Benchmarks end lower ahead of the assembly elections exit poll outcome

Wednesday turned out to be a daunting session of trade for the Indian stock markets, which extended the southbound journey for second consecutive day and gave up over half a percentage point, as investors opted to remain on sidelines ahead of the assembly elections outcome on Sunday that will give a firm direction for the markets. Sentiments remained downbeat since morning tracking weak global cues. Some disappointment also came in from report that Foreign Direct Investment (FDI) into the country declined by about 38 percent year-on-year, to $2.91 billion in September.

As the trade progressed, some recovery was seen in the markets, as some support came in from Prime Minister Manmohan Singh’s statement that market-based pricing and technology are essential as India is expected to become world’s third largest energy consumer in seven years. He also said that, in order to bridge the gap between supply and demand, the government is encouraging domestic and global companies to explore onshore and offshore regions. Some pessimism also came in after industry body Assocham said that narrowing of the current account deficit will help arrest depreciation of the rupee and ease inflation concerns that may soothe some nerves.

Positive opening in European markets too supported the local indices. CAC and DAX traded firmly during the early deals. However, disappointing cues from Asian markets took their toll on Indian markets and dragged the frontline gauges below their crucial 6,200 (Nifty) and 20,750 (Sensex) levels. Asian equities ended the session mostly in the red, with investors tracking the developments in the US. Concerns about Fed stimulus tapering also contributed significantly to the market’s slide.

Back home, traders turned nervous in last leg of trade and major indices slumped to their lowest point of the day as flat numbers of the Services PMI weighed negatively on the local markets. The HSBC Business Activity Index posted 47.2 in November compared to 47.1 in October. Meanwhile, the seasonally adjusted HSBC India Composite Output Index too remained below the 50.00 mark, however, up from 47.5 in October to 48.5, as manufacturing production rose in the latest month. Selling in Realty counter too dampened the sentiments despite the Reserve Bank of India (RBI) allowing core investment companies to raise external commercial borrowing (ECB) for projects floated as special purpose vehicle in order to strengthen the flow of resources into the infrastructure sector.

The NSE’s 50-share broadly followed index Nifty declined by over forty points, but managed to hold its psychological 6,150 level, while Bombay Stock Exchange’s Sensitive Index -- Sensex dropped by around one hundred and fifty points to end significantly below the psychological 20,750 mark.

Broader markets too struggled to get some traction and ended the session in the red. The market breadth remained in favour of decliners, as there were 1,138 shares on the gaining side against 1,339 shares on the losing side, while 182 shares remained unchanged.

Finally, the BSE Sensex plunged by 146.21 points or 0.70%, to settle at 20708.71, while the CNX Nifty declined by 40.90 points or 0.66% to settle at 6,160.95.

The BSE Sensex touched a high and a low of 20863.37 and 20673.62, respectively. The BSE Mid cap index was down by 0.66%, while the Small cap index lost 0.06%.

The top gainers on the Sensex were Tata Power up 2.44%, Wipro up 1.95%, Tata Steel up 1.25%, Jindal Steel up 1.07%, and Infosys up 0.49%, on the flip side Hindalco Inds down 2.50%, ICICI Bank down 1.93%, ITC down 1.86%, ONGC down 1.66%, and Tata Motors down 1.58%, were the top losers on the index.

On the BSE Sectoral front, Power up by 0.31%, Metal up by 0.26%, IT up by 0.09%, Teck up by 0.09%, and Consumer Durables up by 0.06%, were the top gainers, while, Realty down by 2.67%, FMCG down by 1.36%, Auto down by 1.05%, Capital Goods down by 0.99%, and Oil & Gas down by 0.78%, were the top losers on the sectoral front.

Meanwhile, Foreign direct investment (FDI) in India has declined by about 38 percent on y-o-y basis to $2.91 billion in September as compared to $4.47 billion in the same month of previous year. During the April-September period of 2013-14 fiscal, FDI has dipped by 11 percent to $11.37 billion, from $12.84 billion in the corresponding period of last year.

The sectors like services, telecom and metallurgical industries have reported sharp contraction in FDI inflow during the first half of current fiscal. FDI in services, telecom and metallurgical industries declined to $1.32 billion, $32 million and $240 million during April-September this fiscal as compared to $3.04 billion, $43 million and $685 million in the same period of previous year.

FDI is considered crucial for the economic development of a country. Despite the government's various efforts to increase FDI, foreign investments in April-September period of 2013-14 have declined, which reflects the need to take more measures to improve the business environment in the country. Meanwhile, in order to attract maximum FDI into the country, the government has been liberalizing the foreign investment policy. The government has relaxed FDI norms in around 12 sectors, which include telecom, tea, pension and petroleum and natural gas. India would require around $1 trillion in the 12th five-year plan (2012-2017), to overhaul its infrastructure sector such as ports, airports and highways to boost growth.

The CNX Nifty touched a high and low of 6,209.15 and 6,149.90 respectively.

The top gainers on the Nifty were Tata Power Company up by 3.13%, PNB up by 2.76%, Power Grid Corporation of India up by 2.29%, NMDC up by 1.75%, and Wipro up by 1.68%, On the other hand, Hindalco Industries down by 2.42%, ITC down by 2.11%, IDFC down by 1.99%, DLF down by 1.83%, and Ranbaxy Laboratories down by 1.83%, were the top losers.

Most of the European markets were trading in red, France's CAC 40 was down by 0.07%, and United Kingdom's FTSE 100 was down by 0.11%, while Germany's DAX was up by 0.13%.

The Asian markets barring Shanghai Composite and Taiwan Weighted concluded Wednesday’s trade in red with Japan’s Nikkei Stock Average fell sharply as yen regained some lost ground. Indonesia’s rupiah forwards fell to a four-year low on speculation companies are boosting purchases of the greenback to make year-end payments amid lack of dollars in the domestic market. Shanghai led other Chinese cities in economic restructuring as it came out top in a survey ranking their speed of transformation, innovation capability and social harmony. Shanghai’s Economic Restructuring Index stood at 78.1 last year, up 4.6 points from that in 2010 and against the national average of 44.5

Indonesia’s manufacturing activity slowed in November as the country’s manufacturers cut production volumes amid declines in new export orders, fewer workers and higher costs due to a weaker rupiah. HSBC Indonesia’s Purchasing Managers’ Index - which tracks new orders, output, employment, suppliers’ delivery times, and stocks of items purchased, collected form a survey of over 400 manufacturers in Indonesia - fell slightly to 50.3 last month from 50.9 in October.