Benchmarks resume southward journey on profit-taking

Benchmarks resumed their southward journey after a day of pause and snapped the session with a cut of around a percentage point, as investors booked profit after the previous session’s rally. Sentiments also remained down-beat as the investors opted to remain on sidelines ahead of November F&O expiry.

Earlier, sentiments remained somber after the Cabinet deferred the consideration of proposals to relax foreign direct investment norms in the housing sector and to reduce the FDI cap to 49 percent in critical areas of the pharma segment. Stocks of Public Oil Marketing Companies, viz, BPCL, HPCL and IOC witnessed heavy drubbing as oil prices regained some semblance of stability after the previous session's slide, as traders questioned how quickly the Iranian nuclear accord could turn into higher supplies.

Selling got intensified after European markets made a sluggish opening, with all the gauges viz. CAC, DAX and FTSE trading lower in early deals ahead of the release of US housing market and consumer confidence data. Moreover, most of the Asian equity benchmarks shut shop in the red with Japanese market ending with a cut of over half a percent, as the yen strengthened against dollar.

Back home, the down fall was also triggered by selling in jewellery stocks like Shree Ganesh Jewellery, Gitanjali Gems and PC Jewellers which edged lower as the Exports of gold jewellery from India fell 6.9 percent on month in October to $608.95 million. Selling was also witnessed in software counter on account of weak economic data in US and on a firm rupee. Meanwhile, sugar stocks, like Bajaj Hindusthan, Shree Renuka Sugar, Balrampur Chini etc. ended lower on profit booking ahead of UP chief Minister’s meeting with the mills owners later in the evening. Separately, an all-party delegation from Maharashtra, along with the representatives of agitating farmers’ organizations, is scheduled to meet Prime Minister Manmohan Singh about various demands of the sugar industry.

However, investors drew some comfort from provisional data, which showed that FIIs once again turned net buyers in Indian equities, purchasing shares worth a net Rs. 837.80 crore yesterday. Meanwhile, some hospitality stocks viz. Indian Hotels Company, Taj GVK Hotels & Resorts, Hotel Leelaventure, EIH etc. edged higher after the central bank widened the definition of infrastructure lending to include hotels with project costing more than Rs 200 crore.

The NSE’s 50-share broadly followed index Nifty declined by around sixty points to end below the psychological 6,100 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex dropped by one hundred and eighty points to end below its psychological 20,500 mark.

Moreover, broader markets too struggled through the day and ended the session in the red with a cut of around half a percent. The market breadth remained in favor of decliners, as there were 1056 shares on the gaining side against 1459 shares on the losing side, while 139 shares remained unchanged.

Finally, the BSE Sensex plunged by 180.06 points or 0.87%, to settle at 20425.02, while the CNX Nifty lost 56.25 points or 0.92% to settle at 6,059.10.

The BSE Sensex touched a high and a low of 20604.27 and 20390.62, respectively. The BSE Mid cap index was down by 0.26%, while the Small cap index lost 0.83%.

The top gainers on the Sensex were BHEL up 2.57%, Tata Motors up 1.23%, Hindustan Unilever up 1.06 %, Hero MotoCorp up 1.01%, and SSLT up 1.00%, on the flip side Bharti Airtel down 2.72%, ICICI Bank down 2.61%, Coal India down 2.45%, ITC down 1.69%, and HDFC down 1.61%, were the top losers on the index.

On the BSE Sectoral front, Auto up by 0.49%, Power up by 0.36%, and Capital Goods up by 0.32%, were the only gainers, while Bankex down by 1.52%, PSU down by 1.36%, Oil & Gas down by 1.23%, FMCG down by 1.14%, and Realty down by 0.92%, were the top losers on the sectoral front.

Meanwhile, Rafeeque Ahmed, the president of the Federation of Indian Export Organizations (FIEO), has said that high export orientated sectors may soon get the priority sector lending status from the lenders. The FIEO’s president has added that they have requested the government to fix at least 5% in the current priority sector cap of 40% for exports and the discussions between the finance ministry and Reserve Bank of India (RBI) on the issue are now at an advanced stage. 

The FIEO’s move is aimed to ensure credit flows to the exports sector by compelling banks to lend to exporters with priority sector lending status. Furthermore, a high-level committee of exporters led by FIEO is planning to meet the RBI Governor this month-end to discuss the priority sector lending issue. Indian exports increased by double-digit growth at 13.47% for the fourth consecutive month to $27.27 billion in October on the back reviving demand in the US and European markets. Further, emerging markets such as Latin America and others are also providing big opportunities for country’s exports. The depreciation in rupee value has improved competitiveness of domestic exporters.

Rafeeque Ahmed said the Indian merchandise exports during the second half were expected to see a growth of 12-15%. Meanwhile, the government has set a target of $325 billion exports for current fiscal. Increasing exports of the country also has also augmented expectations for a significant curtailing for India’s current account deficit (CAD), a major macro-economic problem that has created huge volatility in the domestic equities markets and currency.

The CNX Nifty touched a high and low of 6,112.70 and 6,047.75 respectively.

The top gainers on the Nifty were Lupin up by 1.93%, BHEL up by 1.87%, SSLT up by 1.40%, Hindustan Unilever up by 1.20%, and Hero MotoCorp up by 1.17%, On the other hand, BPCL down by 6.74%, Bank of Baroda down by 3.88%, NMDC down by 3.47%, ICICI Bank down by 2.72%, and Cairn India down by 2.51%, were the top losers.

Most of the European markets were trading in red, France's CAC 40 was down by 0.17%, and United Kingdom's FTSE 100 was down by 0.38%, while Germany's DAX was up by 0.02%.

The Asian markets concluded Tuesday’s trade mostly in red with Indonesia’s currency dropping to the weakest level since March 2009 after a dollar bond sale fell short of its target, while Japanese shares declined from a six-month high. Indonesia Finance Ministry raised less than half of its original $450 million that it targeted through a bond sale, as investors demanded higher yields. Southeast Asia’s largest economy raised $190 million from the sale of the debt that matures in May 2017. Three Bank of Japan policy board members expressed dissent to parts of the central bank’s semiannual outlook report issued in October, minutes of the board’s October 31 board meeting showed, with two of them arguing that the central bank should highlight the downside risks the economy faces.

Home buying sentiment in Shanghai was sluggish last week despite a slight rebound, as sales stayed below a 300,000 square-meter threshold, and supply fell again. Purchases of new homes, excluding government-funded affordable housing, climbed 5.3% from the previous seven-day period to 273,100 square meters in the city, but they stayed below the threshold for the second straight week.