Freefall of local equity markets continue amidst negative global set-up

Freefall of Indian equity markets continue in absence of positive catalyst and amidst pessimistic global set-up after minutes from the Federal Reserve’s October meeting signaled that the policymakers were considering cutting its stimulus programme in the coming months. With no sectoral indices being spared in green, selling pressure at Dalal Street is showing no signs of abating and is rather intensifying with each passing hour. Trading near day’s low, Sensex and Nifty are languishing below the crucial 20,400 and 6,050 levels respectively, with loss of over a percent. Meanwhile, broader indices too reeling under pressure, although are not suffering as bit cuts as larger peers, but are down and out in red with loss of over quarter of a percent. Investors failed to draw some respite from optimistic comments from Finance Minister, who expects annual headline inflation to moderate to near 5% on the back of reasonable price stability in some major commodities.

Rather, signs of slower foreign buying in India, largely perturbed investors’ which also turned wary after Fitch Rating’s report underscored India’s difficulty in transition, reflected in sharp depreciation of Indian currency, following an extended period of low growth, high inflation and a widening in the current account deficit.

Sectorally, banking, Consumer Durable and Capital Goods were the top laggards of the session among others. Meanwhile, sugar stocks which rallied by upto 20% on Wednesday on reports that a meeting of a group of Union ministers later in the day may discuss a relief package for the crisis-ridden industry,  which may include interest-free bank loans, were all down and out due to profit-booking. The overall market breadth on BSE is in the favor of declines which have thumped advances in the ratio of 1258:783; while 131 shares remained unchanged.

The BSE Sensex is currently trading at 20375.83, down by 259.30 points or 1.26% after trading in a range of 20,579.26 and 20354.85. There were 6 stocks advancing against 24 declining on stocks on the index.

The broader indices continued to reel under pressure; with BSE Midcap and Small cap indices trading lower by 0.50% and 0.37% respectively.

The top losing sectoral indices on the BSE were Bankex down by 1.64%, Consumer Durables down by 1.49%, Capital Goods down by 1.35%, Oil & Gas and Fast Moving Consumer Goods were down by 1.10% respectively. While, there were no gaining indices on BSE,

The top gainers on the Sensex were Gail India up by 0.68%, Maruti Suzuki up by 0.32%, Cipla up by 0.27%, Hindalco Inds up by 0.21% and Coal India up by 0.06%. On the flip side, HDFC down by 2.22%, ITC down by 1.87%, L&T down by 1.82%, Infosys down by 1.75% and Sun Pharma down by 1.73%.

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 is currently trading at 6,045.05, down by 77.85 points or 1.27% after trading in a range of 6,097.35 and 6,037.55. There were 8 stocks advancing against 42 declining stocks on the index.

The top gainers of the Nifty were Gail India up by 0.58%, Hindalco Inds up by 0.54%, Maruti Suzuki up by 0.42%, Coal India up by 0.20%, and HUL up by 0.17%. On the flip side, Axis Bank down by 3.13%, JP Associates down by 2.60%, PNB down by 2.45%, IndusInd Bank down by 2.40%, and Kotak Bank down by 2.24% were the major losers on the index.

Most of the Asian equity indices were trading in red; Shanghai Composite declined by 0.61%, Taiwan Weighted slid 1.28%, Seoul Composite plunged by 1.16%, KLSE Composite lost 0.34%, Straits Times down by 0.34%, Jakarta Composite shrank by 0.96% and Hang Seng shed 0.43%. While, Nikkei 225 up by 1.92% was the lone gainer amongst Asian pack.