Market misses a chance of relief rally; ends lower for third straight session

The Indian markets failed to hold a good relief rally on Friday, after two consecutive sessions of butchery and ended flat with a negative bias, however barring last hour volatility the trade remained firm with benchmarks trying to keep themselves in green. The mood of the markets showed recovery since beginning, tailing the good going in the global markets, though there was some cautiousness too with the ongoing talk of tapering in the US and the rupees’ further decline past 63/$ mark.

The good global cues mainly set the tone for the early recovery in the Indian markets, as the US markets ended higher overnight on getting better than expected jobs data, while following the trend, the Asian markets made a positive start and most of them ended higher with Hong Kong’s Hang Seng surging to its over eight months high. Later the European markets too made a green start and supported the domestic markets to retain their gains.

Back home, the final session of the week was unable to bring any cheer and Nifty despite early good going closed below 6000 level for the second straight session. The Indian markets showed early recovery sign and traders seemed value buying at lower levels after the slump in last two sessions with beaten down sectors in demand. Gains were slightly influenced by Finance minister P Chidambaram’s statement that the annual headline inflation is expected to moderate to near 5 percent as there was reasonable price stability in some major commodities. Finance Minister also made a strong pitch to overseas Indians and said that the country is a safe destination with a potential of 8% growth and ample investment opportunities. Traders also got support of the report that the inflation based on consumer price index (CPI) for agricultural labourers (AL) eased to 12.65 percent in the month of October on y-o-y basis as against 12.78 percent recorded in the previous month. Though, there was some cautiousness with the continuous decline in rupee after it breached 63/$ mark intraday and as the exchanges reported that foreign institutional investors (FIIs), snapping their 32-day buying streak sold shares worth of Rs 59.80 crore on Thursday. Sectorally, rate sensitive auto and realty suffered the maximum beating, down by about a percent. Banking stocks too remained under pressure after the Reserve Bank of India (RBI) said that the Indian banks must focus on improving their asset quality and bring down bad loans in the near term even as they gear up for major structural changes going forward. Meanwhile, telecom stocks hogged substantial limelight during the session ahead of EGOM meeting later in the day to discuss the details of the third round of spectrum auction as well as M&A guidelines for the sector.

Finally, the BSE Sensex lost 11.66 points or 0.06%, to settle at 20217.39, while the CNX Nifty declined by 3.60 points or 0.06% to settle at 5995.45.

The BSE Sensex touched a high and a low of 20388.12 and 20137.67, respectively. The BSE Mid cap index was down by 0.13%, while the Small cap index gained 0.05%.

The top gainers on the Sensex were ONGC up 2.79%, Tata Steel up 2.44%, Gail India up 2.08%, HDFC up 1.91%, and L&T up 1.65%, on the flip side SSLT down 2.79%, Tata Motors down 2.43%, Bajaj Auto down 2.15%, ITC down 1.39%, and Sun Pharma down 1.13%, were the top losers on the index.

On the BSE Sectoral front, Capital Goods up by 1.21%, Oil & Gas up by 0.69%, Consumer Durables up by 0.65%, PSU up by 0.36%, and Healthcare up by 0.14%, were the top gainers, while Auto down by 1.21%, Realty down by 0.71%, FMCG down by 0.60%, Metal down by 0.36%, and Bankex down by 0.16%, were the top losers on the sectoral front.

Meanwhile, allaying fears of investors in overseas countries, especially the Indian diaspora, concerned over the deteriorating fundamentals of the domestic country, Finance Minister P Chidambaram assured them saying that India is a safe investment destination for them. By adding further, Chidambaram has said that present exchange rate of rupee is a better reflection of its true value and the country is confident that both volatility and speculation have been largely contained.

Finance Minister assured investors that stability in rupee value will come soon as Indian authorities such as RBI have been continuously taking measures in order to check rupee volatility. On inflation front, Chidambaram said that the rate of price rise will ease to below 5 percent in current fiscal following steps taken by the Government and the Reserve Bank of India.

Foreign investment is considered crucial for economic development, as a rise in capital inflow will help support the rupee, which has depreciated over 15 percent against dollar in 2013. Despite the various efforts of Indian authorities to enhance capital inflow, FIIs have pulled out Rs 2,916 crore from debt securities so far this month and have withdrawn Rs 53,070 crore from the debt market since the beginning of year owing to the rising worries over the US Fed tapering.

The CNX Nifty touched a high and low of 6,049.60 and 5,972.80 respectively.

The top gainers on the Nifty were ONGC up by 3.25%, Cairn India up by 3.23%, Tata Steel up by 2.85%, GAIL (India) up by 2.25%, and Larsen & Toubro up by 2.21%, On the other hand, SSLT down by 2.79%, Tata Motors down by 2.36%, Bajaj Auto down by 2.27%, IDFC down by 1.50%, and State Bank of India down by 1.39%, were the top losers.

Most of the European markets were trading in red, Germany's DAX was down by 0.05%, and United Kingdom's FTSE 100 was down by 0.08%, while France's CAC 40 was up by 0.30%.

The Asian markets concluded Friday’s trade mostly in green with Hong Kong-listed Chinese companies being the best performers for the week. In Hong Kong, overall consumer prices rose 4.3% year-on-year in October, less than September’s corresponding 4.6% increase, the Census & Statistics Department reported. Netting out the effects of all one-off Government relief measures, the year-on-year rate of increase in the Composite Consumer Price Index in October was 4%, also smaller than September’s 4.2% increase. 

Bank of Japan has been ratcheting up its economic growth outlook, with its most recent forecast predicting an average 2.7% expansion in the year to next March, with inflation at 0.7%. Last week, official data showed economic growth halved year-on-year in the July-September quarter as exports weakened and consumer spending slowed