to have a good third quarter. However, the World Bank president acknowledged that the developing countries are unlikely to go back to the 10 plus growth rate which was experienced before the economic recession in the US. Back on street, the fall aggravated after the weak start of the European markets and by the end markets slumped to their lowest point of the day with Nifty slipping below 6000, last seen on November 13. Selling was spread across the board and both the benchmarks suffered three digit cut and all the sectoral indices ended in red, lower by 1-2.5%. Capital goods, banking, realty, PSU and power were the worst performer, while the broader indices too suffered cuts of around a percent.

Finally, the BSE Sensex slumped by 406.08 points or 1.97%, to settle at 20229.05, while the CNX Nifty declined by 123.85 points or 2.02% to settle at 5,999.05.

The BSE Sensex touched a high and a low of 20579.26 and 20189.23, respectively. The BSE Mid cap index was down by 1.18%, while the Small cap index lost 0.91%.

The top losers on the Sensex were SSLT down 3.91%, HDFC down 3.61%, L&T down 2.86%, BHEL down 2.70%, and NTPC down 2.63%, were the top losers on the index, while there were no gainers on the index.

On the BSE Sectoral front, Bankex down by 2.49%, Capital Goods down by 2.37%, Realty down by 2.29%, Power down by 2.06%, and PSU down by 2.00%, were the top losers, while there were no gaining indices on BSE.

Meanwhile, Planning Commission Deputy Chairman Montek Singh Ahluwalia has expressed need to hike domestic coal prices citing that energy in India is underpriced, which has led to distortions in domestic energy market. Ahluwalia has said that domestic coal is priced much below imported coal even after adjusting in terms of calorific value, therefore India should align the domestic coal price to international levels.

Stating the need for gradually increasing coal prices, Ahluwalia said that the government's recent decision to pass cost of costlier imported coal to consumers was an absolutely unavoidable move as the rising demand of cheap domestic coal is eroding the energy market. India's energy demand is poised to grow between 6.5-8 percent annually by 2030 as compared to world energy demand at a rate of 1-2 percent per annum in the next 20-30 years.

In spite of 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. Meanwhile, in order to meet India’s growing coal demand, the government will soon 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 6,097.35 and 5,985.40 respectively.

The top gainers on the Nifty were Maruti Suzuki India up by 0.34%, and Cairn India up by 0.30%, On the other hand, ACC down by 3.74%, IndusInd Bank down by 3.61%, SSLT down by 3.56%, PNB down by 3.50%, and Ambuja Cements down by 3.44%, were the top losers.

The European markets were trading in red, France's CAC 40 was down by 0.47%, Germany's DAX was down by 0.48%, and United Kingdom's FTSE 100 was down by 0.06%.

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.